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Hi, since we are self-publishing, do we need to form a "publishing company", i.e. a business that will handle all of the legal and monetary transactions?
I looked over the forms of business and noticed WoMen's Literacy Cafe is an L.L.C. It seems to combine pass-thru taxation with personal liability protection without the overhead of the Corporation. Of course there is an $800 annual fee in California. Is this fee tax deductible as a cost of business?
Anyone formed their own publishing company to self-publish?
thanks for any ideas!
The fee may or may not be deductible in your state. With that said it is deductible in the federal taxes. Cansult your accountant because I am not 100% sure of the methodology. The tax code is however written for business' to take full advantage of it, as an LLC you are a business.
Thanks. I'm just worried I won't make more than $800 a year, and the IRS says you have to be profitable by your third year. I guess the fee is a cost of doing business.
Michelle, I'm such a noob. Did you just call yourself a publisher? Are there categories to check off what type of business you are in? And what activities you are allowed or not allowed to do to be called a publisher?
If I call it a publishing business, perhaps I can take on extra work like formatting and beta reading and earn enough to make it profitable.
Anyone argue in favor of a corporation over an L.L.C.? I think the benefit of L.L.C. is that you enter your income on your own taxes, but of course it gets taxed at your marginal rate, which is higher than the 15% corporate tax. But corporations are taxed twice. First when the corporation makes money, and then when it pays you, the employee of the corporation.
Any other pointers? Thanks for all the help. :)
Rachelle, no you do not need an LLC to self publish, and it's really not necessary at all. Some authors open a publishing company so their own name isn't listed or Amazon isn't listed as the publisher.
Hi Melissa, thanks for the reply. How about if you're not writing in your own name? Should I start a publishing company to own the copyright? ISBN # ? My pen-name cannot own the copyright, correct?
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I did form my own publishing house to publish things that the house I am signed with doesn't do. I did it with two other authors instead if us making three houses. As far as taxes go if you have to pay a fee to do business it would be tax deductable. I am in Massachusetts though California may be different, here we do have a spot on our taxes for fees.