Just for starters, I need to make the following disclaimer: The information found in this blog is not intended as a substitute for legal counsel, and RavenSidhe Publishing does not offer any legal advice whatsoever. Any and all actions you may decide to take and any decisions you may make in establishing your own business are solely your own responsibility.
Now that that’s out of the way, let’s talk about the business side of publishing.
If you decide to create your own publishing company, one of the first things you’ll want to decide is whether to establish it as a sole proprietorship or as an LLC, a Limited Liability Company. Both have certain advantages.
A sole proprietorship is a business that has only one owner/operator. There is no legal distinction between the owner and the business; in short, you are the business. You are legally responsible for any and all of the business debts, and of course all of its profits are yours as well. Your business and you are taxed together, not separately, so it simplifies the filing of taxes.
A freelance writer would already be considered a sole proprietorship. However, if you choose to conduct business under a chosen business name rather than simply under your personal name, then you can file a form for that, known as either a DBA (doing business as) or an ABN (assumed business name.) It may cost you a small amount of money to file a DBA or ABN form, but the amount is usually fairly minimal. Whether you use an assumed business name or not, a sole proprietorship is the most common and cheapest type of business to establish.
If this type of business structure sounds appealing to you, you can learn more about it at the following sites.
As you already know, this isn’t the type of business model I decided to use for RavenSidhe. While a sole proprietorship would certainly have been cheap and easy, I liked some of the features of the LLC structure better.
An LLC is a legal entity in its own right. That means that if (heaven forbid) anyone decides to sue your company for any reason, your personal assets are at least somewhat protected, presumably leaving only your company’s assets at risk. Please note that the exact circumstances and rules may vary from state to state and case to case, but generally, the above tends to hold true. The LLC is also responsible for its own debts. As such, it has its own number, known as an EIN (employer identification number) rather than using your social security number like a sole proprietorship would do. An LLC can have either a single “member” (owner,) or multiple members (owners.) If you form the LLC with yourself as the only member, as I did, then it is still functionally very similar to a sole proprietorship, but with the differences I just mentioned.
It doesn’t have a lot of expensive and bothersome regulations like a Corporation, so it’s still relatively hassle-free. I have to submit an annual report online that basically involves filling out a brief form saying “Yes, I’m still in operation at this address, and yes, I’m still the one in charge.” I also have to submit a list of business expenses and profits to my accountant, so it can be included with my taxes. Not too onerous, responsibility-wise, and nowhere near as complicated as I had once feared. I don’t know how it would be in states other than Idaho, but it should be easy to find out the regulations/requirements for your own state. Here are some links that will tell you more about the LLC. I particularly like the first one because it makes it all seem very easy and straightforward, and it even has a helpful little video.
If you reach the point at which you want to create an official LLC, then you’ll need to go to the website for the Secretary of State for your state to get the forms to acquire a Certificate of Organization, or whatever similar form your state requires. For Idaho, it’s http://www.sos.idaho.gov/corp/llc_form.html. Your own state will have a similar website. Filing fees will vary from state to state, and obviously some states’ fees will be more expensive than others. Idaho’s fee was $100.
The IRS website has all sorts of helpful links, forms and publications for different small business entities, including the form to fill out to obtain an EIN, as previously mentioned—the Employer Identification Number. And here’s the best part: the EIN is free. No filing fee. You want one, you get one, often within moments. No wait, no hassle. (Amazing, right?) Here’s a link you’ll want:
I wanted to mention one last thing for this week. There are plenty of websites and legal companies that offer their services in filling out and filing forms for you—for a fee. I promised I’d tell you how I created RavenSidhe on a shoestring budget, so let me just add that I did not use any of these form-filing services. I found and filed the correct forms myself, and paid only the fees I already mentioned above.
Yes, it may be easier to have someone else look up the forms you need and file them for you, and if you have plenty of money to avail yourself of those services, more power to you. But I did not have money to pay someone else to file my forms, so I went to the effort to find out what I needed to do to make things all nice and legal, and I filled everything out and submitted it myself. Having only a small amount of seed money to start the business with made me very frugal and budget-conscious. (And yes, we’ll definitely talk budgeting in a future post.)
The caveat to the above paragraph is that every state is different, and every state makes its own rules for what steps you need to follow in establishing your business entity. Idaho’s rules governing the establishing of a business are amazingly simple, but that may not be the case in all states, so of course you’ll need to look into the specific requirements for your state. If your state happens to be one where they require you to have your forms filed by a lawyer, then you might need to check into retaining a contract lawyer to help you. Most states have some form of cheaper legal aid for people who just need a few papers filed.
Whatever decision you make about whether or not to start up an independent publishing company or just produce books as an individual author, it’s always good to know what your options are and what the potential benefits or hassles might be. In my opinion, it’s always best to know as much as possible about what you’re potentially getting yourself into.
Next week: Making a business plan and how it’s useful.