How To Start Your Own Publishing Company – 10 Essential Steps

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publishing-company

Disclaimer:  This blog post is for informational purposes only.  I am not a lawyer or accountant and am not giving legal advice.  Consult with a tax professional and lawyer before making decisions regarding your business.

As an author, have you considered starting your own publishing company?  Many self-published authors are now choosing this option.

In fact, this is what my husband CJ and I have done.  We started Body and Soul Publishing in 2012 and haven’t looked back yet.

Three Reasons to Start an Independent Publishing Company

 1)    It looks more professional.

When you start an independent publishing company, you can then register your ISBN with your company name as the publisher.  This will show up on your book sales page and looks more professional than “Createspace” or “your name” as the publisher.

2)    It separates your book publishing activities from your personal income and assets.

It can be helpful to have your business and personal finances separate for tax purposes.  In fact, sometimes it can save you money!

Also, when you form a LLC or S-corp, it shields your personal income and assets from lawsuits that may occur.  Lawsuits are very rare in our type of business, but some people prefer to have this extra layer of protection in place.

 3)    It gives you more options.

[pullquote position=”right”]Once you establish your independent publishing company, you have more options.[/pullquote]  You may even choose to publish other author’s books with your publishing company listed as the publisher.

10 steps to forming your own independent publishing company

 #1:  Make a Decision

The first step to start your own publishing company is to make the decision.  You need to decide that you want to make writing and publishing books a business and not just a hobby.

This is a huge mindset shift for most authors. 

And a necessary one.  I found that once I made this decision in 2012, I became much more serious about investing into my publishing business.  And as I focused more on book marketing, my career as an author took off.

Are you ready?  If so, it’s time to go to step #2.

 #2:  Research Your Options

Now it is time to research your options.  Make sure to know what options are available in your country.  Since I live in the US, I researched three main options:

  • Sole Proprietorship
  • LLC
  • S-Corporation

A sole proprietorship is an unincorporated business that you run yourself.  In the US, you claim this under your social security number for taxes.  This is the easiest way to start.

An LLC is a limited liability company that is taxed similarly to a sole proprietorship.  However it is an incorporated business and separates and protects your personal assets from business assets under limited liability.

An S-Corporation is an incorporated business and gives more tax advantages and savings.

Although you don’t need to know every detail about each option, I do think it is wise to do some basic research before consulting with experts.

#3:  Consult With Experts

It is important to consult with experts before making decisions about your business.  Many lawyers and accountants offer a free consultation to answer your questions.  They can advise you on the best path for your particular situation. 

For my husband and I, it was recommended that we start an LLC that is taxed as an S-Corp as this would save us thousands of dollars in self-employment taxes.  However, each person’s situation is different.  So, make sure to consult with a lawyer and an accountant for advice on how to proceed.

#4:  Decide on a Business Name

Once you decide on which type of business to set up, you now have the responsibility of choosing a name.  Ensure your name is not trademarked or already taken in your state if you live in the US.

You also want to choose a business name that is professional and fits your brand.  Don’t rush this step as your business name will stay with you a long time!

#5:  Finalize the Business Type

Now that you have your business name chosen, you can finalize the set-up of your publishing company.  When we first started Body and Soul Publishing as a sole proprietorship, I filed a DBA (doing business as) with my state.

I then received paperwork that listed my EIN (employer identification number) which would allow me to open a business bank account.  I also used that EIN to file 1099’s for my contractors and to file my taxes for our business.

However, once we decided to incorporate as an LLC, we had our tax guy set it up for us.  He charged a minimal fee and made sure it was done correctly.

#6:  Set Up Your Business Bank Account

Once you have your EIN, you can now apply for a business bank account.  Each bank has a different process and requirements for setting up a business account.  Therefore, consult with your local bank for more details.

You may also want to set up a business Paypal account for transactions online.

#7:  Set Up an Accounting System

Bookkeeping used to be a bad word in our house.  However, once we learned how to properly use accounting software and set up our bookkeeping correctly, it actually helped to decrease our stress.

We consulted with an accounting service and paid a small fee to have them help us set everything up.  She recommended that we buy the cheapest version of Quick Books we could find at an office supplies store.

She said she preferred the computer software versus the online version as it gives you more control, it is easier to export data for your accountant or bookkeeper, and it tends to be cheaper.

Make sure you implement a system for tracking your receipts.  You also want to be very careful to never buy personal items with a business account and vice versa.  You want to be organized and keep things separate.  This will make life much easier come tax time!

#8:  Register a Domain Name for Your Business

I highly recommend you register a domain name for your business.  This is another way to add more professionalism to your company.  It can also be a place where you post a listing of your published books.

I have recently started using the My Book Table plugin on my author site and recommend it.  It makes it super easy to add book pages and buy links for your books.  You can see how I set it up here.

#9:  Learn the Laws Related to Your Business

Make sure you learn the laws related to your business.  For example, in the US, there are laws about collecting sales tax when you sell books at live events and it differs from state to state.  You may also need to register for a sales tax license in your state and/or your city.

#10:  Celebrate Your Success!

Now it is time to celebrate your success.  You have formed your own independent publishing company!

My Personal Story

In 2012, we started our independent publishing company.  Initially, we created a sole proprietorship because it was the easiest way to start with the least expense.

However, this year (2014) my husband and I got hit really hard by taxes.  Therefore, we decided to set up an appointment with a local “tax guy.”  Fortunately, our appointment went really well and we decided to officially incorporate our business as an LLC, filing taxes as an S-Corp.  We have a long to-do list, but I am confident that next year will not be as stressful, which is such a relief!

The bad news?  If we would have consulted with this same “tax guy” last year, he could have saved us thousands of dollars on self-employment taxes this year.

Ouch.

We will definitely be hiring him to do our taxes next year!

Have you ever learned a lesson the hard way?

I have many times.

And it seems I learn more from my mistakes than I do from my successes.  It is in the difficult and painful seasons of life that I grow the most.

I’ll be honest…there are days I feel like giving up.  I ask myself, “Is this really worth it?”

Occasionally God will give me a small glimpse of the impact my life is having on others.  In fact, this very week I was encouraged by two authors that personally thanked me for helping them publish and market their books.  They are both successful authors today.

So I will close with some encouragement for you (and for myself) as we embark on this journey of writing and publishing books.

 “Never, never, never give up!”

I encourage you to learn from your mistakes and keep making progress toward your goals one step at a time.

Share Your Experiences

Have you started an independent publishing company?  If so, share your business name and website in the comments below as well as any advice you have learned along the way.

Shelley Hitz
Shelley Hitz is an award-winning and internationally best-selling author. She is the owner of TrainingAuthors.com and is passionate about helping authors succeed in publishing and marketing their books. And she teaches from personal experience. Shelley has been writing and publishing books since 2008 and has published over 30 books including print, eBook and audio book formats. She consistently ranks in the top 100 authors for her category on Amazon.com.
Shelley Hitz
Shelley Hitz

Comments

  1. Shelley, I agree that every self-publishing writer should create a publishing company, but I want to give you some more information.

    First, even a sole proprietorship can get a Federal Employee ID Number (EIN), even if there are no employees. It’s a great way to protect your Social Security Number and separate your business venture from your personal finances. Readers should go directly to the IRS site to apply, since there are scam sites that troll for your personal information. http://www.irs.gov/
    Also, using an LLC to reduce self-employment taxes may not work for everyone. Like you suggest, talk to an expert.
    In June, I will be releasing a book on these topics and more–Self-Publisher’s Legal Handbook.

    • Helen,
      Thanks for your feedback. And, yes, sorry if I didn’t make that more clear, but as a sole proprietor it will still technically be under your SSN but you can get a federal EIN to use. This is what we did and filed a DBA “doing business as” using our publishing company name. This is filed at the state level. Here is some more info: http://www.sba.gov/content/register-your-fictitious-or-doing-business-dba-name

      And I also agree that there is no guarantee that forming an LLC and filing taxes as an s-corp will save you money on your tax return. Each situation is different, and that’s why I recommend consulting an expert.

      Thanks!

  2. Good advise and an excellent starting for obtaining more information. I found that since everything is electronic it is MUCH easier to track expenses.

    Also consider another list for the mechanics of publishing a book. Like this list you don’t need to go into detail, just the high level points which the reader can research.

    Thanks!

    • Troy,
      Glad you found it helpful. And, yes, it is much easier to keep receipts and records with everything being electronic. I just encourage you to find a system that works for you and then stay consistent.

      And thank you for that suggestion for another blog post. 🙂

  3. Excellent post. I do believe that independent authors can expand their horizons and increase their revenues and personal book sales by starting their own publishing company. That’s why I started Garden Gnome Publications and also why I’m spending more time helping authors position and brand themselves through publishing.

  4. hi your steps to becoming an independant publisher has helped me to make a decision about this which path to take
    which has lead me to move on in an direction which I want to take. I felt I had been indecisive for quite sometime but did not realise it until I read your article so thank you for this.
    I understood every detail you had written it was easy to understand so thank you again.Kind RegardS Author Annie Mitchell of HOLDING BACK THE TEARS

  5. Shelley,
    Thanks for sharing what you have learned. I started my publishing company in 1988 as a partnership, and one year ago, changed it to an LLC for added legal protection. I would encourage others to heed your sound advice.

    • Donna – you’re welcome! I’m glad to hear that you have already taken the step to become an LLC.

  6. I have set up my own publishing company and like you, made some mistakes along the way, but was and is still a good and necessary decision.

    I decided to turn toward writing books back in I think 2007 or so when freelance writing for newspapers and magazines started slowing way down (and as it seemed more and more people started doing it too). I set up an LLC right away and chose a name.

    Then I had a friend build my first site on the publishing company domain. After looking at lots of other websites, it seemed like a logical way to go. But it ended up it wasn’t because I didn’t actually want to publish for other people and generally people don’t care who/how your book is published (as long as it’s professionally done).

    My first book ended up being about the publishing process and I did end up with another site focused on that topic as well as a blog. That made more sense.

    From there, I wrote another book on a totally different topic not long after that first one. So now that new website didn’t fit either…So I had another one done which allowed me to separate niches. Also common advice.

    Long enough story shorter, I also eventually wanted to help businesses with content marketing and other authors as well. I have had up to 5 different sites on different topics. As we speak, I have decided to consolidate and simplify (I have 3 currently).

    One thing I would highly recommend to new authors. If it is possible, get your name as a domain like http://www.cherylpickett.com. Having a cool related name is great too, but a site with your name can be a great hub. You can do smaller outpost sites if need be if you end up with a couple of unrelated topics and you want to have a blog etc. on each. If however it is possible to find a way to unify most everything, it’s a lot easier to manage one site and a couple of emails vs. five of everything (at least in my opinion).

  7. This is excellent and helpful information, Shelley, and I’m especially grateful you were willing to share your mistakes as well as what you did right.

    I already have an LLC for my writing business. I wonder if I need a separate entity for a publishing company or if I can do it under the same umbrella. I’ll have to check with my own attorney, of course, but thought I’d see if you had any insight on that.

    • Elizabeth,
      We decided to have our LLC be an umbrella for our entire business as it is all fairly related. For instance, with my website for authors I would simply state it as TrainingAuthors.com, a division of Body and Soul Publishing LLC.

      However, each situation is unique so I would recommend that you do some research and consult with your attorney and/or accountant on the best way to set up your business.