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Thread: Publish as a Sole Proprietor or as a Business?


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Permlink Replies: 11 - Pages: 1 - Last Post: Dec 11, 2017 8:12 AM Last Post By: writerbn
Tony Lewis Jr.

Posts: 1
Registered: 12/09/17
Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 10:30 AM
 
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Hello,

My name is Tony, and like of all of you, I plan to publish e-Books via KDP. I also plan to speak with a Certified Public Accountant about this question but I wanted to get a little feed back from the community before I do so my question is...

What has worked or is working for you? Publishing your e-Books as a Sole Proprietor? Or has publishing your e-Books as a Business worked better for you?

And by better I mean being able to keep more of your profits in your pockets....

Thank you,


Tony

writerbn

Posts: 5,816
Registered: 05/12/12
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 10:41 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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It makes no difference to your profits, at least in the US. A sole proprietor is still a business structure. Either way, you'll pay self-employment tax on your royalties. You could incorporate (as a C corporation) to avoid self-employment tax, but you still pay taxes as the employer and then on your individual tax return as an employee. There are also other costs and headaches associated with incorporation, so I wouldn't advise it unless you're expecting to sell millions of books.

I operate my business as an LLC, and have done so for 16 years. Self-publishing is a small part of it, but I chose the LLC structure for several reasons. Most self-published authors, however, would do fine just filing a Schedule C as a sole proprietor.
Michael Boice

Posts: 10
Registered: 08/12/17
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 10:43 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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Tony,
Highly recommend you consult a professional for this one. I don't know for sure, but income/expenses work the same in either case.
The advantage of an LLC or full incorporation would be the liability.
Michael Boice

Posts: 10
Registered: 08/12/17
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 10:47 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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Tony,
Highly recommend you consult a professional for this one. I don't know for sure, but income/expenses work the same in either case.
The advantage of an LLC or full incorporation would be the liability.
Donna St Felix

Posts: 6,387
Registered: 09/18/13
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 10:54 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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Tony Lewis Jr. wrote:
What has worked or is working for you? Publishing your e-Books as a Sole Proprietor? Or has publishing your e-Books as a Business worked better for you?
And by better I mean being able to keep more of your profits in your pockets....

Publish as Sole Proprietor. You get all the deductions allowable including floor space used for your writing. You need no license to do so.
When you do otherwise, you incur a lot of other costs and headaches.
B.L. Alley

Posts: 1,247
Registered: 06/14/14
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 10:59 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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I created my publishing company as a single owner LLC so I basically file taxes as myself. The only cost was the initial registration. There is no renewal or other ongoing expenses, at least in Arizona.
Emily Veinglory

Posts: 3,589
Registered: 04/25/13
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 11:29 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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Most books have very limited liability, meaning just publishing as a individual is simple and unproblematic.
Ned Kelly

Posts: 1,179
Registered: 09/05/15
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 9, 2017 12:16 PM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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Tony this question appears regularly. Frankly unless you're oozing with income from other sources, and are sure that your first book will make truckloads of money, there's no need to bother about alternate tradings structures, trust funds, etc etc. Of course if you're dripping with loot now, you'll have a tame accountant who'll leap at giving you advice (much of this has been covered by others here)

Just concentrate on getting your first book out there and making it the best you can. Lodge tax details with Amazon as specified so you don't get clipped the 30% withholding tax, then see how it goes., You can always create a structure in the Caymans later when the front lawn is stacked with pallets of small denomination banks notes.

But first things first, learn how to write, format and market.

Cheers

Ned
solutionsetc

Posts: 82
Registered: 02/24/09
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 10, 2017 5:54 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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You are operating as a sole proprietor business. You are the owner of a publishing business.
Notjohn

Posts: 24,174
Registered: 02/27/13
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 11, 2017 6:16 AM   in response to: Tony Lewis Jr. in response to: Tony Lewis Jr.
 
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The vast majority of American writers file as sole proprietors on Scheduler C. However, if you make a lot of money, and if the GOP tax bill provides a pass-through discount for S Corps or LLCs, you might want to switch to that. I would definitely stay away from a C Corp, which is double-taxed and a bother to maintain. For my sins I am treasurer of a C Corp, and I dread that tax return every spring.

Good luck! -- NJ

Notjohn's Guide to E-Book & Print Formatting

The blog:
http://notjohnkdp.blogspot.com
C. Gold

Posts: 1,312
Registered: 02/17/15
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 11, 2017 7:40 AM   in response to: Notjohn in response to: Notjohn
 
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You also want to check whether you have to pay a yearly fee for LLC or not in your local area. I'd get charged where I am, so my fun 'pub' co idea is dead in the water.
writerbn

Posts: 5,816
Registered: 05/12/12
Re: Publish as a Sole Proprietor or as a Business?
Posted: Dec 11, 2017 8:12 AM   in response to: C. Gold in response to: C. Gold
 
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C. Gold wrote:
You also want to check whether you have to pay a yearly fee for LLC or not in your local area. I'd get charged where I am, so my fun 'pub' co idea is dead in the water.
I'm glad I don't live in California. WI had extremely reasonable LLC annual fees, and moving to DE resulted in a huge jump, but CA really screws LLC owners.
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