If you are asking this very question, "how (and why) to start your own publishing company?" I bet you have been publishing for quite some time now. Let me tell you the right answers to help you decide on this matter.
Today's article has three points and you're going to want to stick around for the third point. Because it is a secret as to the one reason that you are definitely going to want to set up a publishing company for your publishing business as an author.
So let's get into it. You're starting as an author and you're first coming out with books. The idea of actually setting up a publishing company makes absolutely no sense and I agree completely with you.
Now, you've created several books, you've got them onto the market, maybe even considering multiple niches. Maybe you're considering helping other people get their books onto the market.
And now you begin to wonder "maybe I should use a publishing company". How (and why) to start your own publishing company? Because there are risks associated with not having some sort of an LLC.
Or some sort of a company behind what exactly you're doing based upon the types of books that you're publishing. This is very important to consider when you're becoming an intermediate to advanced on the self-publishing track.
Something for which we are going to explore today. So where to start? After 200 books that I've put onto the market, I've been doing my best to make it as clear as possible what exactly I'm doing to get these books onto the market and get them selling.
You can find out yourself in the Self-Publishing Checklist that I have included here for free. Just grab a copy of that. So let's get into it, when I first got started with self-publishing, I published, one book at a time like anybody.
But after I'd had about 12 books or 20 books starting to hit the market, what happened was something magical. The sales from these books started to increase as well as the taxes to be paid on these royalties.
That triggered something which is "oh my goodness what exactly is the tax rate I'm going to be required to pay on these?" and "how am I even going to handle that?". Since normally, with your day job, you receive a certain amount of pay.
Then the money is just deducted automatically from the income that's coming in. But that is not how it works with self-publishing or with businesses in general. I went to an accountant, who was recommended by a friend of mine.
I went to him and he pointed out that this is a no-brainer. You need to immediately set up an LLC or in the US would be maybe a C-corp or something along those lines. Because I was starting to get money coming from Courses and Coaching and then the money from the books.
An Accountant Greatly Helps
You need to make sure that as those are coming out you're protected both from lawsuits that might be coming in. Since you're under a corporation. And then also the other benefits which I've got to be careful because I'm about to spoil the secret for the day, so I'll just say other benefits.
The final thing is with an accountant, you're going to use the money that you're already making on your books. Reinvest that money, you're going to be able to reinvest it to get an accountant who can help you set this whole thing up.
If you're not making enough money to pay for the accountant, then you don't need to do this. But they helped me set it up and I immediately saw the advantages. I was no longer paying taxes first which is one of the big deals there.
Rather, the taxes are paid only on profit. Unlike in your day job when you earn your income the taxes are taken first. Whereas with an LLC, as I had read it also in Rich Dad Poor Dad book they point out the fact that there's a huge advantage business only pay taxes on their profit.
So if you're spending all of the money that's coming in, you have zero profit so you're paying zero taxes. Other than sales tax which is one of those issues that we definitely do pay even here in Norway.
We have to pay for that, so that is an issue there. But some of the money is even refunded on that front there. But in terms of the total income, you do not have to pay taxes on it, only on the profit that your company is making.
So how and why start your own publishing company? The first thing is you're going to want to set up an LLC to protect yourself legally. This is especially true if the books you're writing are giving financial advice or health advice.
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All of these sorts of things can create problems down the line if you are not a company. So that you have this corporate shroud that's around you. Protecting you from what could theoretically happen that would come after you personally.
So that's the first big reason to go about it and you're just going to set up an LLC or a C-corp. I'm not a financial advisor so I'm not giving you financial advice. I'm just telling you setting up a company is a good idea.
So you would definitely want to check with an accountant that you trust and people can vouch for to see if this is right for you.
Massive Tax Benefits
The second thing is it gives you more authority to your work. It's no longer just you publishing books yourself. Rather it's under an umbrella of a publishing company or multiple companies.
One thing that I would just comment on here it's that even if you aren't a formal company on many sites like ACX if you're selling your audiobooks they're going to ask you what is your publishing company?
And you can register just your initials followed by publishing or something along those lines. This is what I advise my students to do to ensure that they're able to fill out all of those fields. It looks more professional than just your own name or no name for the publishing company.
This is just one of those little tricks that I like to hand out just free stuff for you to go and do it or not do as you see fit. But definitely, it's something worth considering. The third one which is our secret, I've sort of already revealed it but we'll hit it anyways.
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It's the tax benefits, they're massive. We only are paying taxes on our profits that we make not on every dollar you earn like your normal income. So if you're doing it correctly, you could set it up so that you have a decent size buffer money that's protecting the company itself as a nest egg to protect it.
Then, in addition, the company continues to ramp all the money that's coming in. It is either being reinvested or it's being pulled out as income. Now that income is, of course, being taken as taxed but at the end of the day you may choose to say "I want zero profit so the tax rate on the company itself would be zero".
So any money coming out would be taxed. But to prevent that as we're leveraging the money that's coming in, we're reinvesting it. And that is not being taxed as opposed to your normal day job where the money that's coming in is taxed immediately.
The tax benefits are so massive and they compound with every year that you're putting this off or that you've done it. So this is something, I'm not talking to you beginners right now. I'm talking to you about more advanced or intermediate self-publishers.
You're seeing the money coming in and you're seeing thousands of dollars coming in a month. Now it's time for you to consider what you need to create a company. This is just a little bit of advice.
This is generally the best way to go. You should talk with your accountant and figure out what is right for you. If you aren't making any money yet, well then just ignore all of this it has nothing to do with you.
But at the future point, you're going to want to consider this option. How (and why) to start your own publishing company? So have you considered setting up a publishing company?
If you have, I want to know so write "Yes" if you have considered doing it. And if you've never considered doing it ever, then write "No" below in the comments.
That will really help me know where exactly you are coming from. Grab that free checklist and check out my other articles and videos for more answers to your self-publishing questions.