Today’s writer resource post is going to be a little different. It doesn’t have the flash or whimsical appeal of the fun stuff like design. It doesn’t usually incite excitement. It is probably something writers avoid even more than they do marketing.
Does an indie author need to worry about the legal aspects of running a business?
Are you writing stories and putting them onto Wattpad for free consumption? Do you primarily share your work only on your blog? If yes, you can probably skip all of this legal mumbo jumbo and instead enter my giveaway for a year’s subscription to ProWritingAid.
If your ambitions carry you further than that, then you may want to start thinking about how to keep yourself out of trouble with local, state, or federal authorities. I want to make one thing absolutely clear before we continue:
I am in no way offering any legal advice. I am simply sharing my experiences and opinions. Please do not misconstrue any of this as legal advice. As with everything, you need to conduct your own research and proceed how you feel is best for you. I cannot, and do not claim to, replace the advice of legal counsel, an accountant, or a tax professional. Laws vary from country to country and from state to state. I can only speak to laws I have encountered in the United States.
Now that we have that disclaimer out of the way, let’s get down to it.
If you’re an indie author who sells their work anywhere, including Amazon, guess what? You own your own business! It can be hard to wrap our heads around that, but it’s true.
When you’re starting up a business, one of the first things you need to decide is what kind of business are you going to be? The two types of businesses which will appeal to most indie authors are sole proprietorship or limited liability company.
This is the way most of us operate on default. There’s very little one must do to set themselves up as a sole proprietor—in fact there is no start up documentation required by the US Federal Government. Licenses and permits may be required and will vary from state to state, so check with yours if there are any requirements.
Sole Proprietorships often operate under a DBA, or a “doing business as” (think of it as the pseudonym of the business world) which will require some sort of filing most of the time.
In fact, if you use a pseudonym that could be your DBA. Or even the name of your imprint.
Acting as a sole proprietorship is usually just fine for most indie authors.
Limited Liability Company
It is my opinion that starting an LLC (which isn’t a cheap process) is overkill for most indie authors. I can see this becoming more important if you expand your business to offering services or goods that go beyond fiction.
If you offer editing services, design services, marketing services…any sort of service (like all of these for-profit coaching programs I’ve seen a few indies promoting)…there is always the chance someone may at some point sue you. The likelihood of this happening may not be high, but it is there. An LLC protects you from losing your livelihood in the event someone wanted to be litigious.
If you are interested in learning more about these two business types, I recommend using Legal Zoom.
Regardless of the type of business you choose to go with, there are a few things you’ll want to consider:
Every business needs one. Figure out what is a reasonable amount of money for you to spend on your writing business and then figure out how to allocate those funds. There are many options for budgeting software. The first one that comes to mind is Quickbooks from Intuit.
Once you start listing your expenses, it may be difficult to stomach adding on an additional monthly expense just for the…sake of keeping up with expenses…I get that. So, I would be remiss if I didn’t show you a free option!
Of course you can always do this for yourself using Google Sheets or Microsoft Excel. The more complex your business needs get, the less likely you’ll want to do this, though. Excel can be a bit intimidating to learn, but there are plenty of classes available on Skillshare to help you navigate Excel’s murkiness—as well as tons of business classes!
If you’ve read this far, I’m going to guess at least a few of you have wondered why the hell all of this is important if you haven’t even sold your first book.
You’ll need to talk to your tax professional, but counting your losses on your taxes might be a very good thing for your bottom line come tax time. The list of things you may be eligible to deduct may surprise you.
You might be able to deduct a portion of your rent or mortgage as a business expense if you have a dedicated office space. From what I’ve seen you break your rent/mortgage down by the square foot and you can deduct the amount of the square footage. (So, if you have a 1000sqft apartment and your rent is $1000 per month, you could deduct from your taxes $50 per month if you have 50sqft of dedicated home office space.) Again, please check with your local laws.
You might be able to count mileage if you go to trade-related conventions or if you go somewhere for research purposes. Part of your utilities, internet, new tech, educational classes—there is a long, long list of things you may be eligible to deduct.
Here is a list of a few of the things I am looking into deducting:
Images used for marketing
Stock footage used for marketing
Images used for book cover
Title setup fees for Ingram
Website plan fees
Tickets to trade conventions
Gas/mileage to trade conventions
The cost of giveaway items
A portion of my internet bill
I know legal stuff isn’t sexy. But, congrats Indie! You are a small business professional, and all of this boring legal shit may be very important to you.
You know what is sexy? A FREE YEAR OF PROWRITINGAID, that’s what!
My giveaway is still going on strong, so don’t forget to enter!
Until next time! Have a fantastic week!