A Cheapskate Guide to Creating a Publishing Company

Ken Coffman is a novelist and owner of a small publishing company called The Armchair Adventurer. Coffman writes:

I did it. You can do it too. I am no business expert. I do not know the optimum way of doing things. I don’t care. I used this on-the-cheap method to create my company. If there are better methods, then use the comment field to inform the world. In advance, I thank you for your service to mankind.

1. First of all, dream up a unique name. Google it and make sure it is not being used by someone else. Surf over to godaddy.com and make sure the domain is available.

2. Now surf over to the Company Corporation (www.incorporate.com) and create a LLC (Limited Liability Corporation). Register your company in Delaware or Nevada. I picked Delaware like most other corporations. Why? Because I said so, that’s why. It’s $99 for the economy method and another $120 for the filing fee. Save up your money, you can afford it.

3. Register your domain name(s) with godaddy.com. Pay for five years so you don’t have to hassle with the yearly payments to keep it active. If you don’t have a host for your domain, you can use the service(s) godaddy provides, but that’s not how I do it. There are a billion server services in the world. Use your favorite.

4. Now you have to register your foreign corporation with your state. This may be done online, maybe. Trust me, any interaction with the government will be frustrating. Don’t sweat the small stuff, just roll with it. There are traps, so avoid them. You are not going to sell anything directly, this avoids the sales tax trap. All of your sales will be done either out of state or via a supplier that pays the sales tax, like Amazon, brick and mortar book stores and the like. You’re providing a publishing service. You are not hiring any employees.

5. Now that you have an LLC and a state business number, you can open a bank account for the business. Like government agencies, banks are a pain in the ass too. Fair warning.

6. Register and reserve a block of ISBNs at http://www.isbn.org. Don’t bother creating a bar code at this time, this will be done when designing the cover after you’ve picked a sales price.

7. Like almost everyone else, you’ll use Lightning Source as your printer and listing services. Surf over to lightningsource.com and register your company. If you know how many pages your novel is, then you can get a printing cost. Then you can decide how much markup to allow the reseller (I give them 55% to encourage them to carry my book). Then you can pick a resale price.

8. Find a graphic vendor or partner. I’m a writer, not a graphic artist. I provide photographs and sketches to my designer friend who creates the cover. His software can create the bar code (which includes the ISBN and the resale price).

9. Now you have a PDF for the cover, the front matter and the novel text. Upload that to Lightning Source. Magically, if you want, a review copy will appear. If you like the look of it, approve it and you’re in business. Lightning Source will take care of listing your book with Amazon and Ingram.

10. Now comes the hard part. Your books will not sell themselves. You have to get out in the world and sell them yourself.

11. Let me say a few words about taxes. I think everyone should have a small business and look at all spending as either tax-deductible or not. All business expenses are deductible. Since you’re always doing research, what about your trip to Venice? Deductible. Business use of your car? Deductible. Your home office and computer and camera and DSL and phone bill and business-related books and software? Deductible. You probably think that you need to make a profit in 3 of 5 years, otherwise the IRS will classify your business as a hobby and decline your deductions. Pardon my language, but that’s bullshit. The 3 of 5 years is a guideline, not a rule. You can lose money every year for the rest of your life, it’s still a business. There are requirements. You have to operate in a business-like manner with the intent to turn a profit. In other words, you should have business cards. You should do marketing. You should claim some revenue. You should be prepared to make your case to an auditor with a clear conscience. You should think about and understand the difference between tax avoidance (which is legal) and tax evasion (which is illegal).

12. For tax matters, I highly recommend a book called Tax and Financial Guide for Engineers and Architect from Academic Information Service, Inc. http://www.taxguide-engineersandarchitects.com This book has examples and talks about tax court cases which clearly define what you can and can’t get away with (did I say that out loud?). Yes, this book highly recommended.

13. I didn’t think of everything. There might be better (or cheaper) ways to do things. Let’s hear about it.