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Discussion Starter · #1 ·
I know some people set up their own publishing companies through which to self publish (I think some call them vanity press).  I was  wondering what the pros and cons are in people's eyes - reasons you have set one up or chosen not to.

Seems like it might be a lot of work, and there might be tax implications.  But, on the other hand, it might make you look more like a legit writer and also might protect you if you ever get sued for anything.

Grateful for any thoughts
 

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A vanity press is a company that allows people to pay them to publish their book.

It takes almost no work to set up your own imprint.

Pick a name. Register a domain. Slap up a website. You're done.

If you want to pay money/collect money with that name you need to do whatever your local government demands of a small business. If you want an LLC that generally is used to limit legal liability.

But as a writer, you're not really likely to get sued anyway.
 

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Yeah, not really the same thing as a vanity press. I have my own publishing "company" (it's really just a registered DBA through the IRS/state.) Gives me more weight come tax time and lets me have lots of nice write-offs. Otherwise everything's the same around here.
 

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Discussion Starter · #4 ·
Thanks for the clarification - I'm still learning the ropes

Are there tax benefits other than write-offs?  How do you take money out of the company without getting double taxed or is the company income just taxed on your person taxes?

Any cons?
 

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MarcusPeterson said:
Thanks for the clarification - I'm still learning the ropes

Are there tax benefits other than write-offs? How do you take money out of the company without getting double taxed or is the company income just taxed on your person taxes?

Any cons?
Depends on how you set the company up and where you live. In addition, most writeoffs are available to individuals.

You should really consult a tax attorney if you're seriously considering it.

ETA: Cons being it costs money to register a business.
 
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I'm keeping things simple for now.  My business is organized as a sole proprietorship and I'm doing business under my own name, so no DBA.  I do have a business checking account, but that's just to keep the business separate from my personal finances.  Other than that, I don't think I need to register anything else--Utah is cool like that.  The business stuff gets filed under a schedule C.  Next step: W9s, self-employment tax, and quarterly tax withholding, all headaches but good problems to trade up for. :D

Also, I should mention that I am in no position to offer tax or business advice.  I'm just as new at this as everyone else. :)
 

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MarcusPeterson said:
Thanks for the clarification - I'm still learning the ropes

Are there tax benefits other than write-offs? How do you take money out of the company without getting double taxed or is the company income just taxed on your person taxes?

Any cons?
It's kind of hard for me to explain as I'm awful with explaining tax stuff. (Helpful, aren't I?) But I come from a long line of self-employed people and I use the same tax attorney my parents do (for both of their businesses.) Some cons besides the licensing (mine costs 50 dollars a year) is that I also pay about 30 percent in taxes. PITA but that's why I am all about the write-offs, haha. (My tax attorney said she never met somebody so meticulous with documenting write-offs...and told my parents they could learn some things from me LOL)

It will also vary from state to state. Starting up my business was super simple here in Oregon and everything is pretty straightforward. My editor/cover designer is trying to start a business in North Carolina and keeps hitting paper trails and brick walls.

FWIW I have a separate savings account for my business. I have all the places like Amazon etc deposit my payments in there to help keep track of how much I make.
 

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Discussion Starter · #8 ·
Thanks all.

So I'm going to guess things like editors, book covers, etc. are considered write-offs?

Do you have your copyights owned by the company, or yourself individually?
 

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It is worth consulting with a tax professional to see whether registering a business will give you more tax benefits than doing business as an individual (DBA).  It varies from state to state and country to country.  I determined it was best for me to register as a sole proprietorship.  It cost me $20 for the business license, and I can even write that $20 off as a cost of doing business.
 

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In the beginning, I was all about starting my own publishing company and setting up a corporation/LLC. But after talking to my accountant/tax guy, I was told that it wouldn't be worth it unless I was making about a half million a year. (Nope, not there yet. *sighes*)

Always, always, always consult a qualified professional for such matters. There are just some areas where it does not pay to pinch.
 

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If you're self-publishing, you're running a business entity.  There are significant tax differences depending on how you do (or don't) structure your business.  If your books take off, and that can happen very suddenly, so it only makes sense to set things up properly in the beginning.
 

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The advantages of setting up a publishing company can vary depending on where you live. Amazon and Smashwords are required by law to withhold 30% of the royalties earned by non-US authors until they settle their tax status. You have to go through a lot more red tape with the US governent...it's a little easier if you set up your own publishing company in your home country.
 

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MarcusPeterson said:
Thanks all.

So I'm going to guess things like editors, book covers, etc. are considered write-offs?

Do you have your copyights owned by the company, or yourself individually?
I get my editing and book covers done for free, but yes, I could write them off.

Right now I mostly write off the stock photo fees, business registration, website fees, isbns, shipping (paperback books), etc. Basically, keep any receipts you get for spending done for your business. Your tax attorney can tell you what can or can't be used as a write-off at this time.
 

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ElHawk said:
It is worth consulting with a tax professional ...
Definitely this. You will probably need to do this to prepare your taxes anyway, as it sounds like perhaps you are not entirely clear how to report income/expenses (forgive me if you are--I just got the impression that you might be new to the tax issues involved). That'd be a good time to raise these questions with someone who can look at your personal situation and give solid advice. Once you get a good overview on the tax side of things then you can think about that question of legitimacy you raise, which is a lot more subjective and may not have a clear answer.
 

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I just formed an LLC this year after 5 years of doing business as a sole proprietor. My husband and I have assets (house, cars, and rental property) that I would not want subject to a lawsuit or other legal action. Yes, they can try to pierce the veil, but it's unlikely since the property is not a holding of the same business vs. if I was still operating as just an individual.

Also, as I may one day expand (you never know what opportunities will come along) being in operation for X number of years can make a difference if you're applying for business loans etc.

Absolutely balance the cost with the protection/benefits and talk to an attorney or business mentor (SBA.gov has free resources to talk to a business mentor in your area) that can help you know if your situation warrants more protection or not.

 

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Hildred said:
I get my editing and book covers done for free, but yes, I could write them off.

Right now I mostly write off the stock photo fees, business registration, website fees, isbns, shipping (paperback books), etc. Basically, keep any receipts you get for spending done for your business. Your tax attorney can tell you what can or can't be used as a write-off at this time.
Worth noting that this can be done without a business license within certain guidelines. Which is why getting professional advice helps. You may be advised to keep "being yourself" until you hit x profit/expenses per year. That's the case with me. (Because I get so much of the services I use for free, and I keep my costs low on others, I don't actually write a large amount, or anything complex, off in a year.)

I'm also coming off working as a freelancer, and that was done completely legally just as me, paying taxes filed normally.
 

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Mathew Reuther said:
Worth noting that this can be done without a business license within certain guidelines. Which is why getting professional advice helps. You may be advised to keep "being yourself" until you hit x profit/expenses per year. That's the case with me. (Because I get so much of the services I use for free, and I keep my costs low on others, I don't actually write a large amount, or anything complex, off in a year.)

I'm also coming off working as a freelancer, and that was done completely legally just as me, paying taxes filed normally.
Technically I am a SP with a registered DBA. However, it still cost me money to register everything, and I can't remember what it was exactly, but I couldn't move forward with registering something until I established myself with the county. Could just be a local thing. Like I said, it varies from place to place, so it will depend on where you're from and you should research it thoroughly.

Plus my tax attorney was really happy I did all that, and I'm happy because it helps keep everything super organized. The only thing I pay is the annual license which is negligible.
 

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Hildred said:
Technically I am a SP with a registered DBA. However, it still cost me money to register everything, and I can't remember what it was exactly, but I couldn't move forward with registering something until I established myself with the county. Could just be a local thing. Like I said, it varies from place to place, so it will depend on where you're from and you should research it thoroughly.

Plus my tax attorney was really happy I did all that, and I'm happy because it helps keep everything super organized. The only thing I pay is the annual license which is negligible.
And I think any self-publishing author who starts to build success is probably absolutely best served by starting up a sole-proprietorship for tax purposes.

I'll go ahead and hope that I get there soon. ;)
 
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