Over the past few months, we’ve talked about what it means to be an ‘indie’ author and why some writers choose this path. Today we’ll discuss how to turn your writing into a business by starting your own publishing company. While today’s publishing platforms don’t require you to start a business in order to publish your work, doing so offers many advantages—maximizing tax write-offs, controlling and protecting your work, shielding your personal assets in the event of a lawsuit, conveying professionalism, and, of course, the pride of running your own business.
Indie Navigator founder Mary Shafer believes that starting a publishing company can create plenty of value for self-publishing authors, whether you’re about to publish your first book or you’ve been at this for a while. “Creating a publishing company does two main things: it establishes you as a serious indie publisher who may or may not handle the work of other authors, rather than simply a self-published author. It sends the message that you take the business end of publishing seriously, even if you only publish your own work. Second, it gives your products a professional quality that makes them a lot more attractive to book buyers, librarians, and other parties who may be interested in buying or licensing rights to your work. Plus, it makes your company a lot more attractive to buyers should you ever decide to retire. ‘Sun City Press’ is a lot more impressive-sounding and easy to market as an imprint than ‘Joe Schmoe Books.’”
While I don’t claim to be a tax or legal expert, going through the process of starting my own publishing company a few years ago taught me valuable lessons that should make the experience easier for you.
Begin with the end in mind.
Before you launch your publishing venture, think about what you want to build. A clear vision at the beginning will help you create the right foundation to support your goals. It will also help you answer many of the questions that will come up later in the process. Before you fill out any forms or file any paperwork, consider the following:
- Are you launching this publishing company by yourself or with a partner?
- Do you plan to publish your own work or will you publish other authors as well?
- Will you produce and sell only books and book-like products (such as audiobooks) or do you plan to offer other products (such as merchandise, courses, or podcasts) or services (such as editing, ghostwriting, consulting, or speaking)?
- Will your publishing company specialize in one genre (such as business books or historical fiction) or will you publish a variety of genres?
- What income level do you realistically expect to achieve within three to five years?
- What do you hope your business will look like in five years? Ten years?
- What skills do you possess that would be an asset to your publishing company? What activities will you need help with?
Your answers to these questions can impact everything from the name of your company and the business structure you choose to how you handle bookkeeping and set up your website. For example, knowing upfront that you hope to offer products and services beyond books might steer you away from a self-limiting name like “ABC Books.” Imagine how different your bookkeeping or website needs might be if you’re planning to publish your own work at a rate of one book per year versus publishing several authors with multiple products.
Choose your business structure.
Depending on where you live, multiple business structures will likely be available, each with its own tax and legal implications. Here in the United States, you could set up your publishing company as a sole proprietorship, limited liability company (LLC), S-corporation, partnership, cooperative, or corporation. The Small Business Administration is a useful resource for choosing the structure that best aligns with your business goals and identifying the paperwork you must file to officially establish your company. (If you live outside the U.S., you can find your country’s small-business resources by searching “How to set up a small business in [name of your country].”)
Helen Sedwick, author of Self-Publisher’s Legal Handbook, thinks it makes sense to approach self-publishing as a business. “Our tax code encourages people to start new businesses. In fact, the IRS expects businesses to lose money at first, so the tax code provides tax breaks to help offset early losses. If you are publishing independently with the goal of making money, then you are entitled to enjoy these tax benefits like any other entrepreneur. The key is to operate as a business and not as a hobby. If your writing and publishing activities are considered a business by the IRS, then you may deduct writing-related expenses from non-writing income. In contrast, if the IRS considers your activities to be a hobby, then you may deduct writing expenses from writing income only. This can cost you real dollars.”
If you’re a do-it-yourselfer, sites like LegalZoom can guide you through the business formation process. At this stage of the game, however, paying a lawyer and/or accountant for advice can be invaluable because they will ensure that you consider big-picture ramifications, like how your business structure affects your annual tax obligations. Plus, laws and tax codes change frequently; a professional advisor will know about changes that affect your business so you don’t have to.
Once you’ve chosen your business structure and filed the appropriate paperwork, you will receive an identification number. In the U.S., this is known as your Employer Identification Number (EIN) or Tax Identification Number (TIN), which is the business equivalent of your Social Security number. Keep this number handy, you’ll need it to complete the next step.
Build your infrastructure.
Before you can get to work, you’ll need to set up a handful of accounts. The following list includes vendors I’ve used, but you should tailor your list to your specific needs:
- Business bank account – Now that you’re running a business, you’ll want to keep your business finances separate from your personal finances. It will not only make tax time easier but also help you protect your personal assets in the event of a lawsuit. Use your business bank account for depositing your income and paying for business expenses. You can open a bank account in your business’s name using your tax ID number. Be sure to vet a few different banks to learn about their requirements (like minimum balances) and the fees they charge for business accounts.
- PayPal – Your publishing company will need to purchase goods and services from various vendors (think business cards, editorial services, web design, etc.). You might also decide that you want to incorporate e-commerce functionality into your company’s website so you can sell products directly to customers. A PayPal account is extremely useful for making and accepting payments online. Again, in the interest of keeping your business and personal finances separate, set up a PayPal account in your publishing company’s name and link it to your business bank account.
- Square – If you’re at an event, like a speaking engagement or book festival, and someone wants to buy your book with a credit or debit card, the sale will depend on your ability to accept these forms of payment. Fortunately, you can get a free Square credit card reader that plugs into your smart phone, and the processing fees are relatively inexpensive—especially when the alternative is losing the sale. (PayPal also offers credit card readers.)
- Bowker – In order to sell books and book-like products, you’ll need to purchase International Standard Book Numbers (ISBNs). An ISBN is the 13-digit number found on the back of a book in barcode format (prior to 2007, ISBNs were 10-digits long). Internationally recognized, an ISBN is linked to key information about your book (like title, author, publisher, what the book is about) and is intended to simplify distribution and sales. It’s essentially your book’s fingerprint and is key to discoverability. Technically, you can publish a book without an ISBN, but you’ll have a much more difficult time getting your title into bookstores and libraries. Bowker is the official ISBN agency for the United States and Australia. (If you live outside the U.S. or Australia, you can find out how your country issues ISBNs here).
- GoDaddy – Your website will be one of your company’s most important marketing tools. It will tell the world who your company is, what products you offer, and might even function as a sales channel. GoDaddy is the world’s largest domain retailer, and they can set you up with a web address, provide hosting, and even design your website.
- Vistaprint – Speaking of marketing, Vistaprint is a useful resource for producing custom marketing materials to help you promote your business and products. They offer business cards, bookmarks, postcards, signs, posters, and more.
- CreateSpace – Owned by Amazon, Createspace is a print-on-demand publishing tool that enables you to publish trade paperbacks and sell them on Amazon sites worldwide without having to pick, pack, ship or worry about inventory. (You can also to use it to create and distribute CDs, DVDs, and films.)
- IngramSpark – Owned by Ingram Content Group, the world’s largest wholesaler of print and electronic books, IngramSpark is a print-on-demand publishing and distribution tool that enables you to distribute print books and e-books to independent bookstores, bookstore chains, internet retailers, and specialty markets, as well as other wholesalers. Essentially, IngramSpark is to Ingram what CreateSpace is to Amazon.
- Kindle Direct Publishing (KDP) – Owned by Amazon, KDP allows you to publish Kindle e-books and sell them in Kindle stores worldwide.
- NOOK Press – Owned by Barnes & Noble, NOOK Press allows you to publish NOOK books and sell them in NOOK stores worldwide. You can also publish paperback and hardcover versions and sell them on bn.com.
- iBooks Author – Owned by Apple, iBooks Author enables you to publish e-books for iPad and Mac and sell them in Apple’s iBooks Store.
- Kobo Writing Life – Kobo Writing Life allows you to publish and sell e-books in Kobo’s Ebookstore.
- Smashwords – Smashwords is an e-book distribution platform that reaches Apple’s iBooks Store, NOOK Store, Kobo’s Ebookstore, and hundreds of smaller e-retailers.
- Audible Creation Exchange (ACX) – Owned by Amazon, ACX is a platform for creating, publishing, and distributing audiobooks via Amazon, Audible, and iTunes.
Many of the publishing vendors mentioned above overlap in the distribution channels they reach. There’s no one right way to use them. Your mix will be determined by how many titles you have available, the level of flexibility and control you desire, and the amount of time you want to spend managing book sales. Some publishers sell directly in multiple channels to maximize royalties and maintain a high level of control over sales activities (such as pre-orders and promotions), while others prefer to save time and simplify the process by using one platform, like Smashwords or IngramSpark, to reach many retailers.
Set up a bookkeeping system.
Depending on the complexity of your publishing business, bookkeeping can be as simple as tracking income and expenses in Excel to using accounting software, like QuickBooks, or even outsourcing it to a company like Bench. Though bookkeeping may be one of the less glamorous aspects of running your own publishing company, understanding and monitoring the financial side of your writing and publishing activities has major upsides:
- Tracking business expenses helps you maximize tax write-offs. You’ll also be more organized when tax time rolls around.
- You’re less likely to lose your shirt if you monitor your income and expenses closely.
- You’ll have the information necessary to make better decisions. For example, tracking how sales are impacted by promotional activities helps you understand which tactics are worthwhile.
- Measuring your progress against your goals allows you to course correct when necessary.
Build your team.
Running a publishing company can be a full-time job. To preserve your writing time, you’ll likely need to hire people to help with activities that aren’t in your wheelhouse (or aren’t the best use of your time).
BookSavvy PR founder and president Sharon Bially believes that certain tasks, like book publicity, are better left to professionals. “While most authors can handle their own social media networking (and should!), generating media visibility is a tricky, complicated process with all sorts of nuances and politics to understand. That’s why there are PR firms and publicists: generating publicity truly is a profession that can take decades to learn. It’s also exhaustively labor intensive, with many dozens of moving pieces to keep track of. If you want to make sure that all your bases are covered, that you are communicating with reporters and reviewers in a way that resonates with them and will stick, and—importantly—if you don’t want to set yourself up to become overwhelmed by taking on a job you’re not familiar with in addition to all the other responsibilities on your plate, it is so important to entrust this to a pro. Then you’ll also have the peace of mind that it’s being done thoroughly, and right.”
If you’re tempted to do everything yourself to save money, remember that the savings comes at a cost: an opportunity cost. The time you spend learning a new skill is time you could have spent creating your next product. Fortunately, tasks like editing, book formatting, graphic design, web design, and book publicity can all be outsourced, and there’s no shortage of professional freelance talent available to help you. Here are a few places you can search to find the help you need:
- Upwork – A marketplace of freelance professionals, including virtual assistants, bookkeepers, editors, artists, and more.
- Editorial Freelancers Association – The largest and oldest national professional organization of editorial freelancers. Members include editors, writers, indexers, proofreaders, researchers, desktop publishers, translators, and others who offer a broad range of skills and specialties.
- 99 Designs and DesignCrowd – Online marketplaces of talented freelance graphic designers who can help with logos, websites, business cards, book covers, branding, and other custom projects.
- Your local chamber of commerce – Don’t overlook the talent that exists right in your backyard. Connect with your local chamber of commerce to discover the professionals working in your own community.
Starting a publishing company doesn’t happen in an afternoon (but then again, neither does writing a book). Spending the time to plan your vision and build a framework that’s aligned with your goals will not only enable you to enjoy the advantages of being a business owner but also support your growth for years to come.
Are you thinking about starting a publishing company? What questions do you have about the process? Or, if you’ve already started a publishing company, what helpful tips can you share?