by Shelley Hitz
Disclaimer: This blog post is for informational purposes only. I am not a lawyer or accountant and am not giving legal advice. Consult with a tax professional and lawyer before making decisions regarding your business.
As an author, have you considered starting your own publishing company? Many self-published authors are now choosing this option.
In fact, this is what my husband CJ and I have done. We started Body and Soul Publishing in 2012 and haven’t looked back yet.
Three Reasons to Start an Independent Publishing Company
1) It looks more professional.
When you start an independent publishing company, you can then register your ISBN with your company name as the publisher. This will show up on your book sales page and looks more professional than “Createspace” or “your name” as the publisher.
2) It separates your book publishing activities from your personal income and assets.
It can be helpful to have your business and personal finances separate for tax purposes. In fact, sometimes it can save you money!
Also, when you form a LLC or S-corp, it shields your personal income and assets from lawsuits that may occur. Lawsuits are very rare in our type of business, but some people prefer to have this extra layer of protection in place.
3) It gives you more options.
[pullquote position=”right”]Once you establish your independent publishing company, you have more options.[/pullquote] You may even choose to publish other author’s books with your publishing company listed as the publisher.
10 steps to forming your own independent publishing company
#1: Make a Decision
The first step to start your own publishing company is to make the decision. You need to decide that you want to make writing and publishing books a business and not just a hobby.
This is a huge mindset shift for most authors.
And a necessary one. I found that once I made this decision in 2012, I became much more serious about investing into my publishing business. And as I focused more on book marketing, my career as an author took off.
Are you ready? If so, it’s time to go to step #2.
#2: Research Your Options
Now it is time to research your options. Make sure to know what options are available in your country. Since I live in the US, I researched three main options:
- Sole Proprietorship
A sole proprietorship is an unincorporated business that you run yourself. In the US, you claim this under your social security number for taxes. This is the easiest way to start.
An LLC is a limited liability company that is taxed similarly to a sole proprietorship. However it is an incorporated business and separates and protects your personal assets from business assets under limited liability.
An S-Corporation is an incorporated business and gives more tax advantages and savings.
Although you don’t need to know every detail about each option, I do think it is wise to do some basic research before consulting with experts.
#3: Consult With Experts
It is important to consult with experts before making decisions about your business. Many lawyers and accountants offer a free consultation to answer your questions. They can advise you on the best path for your particular situation.
For my husband and I, it was recommended that we start an LLC that is taxed as an S-Corp as this would save us thousands of dollars in self-employment taxes. However, each person’s situation is different. So, make sure to consult with a lawyer and an accountant for advice on how to proceed.
#4: Decide on a Business Name
Once you decide on which type of business to set up, you now have the responsibility of choosing a name. Ensure your name is not trademarked or already taken in your state if you live in the US.
You also want to choose a business name that is professional and fits your brand. Don’t rush this step as your business name will stay with you a long time!
#5: Finalize the Business Type
Now that you have your business name chosen, you can finalize the set-up of your publishing company. When we first started Body and Soul Publishing as a sole proprietorship, I filed a DBA (doing business as) with my state.
I then received paperwork that listed my EIN (employer identification number) which would allow me to open a business bank account. I also used that EIN to file 1099’s for my contractors and to file my taxes for our business.
However, once we decided to incorporate as an LLC, we had our tax guy set it up for us. He charged a minimal fee and made sure it was done correctly.
#6: Set Up Your Business Bank Account
Once you have your EIN, you can now apply for a business bank account. Each bank has a different process and requirements for setting up a business account. Therefore, consult with your local bank for more details.
You may also want to set up a business Paypal account for transactions online.
#7: Set Up an Accounting System
Bookkeeping used to be a bad word in our house. However, once we learned how to properly use accounting software and set up our bookkeeping correctly, it actually helped to decrease our stress.
We consulted with an accounting service and paid a small fee to have them help us set everything up. She recommended that we buy the cheapest version of Quick Books we could find at an office supplies store.
She said she preferred the computer software versus the online version as it gives you more control, it is easier to export data for your accountant or bookkeeper, and it tends to be cheaper.
Make sure you implement a system for tracking your receipts. You also want to be very careful to never buy personal items with a business account and vice versa. You want to be organized and keep things separate. This will make life much easier come tax time!
#8: Register a Domain Name for Your Business
I highly recommend you register a domain name for your business. This is another way to add more professionalism to your company. It can also be a place where you post a listing of your published books.
#9: Learn the Laws Related to Your Business
Make sure you learn the laws related to your business. For example, in the US, there are laws about collecting sales tax when you sell books at live events and it differs from state to state. You may also need to register for a sales tax license in your state and/or your city.
#10: Celebrate Your Success!
Now it is time to celebrate your success. You have formed your own independent publishing company!
My Personal Story
In 2012, we started our independent publishing company. Initially, we created a sole proprietorship because it was the easiest way to start with the least expense.
However, this year (2014) my husband and I got hit really hard by taxes. Therefore, we decided to set up an appointment with a local “tax guy.” Fortunately, our appointment went really well and we decided to officially incorporate our business as an LLC, filing taxes as an S-Corp. We have a long to-do list, but I am confident that next year will not be as stressful, which is such a relief!
The bad news? If we would have consulted with this same “tax guy” last year, he could have saved us thousands of dollars on self-employment taxes this year.
We will definitely be hiring him to do our taxes next year!
Have you ever learned a lesson the hard way?
I have many times.
And it seems I learn more from my mistakes than I do from my successes. It is in the difficult and painful seasons of life that I grow the most.
I’ll be honest…there are days I feel like giving up. I ask myself, “Is this really worth it?”
Occasionally God will give me a small glimpse of the impact my life is having on others. In fact, this very week I was encouraged by two authors that personally thanked me for helping them publish and market their books. They are both successful authors today.
So I will close with some encouragement for you (and for myself) as we embark on this journey of writing and publishing books.
“Never, never, never give up!”
I encourage you to learn from your mistakes and keep making progress toward your goals one step at a time.
Share Your Experiences
Have you started an independent publishing company? If so, share your business name and website in the comments below as well as any advice you have learned along the way.
This article was originally published on The Future of Ink and is reprinted here in its entirety for our Magnolia Media Network readers.