Basics of Self-Publishing: Introduction

by Moira Allen

The series that follows does not cover "everything you need to know to become a successful self-publisher." Several excellent books have already been written on that subject; I didn't feel inclined to write another one! Rather, it covers "everything you need to know to get started in self-publishing" -- or better yet, "everything you need to consider before making the decision to self-publish."

Make no mistake: Self-publishing is a huge decision, and should not be undertaken lightly. Never assume that this is the "fast" or "easy" way to get your book into print. It will have a profound impact on your finances, your time, your emotions and your personal life. It is not simply a matter of "getting your book published" -- it is a matter of launching a business, with all the tasks (and risks) a business entails. If you would think twice about, say, setting up your own retail store, then you should also think carefully about self-publishing.

For writers, this can be a serious consideration. Many of us are writers first, and business people a distant second. Many of us became writers because we disliked and preferred to avoid the "business" world, the daily grind of the office, the endless trivial tasks of administration. Many of us became writers because we wanted to create -- to express our thoughts, ideas, dreams and emotions. We wanted to become published writers so that we could share those thoughts and ideas with others. But there is a huge jump from being a "creator" to becoming an "entrepreneur." If the thought of bookkeeping, financial management, advertising, promotion, sales, order-processing, and book packaging makes your blood run cold, you may want to ask yourself whether this is something you really want to do.

Writers also find that becoming a "self-publisher" can often mean CEasinG to be an active writer. Writing is a time-consuming business; self-publishing is a time-consuming business. Writers who self-publish often find themselves so caught up in the ongoing tasks of marketing, order fulfillment, and paperwork that they have less and less time to write. Be sure to consider how self-publishing fits into the rest of your life-goals.

By now, you may be wondering why the tone of this introduction is so negative. Should I not be portraying self-publication as a wondrous adventure, with infinite potential for success? It can be! But I have known too many writers who approach this process with wide-eyed dreams of becoming an overnight success -- who imagine that all they have to do is run a few hundred copies of their book off a press to get their work before the world. (I've actually had writers tell me, "I don't want to know all that stuff about ----; I just want to get my book published.") It doesn't work that way -- and when a self-publishing venture doesn't work out, the result can be not only profound disappointment but significant financial loss.

The successful self-publisher is the informed self-publisher. It is the writer who has studied the options, weighed the risks, and made an honest decision about his/her ability to handle the responsibilities. The successful self-publisher is also the dedicated self-publisher -- the writer who can stick with a task even when it's boring, tedious, time-consuming, and showing little immediate payoff.

Self-publishing can be a wonderful way to launch your book. It can be ideal for a book an author believes in -- but that isn't considered "just right" for the market by larger commercial publishers. It can bring you not only financial rewards, but recognition and acclaim. Just remember that in this, as in any business, your "payoff" will be directly proportionate to the amount of effort you're willing and able to invest in the process.

Establishing Your Business Identity

Perhaps the most important thing to realize when you consider launching a self-publishing business is that it is exactly that: A business. If you are selling print books (or e-books on disk), you are officially a retailer, which has a variety of tax and legal implications.

Here are some of the steps you'll need to take to establish an effective, smooth-running business:

1) Choose a company name. It's best not to use your own name as the name of your publishing company, as this simply calls attention to the fact that your books are self-published. I.e., if all your books are by "John Smith," don't call your press "John Smith Books" or "John Smith Press." Instead, choose a name that is in some way relevant to the type of book you're publishing. If, for example, you're publishing regional titles about Nantucket, consider calling your publishing house something like "Nantucket Press" or "Nor'wester Books". If, however, you expect to expand to other subjects, don't choose a name that will limit that ability.

Once you've settled on two or three possible names that you like, the next step is to make sure that they are available. If a Nantucket Press already exists, you don't want to call yourself the same thing (even if they're in another state), as you'll create endless confusion -- they'll get your orders and you'll get theirs. There is even the risk of being sued by a company that is particularly "possessive" of its name (Amazon.com's lawsuit against a bookstore named "Amazon" being a good example). A quick and easy way to check a business name is to run a search for it online; you can also check business listings through the reference section of your library.

In addition to choosing a name, you'll probably want a business logo. If you're not an artist, it's a very good idea to have someone design this for you. You can also look around for clip art that at least suggests the idea you'd like your logo to convey -- but it's better to have the logo itself designed specifically for you.

2) Register your name. In most states, it is not legal to do business under a name other than your own until you've filed a "doing business as" (dba) statement. In some regions, you must first obtain a business license; in others, you can file the dba statement separately. This is actually quite simple; just call your local paper and tell them that you want to file a dba statement. They'll take your information, bill you, and file the announcement in their local legal announcements section. They'll send you a copy, which you may need when opening a business bank account.

3) Choose a business address. Many writers are uncomfortable with the idea of using their home address as their business address. If this bothers you, rent a post office box, or a box at a "mailbox" facility (such as Mailboxes Inc.). If you rent a box at such a facility, however, be aware that the post office will NOT forward your mail for you if you change addresses. Make this decision before you begin filing official paperwork regarding the name and location of your business.

4) Obtain a business license. As a retailer, you'll need a business license, and you'll need to register with your state sales tax authority. In some states, these are done at the same time; in other states, they are separate. Each state (and even different counties and cities) has different rules on how to file for such a license; you'll need to check with your city licensing office for details. The one area that can get sticky is the question of "zoning" -- as a home-based business, you're going to be filing for a business license in a residential area. Fortunately, restrictions on home-based businesses have eased greatly in most areas in recent years. You may need to fill out a form, or otherwise provide information to the effect that your business will NOT involve customers coming to your residence, that you will not have employees on your site, that you will not have frequent deliveries, and that you will not be manufacturing or producing a product (or running heavy business equipment) on the site. You will also be restricted, in most areas, from having any sort of business sign or display on your property. (It's also a good idea NOT to mention that you may be storing 50 boxes of books on your property!)

5) Obtain a sales tax certificate. In some areas you'll do this when you get your business license; in others, you must do it separately. You will be expected to collect sales tax on any direct-mail sales to customers within your state. If your state has different tax zones, don't worry; you only have to collect the amount of tax that is charged in YOUR city or county.

6) Establish a business bank account. Since you will most likely be receiving checks made out to your business name, you'll need to set up a separate bank account. It's advisable to do so in any case, simply to keep your business funds and your personal funds separate. Generally, you'll need to show the bank your business license and/or dba statement in order to set up such an account. In some states, your spouse will also be required to co-sign on the account, even if your spouse has nothing to do with the business.

Here's a quick tip: Do not order your business checks from your bank. Order them through one of those ads you'll find in the coupon section of the Sunday paper. Banks charge three or four times as much for checks as places like Artistic Checks -- why pay it? Also, resist the temptation to order a check-endorsing stamp from your bank; this can cost between $30 and $40. If you want one, you can have one made at your local print shop or office supply store for much less.

You may also want to order sets of deposit slips, as you're likely to exhaust the supply that comes with an ordinary set of checks. If you have lots of deposits, you can also get special deposit slips from your bank that (a) have carbons and (b) enable you to list 25 or more checks on a single slip.

7) Set up a business phone. Even if you don't expect to do much business by phone, it's a good idea to either have a separate line, or pay for a separate number on your main line that has a "distinctive ring," so that you can answer it in your "business" voice. If you're going to take orders by phone, a separate line is almost a necessity -- you won't have to worry about it being tied up with other family members' personal calls, and you can hook it up to a separate answering machine with a business message.

When I was in the self-publishing business, cell phones were not widely available; however, I suppose it would be perfectly possible to use a cell-phone, with a voice-messaging system, as your business phone. This would also enable you to take business calls wherever you are, including at your "day job" (with discretion).

If you do not maintain a separate phone line, you will not be able to deduct any of your basic telephone charges on your taxes. You can, however, deduct the cost of business calls. In this case, it's a good idea to maintain a log of such calls, and cross-check it against your phone bill, so that you can "prove" which calls were for business.

8) Find a means of accepting credit cards. Today, this is more indispensable than ever -- yet it remains almost impossible for a small, home-based business to accept credit cards directly. You will almost certainly have to use a third party to process credit card orders, which means losing a small percentage of each sale in fees. PayPal is another good means of accepting credit cards, at least for online orders. (See Processing Orders for more information.)

9) Learn how to keep proper income/expense records and tax records. As a self-publisher, you will be considered a "sole proprietor" business, and your income and expenses will be declared on your Schedule C. If you've already been filing a Schedule C as a freelance writer, you're already familiar with this form, and there will be few differences. The key difference is that you cannot simply write off the cost of producing your books when you incur that expense. Instead, you can only write off those costs AS YOUR BOOKS ARE SOLD. The cost of your unsold inventory cannot be written off.

On the IRS Schedule C, you'll find a section that asks you to enter the value of your inventory (i.e., what it cost to produce your books) at the beginning of the year, and the value of that inventory at the end of the year. The difference is the "cost of goods sold" -- the amount that you spent on the books that you actually sold during the year. The form is set up so that you subtract current inventory from previous inventory -- but in reality, no one really does it that way. Instead, you need to track how many books you actually sold and/or distributed to reviewers and list and multiply that number by your per-book unit cost, and enter that in the "cost of goods sold" box. (Put the number of books sold plus books given away or otherwise distributed or disposed of in the box that lists the "change" in your inventory.)

If you decide to rent a mailbox for your business address, keep in mind that mileage to and from that mailbox (as well as to your bank, post office, etc.) is a deductible business expense. Try to run that errand separately from personal errands -- or determine the exact distance between your home and mailbox, and record that distance whenever you pick up your mail.

For more information on how to track income and expenses for the Schedule C, see the Business section of this site.

You may also find that you now have to file estimated taxes quarterly, rather than paying your income tax annually. This is a complex process, and I highly recommend hiring an accountant to prepare your quarterly (or annual) tax forms.

10) Determine where and how to store your inventory. If you're producing a print book, sooner or later you're going to receive a shipment of a lot of boxes. You may find that it is several years before you can park your car in your garage again, or let someone sleep in the guest bedroom.

Actually, a garage is often not a good place for storing books. If you live in a damp climate, books are likely to soak up that dampness in a garage. (Another tip: Don't store them near a bathroom where they're likely to absorb steam from a shower.) Similarly, a garden shed is not a good place for books (in addition to the dampness, you may have an extra problem with bugs.) It's best to store your books indoors, in a dry, insulated room. Consider whether you can clear out a large closet and use it for nothing but books. (You may find yourself becoming very creative with "cardboard furniture" for a time.)

If you can store your books in a room or closet that is used for nothing else, you can also include that storage space when writing off "home office" space on your taxes. You can't do this if you simply stack the books in a garage.

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