It’s possible to just make up a name for a fake company and slap it on your books when you’re self-publishing. But once you decide to publish other people, you’d better gets some legal things in order first.
Choose a Name
I did a poor job of this one. I didn’t take my time and just picked a name quickly. I didn’t think about how important a name is and how I needed to be able to say it with pride, tell friends and family about it, put it on everything. I think our name is okay but it’s not great.
So don’t do what I did!
If you’re starting your own company, take some time to think about the best name for it. Particularly think about the connotations of the name and what people (like your target audience) will think when they hear it.
The book The Brand Called You recommends always using your own name but I’m not sure how well that advice works for forming a publishing house. Perhaps your last name will sound good and elegant as a publisher name. I agree with a lot of the premise of the book, which is that the brand you are creating is centered on you and who you are as a person. I don’t think that means you have to name it after yourself, though.
Form an LLC
Okay, so it turns out some of my background actually has come in handy! For the previous five years I’ve worked as an office manager handling a lot of accounting for a small company. Before that I took a number of night classes in the paralegal field.
Both those things helped me understand how to go about setting up a legal entity and running it!
The LLC stands for “limited liability company” and this means, to my understanding (and please know this is NOT legal advice) that if something goes catastrophically wrong or you get sued, you personally are not responsible for the money. Just your company is. Keeping yourself a little separated from the entity of your company is a wise move.
It’s been two years, but if I remember right, I think a DBA, or “doing business as” is another option. You can find out what you need by doing some Internet searching. How to get an LLC or a DBA depends on where you live. I found the process to be very simple and easy. So easy I wasn’t sure I’d done it right! (One thing I did need to have was a mission statement/explanation of what my company is. See more about that below).
Apply for an EIN
An EIN is an Employer Identification Number and it is your business’s equivalent of a social security number. You’ll use that number rather than your personal ssn when doing anything connected to money and taxes with your business.
Apply for a Bank Account
Use that EIN to set up a business bank account separate from your personal one.
This is easier for taxes and it gives you a clear idea of what money is for use within your company and to pay your authors and which money is for you to take home. You’ll pay yourself either a salary or a royalty from the profits of your company and you’ll transfer it over to your personal account with the same level or paperwork you would for any of your authors.
I can’t stress this enough: keep your business’s money separate from your personal money!
How much money will you need as seed money? Not that much.
Some businesses require a lot of money in start up costs: renting a space, furnishing it, getting the things to sell. This is not like that. You’ll need money to pay for things like editing, cover design, ISBN numbers. The way I have started is by using print-on-demand for physical paperbacks and that means not having to pay to print thousands of books or warehouse store them. I’d say probably $1,000 to $2,000 will get you started.
Write a Mission Statement and Business Plan
A business plan doesn’t have to be the size of a PhD thesis. The word can be intimidating, but in reality it doesn’t have to be more than a single page laying out your intentions. Answer questions like why you want to go into business, what your company offers that’s different from what’s already available, your practical steps to get books visibility. It’s like writing a query letter for your business instead of your book!
As part of this you’ll want to create a profile of your target audience. Who do you think is going to want to buy the books you publish? Get as specific as you possibly can because you can use that profile to figure out where to go to reach those people.
Having a niche is a great thing. It gives you focus and allows you to remember what you’re doing that’s different from the big guys. On the other hand, you have to be careful in selecting your niche that it’s not so narrow that you have no audience.
Being small, we don’t have a lot of overhead so we can afford to take on these quirky books that wouldn’t find a home in a bigger publishing house. Also, because it’s our sole focus, we know where to market them to.
Having a Niche: It’s a double edged sword, as they say. You want a narrow focus so you know exactly who to market to but you also want an audience large enough to sustain your company. The balance that I try to find with Dev Love Press is to take on books that my core audience, people like me who enjoy “wounded hero” romances for whatever reason, will love but also promote the books to general romance novel readers who have never considered giving a disabled hero a chance. I love when we see reviews where someone says that they would never expect to find one of these guys sexy but they totally do. A mainstream person comes to realize that a guy with a disability is still a guy and still a viable romantic partner. Now that’s what I call success!
Make a Contract
Again my paralegal classes prepared me pretty well for this. I had taken one class specifically in business law and contracts because at that point I knew that I was heading towards creating a company.
I got a lot of inspiration and ideas from the book Business and Legal Forms for Authors and Self Publishers.
You’ll need to decide on a fee structure. How much royalty will you be giving your authors? Will that be gross or net? How much will you take as your own salary (in any) and what percentage will go towards advertising, towards getting new business, towards maintaining your office systems?
I regret the current way we’re set up. I think for future books I’ll do things a little differently. One thing that is a priority for me is getting the author’s a good royalty rate. You’ll need to figure out what percentage of profits you’ll want to:
- pay authors
- pay yourself
- put into advertising and other promotional activities
- put towards physical copies for reviewers, giveaways, conferences
- save for taxes (I’ve been setting aside 14% for that)
- put into office supplies
- put towards future editing, cover design, ISBN numbers, etc.
- put towards future advances
- put towards professional development like conferences or organization fees
Since it’s a start up, you may want to not pay yourself for a while and put all your profits back into the business. That’s up to you. Luckily with Print on Demand and ebooks there is not much initial cost. I’ve focused on those while I build up enough money to branch into more traditional physical books.
In a later post I’ll talk to you about my favorite budget software and how to keep all these categories separate!
And make sure that you are clear on what rights you are getting! If you’re going to focus on e-books (as I do) then you’ll have to make sure that you have both digital and print rights!
Get an Accountant
Your taxes are about to get more complicated.
So get a professional to help you with them. No more TurboTax or Dad doing your taxes for you!
It’s going to be worth it because someone who understands taxes for small businesses will know what deductions you can get and will often save you money. So far for the last two years, my accountant’s fee has been completely covered by the refund he’s gotten me (and there was leftover too).
So you’re prepared for tax time, use having a business bank account (or budgeting software that I’ll talk in more detail about in the future) to keep totals of certain categories like: money spent on advertising, money spent on business travel, money paid to authors, money paid for office supplies and equipment (and keep receipts too)
Does this sound horribly unsexy? Perhaps surprisingly, I found it fun. I enjoyed the process of getting all my ducks in a row.
(This last one recommended by Jane Friedman)