I've always wanted to be a writer, and as a child I imagined my name on the cover of several novels. As I've grown up into a digital age, the possibilities for being a writer today seem endless, and nowadays one doesn't have to rely on the mercy of large publishing companies to grant you your dream come true as self-publishing has fully come into its own in the publishing world.
Nowadays, people of all walks of life can become novelists thanks to platforms like Amazon's KDP and iTunes. Because of the ease in which people can publish their own books, the number of self-publishers in the industry has risen exponentially and could even take over 50% of the market by 2020.
However, like many new self-publishers are learning, jumping into self-publishing without being aware of legal implications can lead to danger and bring upon them new challenges that they aren't prepared to face.
As more self-publishers rush to place their books on the market, the number of copyright infringement lawsuits have increased. Many authors are now facing lawsuits that not only threaten their writing, but also their personal assets and savings.
It is for reasons like this that many self-published authors are starting to approach their writing as a business and taking the right steps to separate their book income from their personal assets by setting up their writing under a Limited Liability Corporations (LLC) or other business structure.
Setting up an Limited Liability Corporation, or LLC, protects your personal assets and credit rating from being affected in the case of legal action being taken against you. This scenario is more likely than one might expect, as plagiarism cases are as prevalent as ever. If your LLC publishing company faces legal action, the assets of the company would be at risk, but not your personal assets.
Another benefit of setting up an LLC is the tax benefits. Presuming you establish a successful writing career on top of your day job, the profits from your book(s) may push your overall annual salary into a higher tax bracket, and paying more tax isn't something most people would like to do. That being said, different states within the U.S., as well as other countries, have different tax structures and set-ups, so it's worthwhile checking out what you're dealing with in your own jurisdiction. Still, if you end up traveling thanks to your writing career - just think of all those literary festivals - then you can write off travel costs and other expenditure as company expenses, including costs to design your books' covers, as well as any other marketing material, whether online or offline.
Dave Chesson, founder of Kindlepreneur and a leading authority on self-publishing and LLC setups, explains that:
"[LLCs]... still provides adequate protection of assets while not being as difficult or expensive as setting up a Corporation. Furthermore, an LLC is more versatile and allows you to tax it as a Sole Proprietorship, Partnership, C Corporation or S-Corporation. Basically, it is the best of all worlds and fits nicely in the self-publishing business structure."
Chesson also goes on to write that setting up a LLC is easier than most people think. Through online professionals that handle corporation creation, you can even have an LLC setup in a mere 15 minutes.
However, regardless as to whether or not you setup your writing under a business, it should be evident that when creating a product, like a book, and selling it, you have now entered the business world and are not operating in just a hobby situation. Risks are abound in this industry and increasing every year. Those authors that don't take the necessary action to protect themselves may find that their "dream come true" turns into a nightmare.