JB’s Steps to Indie Publishing 2 (Setting-up Business as an Author)

Today, I’ll share what I learned about building a business as an author, in hopes that you’ll fare slightly better—or at least start earlier—because what I expected to take a few weeks, took about 2 months (partly because every step is dependent on the previous step)!

1. In the last post, I covered that I personally think it’s a good idea to set up your pseudonym legally for protection and for financial separation, however, there are various ways to do this. I became a sole proprietor LLC with my pen name (see previous post: https://thevioletfemmes.wordpress.com/2015/01/26/jbs-steps-to-indie-publishing-1-an-authors-legal-and-financial-decisions/). In registering ($125 in NJ, and more if you incur lawyer’s fees), you’ll receive a corporate ID number from the state. The lawyer sends also a certificate of formation that lists the same number as well as the business name you’ve chosen. I assume that a DBA situation would be much the same.
2. Use that corporate ID number to request an FEIN (Federal Employer Identification Number) from the IRS. The lawyer could have done it, but here I opted to save money by doing it myself. Two interesting things to note: you can have more than one EIN, however if you already have one, you cannot sign up for another one online. Online is fastest (a few days), fax next (a week supposedly but proved to be about 2.5 wks), and mail by far the longest (a month). An EIN is a good idea regardless. Otherwise your social security number is floating around everywhere, increasing your risk of identity fraud. There is no charge for an EIN.
3. Once you have your EIN you must register your new business with the state (because yes, they’ll want to collect taxes as well). I chose to do this myself, but admit that my lawyer spoon fed me the forms and the info for the tricky spots. The forms are also available online via the IRS. You will receive confirmation. Again, no fee.
4. Open a bank account under your pseudonym. This one also was a surprise: the bank I’ve used forever and would have preferred both for familiarity, loyalty, and so that I could link accounts required a minimum balance of $1400 for small business checking. $1400!!! Uh, NO. And, because I’d become an LLC, I really couldn’t (legally) open a personal checking account with the pen name. I’m happy to report that ConnectOne offers free checking and no minimum balance for their small biz customers. Look online for the details of what each bank offers, then call them, as there’s a whole list of things you need to bring with you, including all of the documents I’ve discussed today, your driver’s license, and a credit card.
5. You probably want to apply for a credit card under the pen name. Editors or cover artists usually prefer checks or PayPal, but what if you attend a conference that involves a flight and a hotel and numerous restaurant meals? What about that hefty price tag on bulk ISBNs? If you keep this card entirely separate from your personal stuff, you’ll also have a very easy way to track all writing expenses for the year. One author I heard speak suggested a cash-back credit card. It makes sense to put money back into your business, plus it’s simpler than jumping through the hoops of complicated travel or shopping rewards cards. Besides, the whole goal is not to be buying groceries, gas, and clothing on your business card, right? The two highest ranked cash-back cards I found were American Express Blue and Citi Double-Cash Card.

Having the business set-up complete was a GIANT relief. (At least until I realized there was quarterly tax filing involved!) My apologies that it took me so long to continue this thread. Good luck to you and thanks for reading! ~JB

www.jbschroederauthor.com

Posted by JB Schroeder on September 8, 2015

https://thevioletfemmes.wordpress.com/2015/09/08/jbs-steps-to-indie-publishing-2-setting-up-business-as-an-author/