Something many self-publishing entrepreneurs ask at some point in their writing career.
Starting your own book publishing company is an important step to not only helping your book sales, but also protecting yourself in the process. However, for many, establishing your company can sound pretty tedious and over the top.
But starting a publishing company is no longer as arduous of a task as it used to be.
Back in the day, it would require you to do a lot of research, find particular paperwork for whatever state you were going to set it up in, and get legal representation to aid you through the process.
However, this crazy torment is no longer required thanks to online services — which we’ll get into later — that will help you every step of the way and do most of the work for you.
In this article, you will learn:
- What benefits a LLC or publishing company can give you and your books
- What version of a corporation you should choose
- What you NEED to know before setting up a publishing company
- How to start your own publishing company online
But before I can get into this process, I must first make a quick disclaimer: although I have a lot of experience in setting up LLCs, I am by no means a lawyer or CPA and cannot speak on their behalf. If you have any questions, it is best to seek the legal advice of a professional before moving on.
Why would a self-publisher want to start their own Publishing Company?
To some, starting a company might sound like overkill…but that’s far from the truth. The fact of the matter is, if you intend to learn how to publish a book or have already done so, there are 3 major reasons why you should publish it under your company and not yourself.
It Grants You Legal and Financial Protection
If you don’t have a company, and your book, product or service gets sued, then your personal finances and public record will be at major risk.
Starting a company gives you legal protection and helps to distinguish between the business’s finances and your own personal finances. The courts, or collection agencies, could not come after you and could only come after your company’s assets.
Not that we’re going to do anything illegal, but it is nice to know that your personal assets are not at risk.
For publishing, this is very important because there has been a rise in copyright infringement and other accusations on the Kindle platform and other eBook sales sites. In many cases, the claims are unfounded, but they are still very real.
Woo Hoo! Tax Advantages!
First, it helps to differentiate between your personal income and the business income.
So say for example you and your family bring in $100,000 a year and your online business brings in another $100,000 a year. If you did not set it up as a company, then your net income becomes $200,000 a year, which in some cases will put you in a different tax bracket. Ouch!
However, if you start an LLC or corporation, then you get taxed based on your income, and the business gets taxed on its income. If handled well, this can be a really big benefit to you and your business.
Another important tax advantage is that you can write off certain business expenses, which will save you a lot of money.
For example, the business just paid for me to attend the Tropical Think Tank Conference this summer with Chris Ducker, John Lee Dumas and Darren Rowse. And that large ticket price… Paid for by Ebookpreneur, LLC. Tax deductible…which is nice.
Why Have Just One KDP Publishing Account?
Another added benefit to starting a publishing company is that you’ll be able to start up another Amazon KDP account.
The terms of service state that you can only have one KDP account.
However, the cool part of owning your own publishing company is that your company has its own EIN and bank account, which allows it to open its own KDP account. So now you can have two, and the second one is a publishing account, which comes with added benefits.
Why should you care about having another account? Well, you can have more author pages, as well as use more pen names. But also, it’s nice to have a little bit of redundancy to fall back on in case something bad happens.
Things You Should Know Before You Start Setting Up Your Very Own Publishing Company
Before we dive into the step-by-step process on how to start your own book publishing company, we need to look at some of the things you should think about first.
What Form of eBook Publishing Company Should I Start
Before you can start creating your own eBook company, you need to choose which type of business structure you would like to create.
There are many different types of businesses like S-Corporations, Sole Proprietorship, General Partnership, Limited Liability Companies and more. Each one has its own pros and cons, but in the end, I believe that the Limited Liability Company (LLC) is the best one for publishers.
I have heard an LLC be referred to as a Corporation, however, no matter what you call it, it is not a Corporation.
While not a corporation, it still provides adequate protection of assets without being as difficult or expensive as setting up a Corporation.
Furthermore, an LLC is more versatile and allows you to tax it as a Sole Proprietorship, Partnership, C Corporation or S-Corporation. Basically, it is the best of all worlds and fits nicely in the self-publishing business structure. Here’s a great article that discusses in more depth the difference between a Sole Proprietorship and LLC, the two that most likely will fit most self-publishers.
Don’t believe me, check out the bottom of many of your favorite authority authors or bloggers and you will see those magical LLC letters. But, before you make a decision on which is best for you, make sure to do some extra research on each. To find out more about each type, you can check out the IRS’s page on business structure — okay, that made me feel a little dirty referring people to the IRS…haha.
Selecting a Name
Think good and hard about this one.
Although the name of your business doesn’t need to reflect the name of your actual business, it can still cause problems if they aren’t the same.
Also, it is a good idea to have backup names ready just in case yours is taken. The good news is that the name availability is state specific, meaning that even though a company may have registered the name in New York, if it hasn’t been registered in the state you are filling with, then it is available.
Selecting a Location
When setting up an LLC, many self-publishers will make their home their place of business since they need a physical place for their company.
This is a bad idea because your information will be public and debt collectors, lawyers, and random people will know where you live. So what can you do instead?
Rent a Physical Location: I don’t think I need to explain that this option is very costly and isn’t really a viable option for most of us.
Get a UPS Mailbox: It’s important that you get a UPS mailbox because most states do not allow you to put a P.O. Box number on the application. Luckily, UPS gives you a mailbox number that looks like a regular address. By choosing this option, you will need to show up in person to setup you mailbox. That means the state in which you decide to setup your LLC will be completely dependent on your ability to physically get there. But once you setup your mailbox, you can also have them forward your mail to your real address so that you don’t have to actually go there to get your stuff. I’ll explain later, though, why you might want to setup your LLC in a different state.
Setup a Virtual Office: Virtual Offices are my favorite option. These are professional offices that give you a specific mailing address, collect your mail, forward it to you, and can also be your Registered Agent (extra level of personal protection). Furthermore, most virtual offices will give you a 1-800 number and will record and send you voice mail to you electronically. This option is great for those of you who travel or if you reside in a state that has awful business taxes. Furthermore, you don’t have to go there to set it up. You can do it from your home in a different state, or from a different country–like Sri Lanka like I did 😉
Now, for those of you thrifty business people who are looking for tax breaks or lower annual registration costs, here are a couple of the states that most setup their business in.
If you live in one of these, then great…otherwise you will need to setup a virtual office there OR setup your UPS mailbox within that state to legitimately create an LLC in that particular state and reap their tax benefits.
*Of special note, Nevada just recently created a “Licensing Fee” which includes an extra $200. So, if you are doing extra research and keep seeing Nevada listed as #1 for entrepreneurs or starting a business, check the date the article was written. They increased their Annual Renewal Fee from $125 to $325.
**Unlike the other two, Texas’ Annual Renewal Fee is PER partner. So if you and your spouse are members of your LLC, then you will pay $400 per year to renew your LLC. OUCH!
***While Texas claims to have a “No Business Income Tax,” they do tax on something called “Gross Receipt Tax” which taxes a company on the total gross revenues, instead.
Don’t take for granted some of the above metrics or statements.
Although the three listed above share many of the same attributes, most states do not have many of these. Out of the 50 states, only 7 states offer no business income tax, but a couple of them have a secondary tax which is basically an income tax, but called something else — like Texas does.
I have personally setup a corporation in both Nevada and Wyoming with Wyoming being my overall favorite.
However, again, make sure you do your research before making such a big decision.
Originally, I setup in Nevada. But when I went to setup Ebookpreneur LLC, I did my research again and discovered that things had changed since I last did my research and started up my other two.
So be diligent in your research.
Setting Up Your Book Publishing LLC
Setting up an LLC, corporation or sole proprietorship is actually quite simple. When I created mine, I used a service called My New Company. I personally selected a LLC, chose my virtual office in Wyoming, and even designated them to sign corporate documents for me (added privacy).
Check out the video below to see how I did it in under 10 minutes.
And just like that, you could be a President/Owner/Founder of your very own publishing company.
Pretty cool huh? Now was that so hard?
Books I’d Recommend to Prepare for Running a Publishing Company Smartly
Jumping into setting up a LLC, Corporation or Sole Proprietorship can seem pretty monumental and if you’re like me, then you probably like to do your research. Before I jumped into setting up my LLCs, I did my fair share of reading. Here are three books I’d recommend based on where you are at with the process and areas in which you should know more so as to better manage your company once off the ground.
LLC vs. S-Corp vs. C-Corp is a great book for those who aren’t sure whether or not they should start a LLC, S-Corp, or a C-Corp. It goes into GREAT detail on each one, their benefits and how to effectively run each. Highly recommend this book for those that are stuck on that particular step of the publishing company setup process.
The Tax and Legal Playbook is my favorite book for helping me to understand taxes and how to operate my small business. It was a great combination of conservative as well as risky but helped me to figure out to TRULY get the best tax benefits from my LLCs and ensure we are operating legally as well. Some of the best money I’ve spent.
The Self-Publisher’s Legal Handbook is a must own for any self-publisher. Although it doesn’t dive deep into the business setup of things, it does give keep data on copyright laws and infringement. It will help you to understand your rights as a publishing company and help you to mitigate any pit-falls.
Need More Information about Starting a Company?
I’m a big fan of learning more and ensuring I’ve got a handle on something before I get going. Here are a couple of articles I found useful when I was doing my original searches:
- When Should Writers Incorporate: Some really good points in helping you decide ‘when” the right time is for Incorporating.
- List of Resources for Setting Up a Publishing Company: This quick guide is great for the terminology and list of resources in each of the steps.
- How to Form a LLC by WSJ: Who better to give you more information than the Wall Street Journal in setting up your own company?
- 6 Mistakes to Avoid When Setting Up Your Corporation or LLC: What more can I say from that title than make sure you don’t make any of these mistakes.
- Pat Flynn’s Personal Details on Setting Up His LLC: Pat Flynn of SmartPassiveIncome.com does an excellent job of showing why and how he did his LLC setup.
- Nuts and Bolts: Nitty-Gritty Details, Incorporating, and Taxes: This one is my favorite.
So, what are you waiting for?
Thanks to services on the Internet, it is easier then ever to setup your own LLC or Corporation.
Although there are added annual costs to making your business an official business, the benefits of stating your very own publishing company will quickly outweigh this. Better taxes, increased personal security, and more publishing capabilities were all reasons why I started 3 different LLCs to support my entrepreneurial habits.
Now that you know how to start your very own publishing company, get started and become a book publisher today.
If you have any questions along the way, don’t hesitate to ask me but please remember that I am not a lawyer….just an experienced entrepreneur.