You recently read about the advantages of having self-publishing imprint in our latest "Notes from the Field" post by BW author, Carole P. Roman. Shortly thereafter, our Author Branding Expert, Dave Chesson, shared with us the story of an ordeal he endured that further underscored the value of having a legally registered company for your writing business. We asked him if he would be willing to talk about that for the benefit of his fellow authors and happily, he agreed...
Have you ever been kept awake, unable to sleep or even eat, as a consequence of your writing?
I have. In fact, I went through the most difficult legal situation of my life as a result of a book I published.
It was a truly testing time. It made me question myself and what I was doing. I knew I was innocent of the accusations. But it still shook me to my core.
What happened exactly?
Someone threatened to sue with a false allegation of plagiarism. It turned out it was a competitor seeing an unfair advantage.
As a result of that incident, I learned all about protecting my writing business legally.
Now this shouldn’t be taken as legal advice. Instead, it’s just a story of caution, author to author.
The Benefits of Starting a Company
Starting a company when you are an author might seem like a strange step. After all, you might rightly see yourself as an artistic individual, not a business entity.
However, by taking the time to officially set up a company, you experience a range of key benefits.
- Legal protection. When you start a company, it is considered a separate legal entity from you as an individual. That means if you should face a situation where you get sued or get into any other form of legal trouble, your personal assets are not at stake.
- Tax benefits. When you have a legally registered company, you are able to deduct certain things from your taxes. This means that laptops you purchase and other expenses, such as specialist author software, can be deducted from your company’s taxes.
- Extra KDP Accounts. When you register a company, you are able to set up an extra Kindle Direct Publishing account. This allows you a whole new set of pen names to publish under.
The effort of setting up a legally valid company is rewarded by the above benefits.
However, setting up a company for your writing business might not be the right move for every author.
Read on to discover whether it’s the right step for you to take.
When to Start a Company as an Author
So when exactly should you make the move from being a single author operating as yourself to operating under a company?
There’s no exact science. You should always weigh the pros and cons as they relate to your personal situation.
However, I believe that if you fulfill any of the following criteria, you should strongly consider setting up a publishing company to operate under:
- Your revenue from publishing your work as an author is greater than $2000 per month
- You write in niches or about subject matter that could potentially attract legal action on the grounds of it being highly technical
- You are a traveling digital nomad who wants to make sure their taxes are handled in a legitimate way even while you maximize your time as you journey around.
If any of the above apply to you, you should definitely consider whether it’s worth it to take the first step in setting up a company for your author activity.
So how can you as an author take the first step and begin operating as a company?
How to Take the First Step
The first choice you will have to make is if you want to do the process yourself or whether you want to have someone else carry it out for you.
I’d personally strongly suggest spending the money if you can afford it and getting someone to take care of it for you. There’s nothing like the peace of mind that comes with knowing a qualified legal expert is handling things the right way.
I offer a full guide for writers who wish to start a publishing company free over at Kindlepreneur.
However, whether you decide to go the solo route, or have someone deal with it for you, first consider the following things:
- What will the name of your company be? You want to ensure no one else has taken it, it represents your brand well, and adheres to local laws and rules.
- How does the cost of the company fit in with your overall financial plan as an author? You want to ensure you’ve budgeted out the financial side of publishing.
- Check out the tax implications. Registering as a company will almost certainly change the way you do your taxes. Don’t hesitate to seek out specialist tax advice if you’re at all confused.
- Consider which location to register in. Different states have different rules and regulations. Carefully select the best choice for you.
- Think about the type of company you want to register. The legal structure you choose will have implications for how you operate.
Take your time thinking all of the above through. It’s vital to protect yourself, legally speaking.
By the same token, you shouldn't rush into setting up a company.
Make all the decisions on the basis of logical and careful thought. The time you invest will pay off in the long run.
- Notes from the Field: The Advantages of Having an Imprint by Carole P. Roman for BookWorks.com blog
- Author LLC: When Should Writers Incorporate? by Helen Sedwick for BookWorks.com
- Own Your Author Business in 7 Steps by Carla King for BookWorks.com
- Should Indie Authorship Be Its Own Business? by Ron Callari for BookWorks.com
Protecting Your Writing Business – Final Thoughts
If me going through my legal nightmare has put me in a position to help others, then it was worth it.
I truly don’t want you to go through what I went through.
Please consider the questions in this article and do what you need to do to protect yourself as an author.
I’d love to hear your own experiences in the comments. Have you faced a legal challenge of your own? Have you taken the time to set up a company for your writing business?
It would be awesome if you let me know!
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