As an independent publisher, you may be wondering if you should create a self publishing company, and if so, how to do it.
Should I create a self publishing company?
You don’t need to create your own company to publish your books, but you should strongly consider it. A few reasons to create your own company are to:
- make your work look more professional: For example, if you choose to publish without creating a company, the Amazon page for your book will show “Independently published” or “CreateSpace” in the Product Details section. Some people have negative connotations towards independently published books, and having a publishing company associated to your title may prevent some from dismissing your work out-of-hand.
- publish multiple books: If you plan on publishing multiple books, the benefits of a publishing company would likely outweigh the startup costs of creating a business.
- tie together works by multiple authors with a similar theme: If you think you might want to help other authors publish their works, creating a publishing business supports clearer infrastructure for providing royalty payments and managing taxes.
- market your works: A publishing company lets you consolidate marketing for multiple works. You can have a single website that lists all of your books, a single instagram account that you can provide status updates through, etc. You can also do this with a website or social media accounts that feature your name without having a formal company.
- provide you with liability protection: If you plan on hiring staff (this does not include hiring independent contractors like illustrators) or writing about topics susceptible to libel accusations, some types of companies may provide you with additional protection by protecting your personal assets from potential debts, losses, and lawsuits associated with your business. However, it is unlikely that your business or work would need this type of protection.
How do I create a self publishing company?
Most people who create companies to publish their independent books create either sole proprietorships or LLCs (limited liability companies).
From the U.S. Small Business Administration:
A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.1
An LLC is considered a type of unincorporated association, not a corporation, even though it is a business entity. Similar to a corporation, though, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, including the benefit of pass-through taxation and greater management flexibility in allocating profits.2
Creating a Sole Proprietorship
Shockingly, you don’t need to do anything to create a sole proprietorship if your sole proprietorship is in your own name. Simply performing business activities under that name is sufficient for you to be a sole proprietorship.3
It’s slightly more complicated if you choose to do business as another name. In that case, you must register your business locally. In Massachusetts, this means filing a Doing Business As (DBA) form with your local town or city.
And that’s it!
If you want, you can apply for an Employer Identification Number (EIN) from the federal government, but this is not necessary if you don’t have employees.
Creating an LLC
Creating an LLC is more complicated and more expensive than creating a sole proprietorship. For example, in Massachusetts, registering your LLC costs $500, and your LLC must have liability insurance. Each state will have different requirements for your LLC. In Massachusetts, you need 4:
- A unique name that includes “Limited Liability Company” or a variation of “LLC”
- An explanation of the type of business and any necessary regulation certificates
- Liability insurance
- Business address
Check your state’s website for information specific to your state.
What type of company should I create?
I highly recommend that you speak to a professional in your area to get their advice. I spoke to a financial manager and a tax accountant. Both strongly recommended I go with a sole proprietorship over an LLC. I was told that an LLC may provide me protection if I have employees (people on payroll), but didn’t do much else for me. The additional cost and complexity of creating an LLC meant that a sole proprietorship made much more sense.
Business image by rawpixel from NeedPix