Goodreads Authors/Readers discussion

I am curious how my fellow authors are set up for business. Sole proprietor, llc, ??? I am committing to writing full time and need to establish the "business" aspects of it. would like input from anyone who would be willing to share.

Thanks.

I retired from accounting after practicing in Canada for over 40 years. Regardless of where you live, the absolute best advice I can give you, is to hire a reputable accounting firm and follow their advice. It's much easier (and cheaper) to do it right from the beginning, than to have to fix it later.

I'm sure many people can give you various advice, but save yourself a lot of headaches and get professional help right from the start. Good luck with your new career.

Robyn wrote: "I am curious how my fellow authors are set up for business. Sole proprietor, llc, ??? I am committing to writing full time and need to establish the "business" aspects of it. would like input fr..."

You didn't say where you are in your writing career--just started or established author. If you're making a lot of money from it, by all means hire a professional to take care of your money. If you're just starting, and have made very little to nothing, don't worry about it until the money starts rolling in. I know that in the U.S.A. the I.R.S. doesn't bother with how much you earn until you break over a certain amount.

Robyn wrote: "I am curious how my fellow authors are set up for business. Sole proprietor, llc, ??? I am committing to writing full time and need to establish the "business" aspects of it. would like input fr..."

Again like Ken I would ask where you are in your writing career. I was also an accountant. I now only write and make a reasonable income, not great yet but okay. Personally I am a sole proprietor and would recommend that route for several reasons:
1) It is much easier, for both accounting and setting up the business.
2) There is no need for limited liability as in my case I have no debt ie no liability. I publish on kindle and createspace only so my expenses are small and I only spend profits.
3) It's cheaper.
4) It's not that difficult to do. Keep a list of all expenses and all incomes that are for the business - there is a little bit more to it than that but there is plenty of information available.

(Caveat I don't know your personal circumstances so this must be modified to suit them)

Hope this helps.

I am an LLC. I chose that route because I am a children's storyteller and travel to different venues (schools, libraries etc) performing as well as teaching. I am just now getting into the author/publishing side, taking my stories and turning them into picture books. I do have an accountant who helps with the tax side of things and keeps me organized and informed when I have questions. Which I always do!! :) I agree you should contact an accountant to help you weigh the pros and cons for your needs/goals.

Keep in mind that if you're starting out as an author, you can't afford all of these services--unless you have an extra pot of money sitting somewhere that you don't mind throwing at something that may or may not pan out. Editors will tell you that you need an editor; proof-readers will tell you that you need a proof-reader; cover artists will tell you that you need a cover artist, accountants will tell you that you need an accountant, etc., etc., etc...

Until you learn your craft, establish yourself, and start making money at it, you don't need any of that. Begin as a sole proprietorship, keep the bookkeeping simple, and wait for the money before complicating things by hiring others to do chores you can do yourself.

Along the lines of what others have said, if you make a reasonable amount of money your needs are different than if you make next to nothing.

In the US your earnings will be reported on a form 1099 Miscellaneous if memory serves, and you would plug that in on the appropriate line of your tax return. As a rule if the amount you made from sales is so small it doesn't affect your tax bracket (i.e.: less than $20) the IRS isn't worried about how you're set up.

If you're earning thousands, it's a different story.

Ken wrote: "Keep in mind that if you're starting out as an author, you can't afford all of these services--unless you have an extra pot of money sitting somewhere that you don't mind throwing at something that..."

I'm afraid I can't agree with you on this. Using professional services is the back bone of any business and, like it or not, writing is a business. It needs a quality product and good business plan to succeed.

No one said you had to spend a fortune to get that kind of help. On the flip side, how much does it cost to run without those services. Without a professional looking cover, editors, and proof-readers your book will come off as amateur and hard to read - not the way to sell any product.

Accountants are not employees, they are consultants. You can do the work yourself, but having someone to set you up properly and be there if you have questions is worth the cost. They will save you time and taxes in the long run by identifying expenses, preparing taxes and advising on business issues.

You need to think about writing as a business. It's foolish to start any business without sufficient capital. A small bank loan, a few interested investors, or even a small grant would be sufficient to get started, and your professionals (accountant, banker, lawyer) can help you find those resources.

Christine wrote: "You need to think about writing as a business. It's foolish to start any business without sufficient capital. A small bank loan, a few interested investors, or even a small grant would be sufficient to get started, and your professionals (accountant, banker, lawyer) can help you find those resources..."

The writing business is somewhat different from those businesses that require intensive capital investments at startup. If a writer had to have the things you listed in order to get started, we would have missed out on a great number of classics and many of the fine authors that we enjoy today. Treating it as a business in the beginning, instead of as a craft to be learned, will disappoint and bankrupt a lot of would-be writers. You learn to handle every aspect of your craft first, and then you become a business. So, yes, we do disagree.

Having enough talent to write and engage an audience is not a commodity that can be bought and sold, therefore writing is not a business in the traditional sense.

If one could buy talent, then everyone with the money to do so would be an author / chef / actor / you-name-it of renown, including their own accountant, attorney, surgeon, and so on.

It's like the one 'professional' who tried to tell me my 14-month-old daughter is borderline for being obese, because he didn't take her height into account. Per another 'professional' she's a big proportionate girl at roughly 32 inches tall and 26 pounds in weight. The child often uses a six-pound medicine ball for a toy.

Point being, some professionals want to push their services whether they're needed or not.

All of this is moot until Robyn comes back and tells us where she is in her career. A beginning writer has needs that are different from an established writer, who has needs that are different from a financially successful writer.

Ken wrote: "All of this is moot until Robyn comes back and tells us where she is in her career. A beginning writer has needs that are different from an established writer, who has needs that are different fro..."

Very true. I know of a writer whose main income isn't from his writing, but who still manages to pull in a nice amount of money due to the niche market he caters to.

How the niche-writer needs to handle his taxes will be different than someone whose sole income is derived from writing or whose earnings from writing are next to nothing.

At any rate, off to write while tiny demon takes a nap.

Thanks to everyone for chiming in. I am just beginning to write and have one published childrens book. I am 2/3 of the way thru the second book of this three part series. I have outlines for 2 adult fictions and 1 non fiction book. I have incurred more expenses than income in 2014 which was my 1st year. Expenses were editors, reviews etc. in 2014 I will be actually marketing my book and hope to sell more. So in light of the comments, I will act as a sole prop. Not sure if a 1099 will suffice as I want to take the expenses incurred against income. Has anyone set up a DBA? Is it a good idea?

Robyn wrote: "Thanks to everyone for chiming in. I am just beginning to write and have one published childrens book. I am 2/3 of the way thru the second book of this three part series. I have outlines for 2 a..."

If a 1099 is all your publishing venue sends out, it's the proof of royalty income you'll have to work with.

As for itemizing, if you know a tax professional you might want to ask her or him for advice about the monetary amount that would make most sense in your situation.

I'm wondering if anyone could give me some advice from going self published in the UK? I self published my first book last year and paid a nice sum of money to get my book out there. Now im awaiting my first royalty but my publishers are telling me that 20%VAT is being deducted before I receive my payment, that's on top of their 25% cut, is this right? After all Ive paid them already.

Gabriella wrote: "I'm wondering if anyone could give me some advice from going self published in the UK? I self published my first book last year and paid a nice sum of money to get my book out there. Now im awaitin..."

My understanding is the EU VAT prior to 2015/01/01 was based on the seller's country, and after that date on the buyer's country. Different tax rates depending on when the sale was made should have been figured in but a blanket 20% on all EU sales is wrong since different member-states have different VAT rates.

You might want a literary attorney to go over your contract if you haven't already.

Thanks for that R.F.G. I know there is nothing in my contract that mentions VAT but I will get someone to look into it.

Gabriella wrote: "Thanks for that R.F.G. I know there is nothing in my contract that mentions VAT but I will get someone to look into it."

With e-books on different platforms the VAT is added to the price unless the site specifies it's a part of the price.

Apple's Istore lists the VAT as part of the price I think, and Amazon adds it.

I'm not sure what publisher you went with but you might want to check them on Preditors & Editors. If the publisher is there the site usually lists if there have been good or problematic reports in the past.

One thing that you should be aware of is that from 1/1/2015, the VAT ruling in the EU on e-books was changed.

Prior to this date, Amazon added 3% sales tax to your book's net price. Since that date, the ebook buyer's country, not the ebook seller's country imposes their particular VAT % rate.

This anomaly means that unless you manually change your book price on Amazon, you will see different Euro prices for your book in France, Holland, Germany, Italy & Spain. Ironically the VAT in France is only 5% whereas in the other four countries, it is somewhere between 19-22%.

The simplest thing to do is to have a universal Euro price across all European markets even if that means that you make a slightly bigger margin in some markets and a slightly smaller one in others.

For example with my recently published short story collection Impromptu Scribe which was released just before the new EU directive came in (Nov.2014) I have subsequently, since the new ruling, set a universal Euro price of 2.49.

If for no other reason, at least a universal Euro price is unlikely to confuse those European consumers who might choose to shop between different national Amazon stores e.g. Swiss buyers looking at Amazon.de, Amazon.fr and Amazon.it or Belgian buyers looking at Amazon.fr and Amazon.nl

Hope this is helpful in resolving any fog caused by overzealous European treasuries wanting their slice of Amazon's pie :-)

I believe my average Kindle royalty is Euros 1.03 and UK Pounds 0.85.

In a few months we'll get to see who loses the most.

Thanks guys, my book A Fathers betrayalwas released at £2.99 on Kindle £9.99 paperback but after it became a bestseller Amazon has since price matched it at £2.39 Kindle.I was told that would make no difference to my royalties.I'm not at all clear at what im doing and my publishers know this so I am worried about being taken advantage of.

Just looked up my publishers on Preditors and Editors!It says, Not recommended, Acts like a literacy agency so we are treating them like one.....

Gabriella wrote: "Just looked up my publishers on Preditors and Editors!It says, Not recommended, Acts like a literacy agency so we are treating them like one....."

That literary attorney sounds like a better idea now