business for authors, business side of self publishing, how to apply for a business license for self publishing, indie guide on how to pay taxes
So, we’ve hinted already about forming a business and we’ve discussed said costs, but let’s go more into depth.
I asked our faithful contributors these questions:
*Did you use the service you self-published through as your publisher or did you make your own publishing company/ name/ imprint?
*What sort of business license did you take out if so? How much did it cost? What did you have to fill out? Where did you find the forms?
But FIRST, disclaimers! I am not (nor is anyone on this site) actual accountants or YOUR legal counsel. Soooo when in doubt, call the secretary of state office of whatever state you live in and/ or the IRS and get the tried and true facts about what business license is best for you (should you choose to get one).
Here are some good sites about business licenses (if you get confused below)
What is a business license? CLICK HERE.
How do I get a business license? CLICK HERE.
Find out more about an online business (especially if you are dealing with sales tax): CLICK HERE. And CLICK HERE.
Done clicking? Okay, why would you want a business as an author?
CHRISTINE BRYANT: Something else you might consider. If your book does not state that you have a publisher, that is a big red flag that you’re self-published. Not that I care, I’m proud to be an INDIE. But if you don’t want the red flag that you are self-pub, you’ll need to create your own label. Easy enough to do; just register a business name with the state and get a sales tax license. Heather created her own label and publishing company, “Jelly Bean Press.” I plan to do the same thing, but not just for my books. I hope to offer editing, formatting and some graphic designs to INDIE’s in the future to make a little extra money and can use that business name for all of that. If you plan to sell any books out of the back of your car, or at fairs or booths or whatever, you’ll need a tax ID number and will need to charge and turn in sales tax. Another reason I’m starting an official business. TAXES!! It’s something to consider.
HEATHER HORROCKS: I did [start a business] but you don’t have to. If you’d like to, contact your state. I had to list my business name with the state so I didn’t duplicate anyone else’s business name, and I had to get a business license through my city. But again you probably don’t need to do that unless you’re shipping books (and with POD the retailer ships and the customer pays and you just receive your money.) *But* when your yearly income hits about $50,000 you’ll need to have a business and incorporate.
JOLENE PERRY: I use Next Door Publishing. I’m still working on the formal paperwork part of it, but business licenses are fairly easy to do and prices vary from state to state. I’m going to start an LLC w/ Next Door Publishing – biggest advantages are for TAX as well as if I’m every sued for accidentally using an image inappropriately – they’ll only have access to my LLC, and not to me personally.
ANDREA PEARSON: Yes, I formed an LLC. I don’t really use it, though, except for the bank account I had to create to accompany it. Here’s the thing: right now, I represent myself to companies who don’t really care about my personal information. I’m not about to mess up my own life by making bad choices where my name is concerned. Back when I was with a traditional publisher, however, the contract was signed between them and my LLC, and that offered me some protection. If you plan to get movie deals, sign contracts with traditional publishers, or agents, or whatever, I’d recommend forming an LLC and having everything be under its name. (I’d suggest working with an attorney to do so. Mine is one of the best attorneys I’ve ever met – incredibly kind hearted. His law firm is in Provo, UT. Let me know if you’d like his information.) But it’s not completely necessary to form an LLC during the early stages of publishing. First off, you’re unlikely to sign any movie deals within the first few months. Just make sure to get one set up when something looks like it’s heading your way.
JEWEL ADAMS: I publish under my own label, Jewel of the West. My only out of pocket money is the cost of the copies and bookmarks. I use a lot of free publicity and list my books with online bookstores. We have an LLC.
HEATHER JUSTESEN: You have the option of using your own imprint name, you don’t have to list CreateSpace as the publisher. We just picked a publishing name (and purchased the website address in case we decide to self-publish more of my books down the road, not because I ever intend to become a publisher for anyone else!) and my husband created the imprint logo. Then when you set up the info on your book, you just list your publisher name on the form, and place the logo on the cover when you create it. If you’re going to do this, make sure to file a DBA (doing business as) form with the state. It’s only a page and no big deal, it just tells them that you are using the publisher imprint to earn money (or spend money, which is more like it!). We filed this through our business (which already handles all of my writing expenses and income), but I think you can do it just as yourself without a business license. Call the state if you have questions.
ME: I bought my business name (about $22) and then a business license (about $50). I decided to make my company Triad Media and Entertainment; it’s a sole proprietorship without a sales license, HOWEVER, some of my friends have opted just to keep Createspace as their publisher, which is free (can’t beat that). After consulting my sources (*Again, I am NOT an accountant or legal advisor—so if someone else KNOWS differently, give me what-for in the comments below/ above and I will change the following information); you don’t need a business if you’re just going through Amazon (or whatever online service) AND if you’re NOT dealing with sales tax. This is what my friend told me who has a sole proprietorship with a sales license; “If you sell a book on your site, you have to remit sales tax on that item because you were the point of sale. If you arrange for B & N to carry your book, they pay the sales tax, and you just pay income tax on what they pay you. You need a business license if you are the point of sale.”
For more information about this, CLICK HERE.
Once again, if you ‘are’ the point of sale that means that YOU are making the business transaction (over your site or face to face and not through Amazon or other sites).
Now, I’ll answer the question on where you get the government form to make your own business (should you choose or need to). It’s nice and boring. Haha! First of all, you’ll need to know what sort of business license you want, so ‘know your entity’ as this link talks about: CLICK HERE.
As some of the authors talked about above, most of our businesses are a sole proprietorship with an LLC (Limited Liability Company). An LLC means if you get sued (someone accuses you of plagiarism or they slip on a banana peel while reading your book), you have limited PERSONAL liability (your business is sued, not you personally). For more info on LLC, CLICK HERE.
In some states, an LLC is more expensive than just being a sole proprietor, but some business owners find the extra protection invaluable.
If you live in Utah, here is where you find the form to register your business online: CLICK HERE. If you live elsewhere, just google “your state [Washington, New York, wherever],” and “business license;” you’ll get the form easily. You can also look at the following link and put in your zip code to get the form you need: CLICK HERE.
If you have any more questions (like should you have a business, what sort of business if so, if you need a sales tax license or not, selling across state lines and online, whatever), you can chat live with a government official online or call your secretary of state office. No worries. They are super friendly and informative.
Of course, if you start making more than $50,000 like Heather Horrocks mentioned? Well, I don’t know anything about that right now. Thank goodness? But my guess is you’d have to follow her advice and get yourself a business.
Taxes, taxes, taxes…
Now that you are selling books, what do you have to do for taxes? Federal? State? Do you have sale’s tax?
HEATHER JUSTESEN: You don’t have to do sales tax on your ebooks, just on your paper copies, and you’ll submit that quarterly. That’s really all I know, since I don’t do the tax end of things. Sorry!
JOLENE PERRY: No sales tax in Alaska 😀
*Steph’s note: I’m moving to Alaska! Ooh, maybe Oregon?
ME: At first when I applied to get a business license, I got a sales tax license to go with that. That means you have to do quarterlies (or monthlies or an annual, depending on what your state tells you to do). Once you apply for your license, you’ll get a letter detailing how and when the state wants you to pay). AIGH! But then when I realized I wasn’t selling or distributing my books anywhere (only through Amazon and other places where they already took the sales tax out), I was able to drop that tax license (over the phone with a friendly state office person) and not worry about quarterlies, monthlies, and whatnot anymore. BUT if you are selling your books on your own site or directly to customers, just follow the directions the state gives you to file your returns (call them for more details if needs be, since every state is different and you don’t want a fine). Some people can fill out forms online, others need an accountant. Choose whatever works best for you.
ANNUAL FEDERAL AND STATE INCOME TAXES
The Tax man’s a’coming…
HEATHER HORROCKS: Initially I set one-third of all writing income in a tax savings account so it will be there at tax time. After incorporating, taxes get trickier.
ME: Ugh taxes. Alright, I got this. My dad’s an accountant (which actually means I might be worse at taxes than all of you). During tax season, if you have formed a business, this link tells you what tax forms to fill out (under “How Do I File My Annual Return?”): CLICK HERE If you need an accountant to help you out during tax season, by all means, do so. It’s worth it (PLUG FOR DAD)!
If you’re only selling through Createspace, and/ or another similar publishing service, and only doing your transactions through Amazon, Nook, and Smashwords OR if you don’t care about having the CreateSpace imprint on the back of your book, you should receive a 1099 form or statement from these services (your royalties). For more information CLICK HERE. and CLICK HERE:
The main thing is that whether or not you have an official business yet, as a writer you have to keep track of ALL of your writing expenses and royalties. For tips to do that, CLICK HERE.
My trick is to spend more on writing than I earn, haha. Okay, okay, but someday IF I ever get the privilege of living off the money I make on writing, that won’t cut it anymore, and I’ll actually have to pay real taxes. Maybe even incorporate as Heather mentioned. So all of you keep track of your expenses and what you make now!
And for goodness sake, keep some of your earned income back for taxes (I’m quoting Heather again, AND she says a third). I’m sure the more years we pay our taxes and itemize our expenses, the more experienced we’ll be at it. And if you want to justify buying that new laptop? Well, it’s a writing expense. Hurray!
Now stay tuned for tomorrow WHEN the REAL fun begins–ebooks! We’re gonna talk ALL about EBOOKS!!!
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Hi Janine, I’m working on putting more information on the guide. If you have any particular questions, be sure to ask!
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