What's A Publisher Need To Be Legal?

Life is complicated, business is simple.

OK, that's the short answer to a question I've heard three times in the past week, one by phone and two by e-mail, which I think means the British are marching on Concord.

The question is in the title of this post: What's a publisher need to be legal? Sometimes, the question is phrased a little more specifically, as in, "Do I need to incorporate to start a publishing company?"

Incorporation is complicated, unless you've done it before, and it costs money. It doesn't have anything to do with the legitimacy of a publishing business, it won't help you sell books or get reviews. Incorporation can be an important step for some businesses, but its implications are financial and legal. Corporations follow a different tax regime than individuals, have different reporting requirements, pay annual fees, and are taxed at a different rate. Businesses tend to incorporate to make it easier to raise money from multiple investors and to protect those investors from illegal or harmful actions the corporation might take.

If you're a self publisher or a new small press, you probably aren't trying to raise money through selling shares, and you probably don't have a lot of spare cash to spend on setting up a corporation. I do know a few self publishers who are incorporated, but most of them were incorporated before they added publishing as an activity. Incorporation can protect shareholders from legal actions, limiting their liability to the amounts invested, but incorporation doesn't give individuals protection from their own actions. In other words, if you're a self publisher, incorporating doesn't protect you from charges of libel (and legal awards) if you commit libel. Incorporation may protect investors in your self publishing company if you did everything right, but as the author of the libel, you're responsible as an individual.

I've never lived anywhere where a publisher was required to obtain any sort of special publishing license, but self employed people who use a made-up name for their business often have a local business licensing requirement. Around my neck of the woods, it costs $30 or so to file a DBA (Doing Business As) at the local town hall. I believe the purpose of the DBA is to prevent you from hiding from legitimate complaints. If you want to use your last name in the name of your publishing company , it's usually not necessary to inform anybody you've started a publishing business until...

TAX TIME

The people who really, really care about how you're doing are the IRS and your state tax authority. If you make a profit, they want their money, or our money, depending how you look at it. In your first year, you aren't required to pay estimated taxes, but come tax time, you have to file a Schedule C for the business, and give them the name of your publishing company. The name of the company has no impact on the taxes you owe, it's just a label.