JB’s Steps to Indie Publishing 1 (An Author’s Legal and Financial Decisions)

I am on the path to indie-publishing my books and all the questions I’ve gotten make me think I should share what I’ve learned as I go. Today, I’ll jump forward to my “Step 2 PLUG AWAY AT THE BUSINESS SET UP END OF THINGS.” The most important piece of this—setting up my pen name legally—was complicated, so I’m dedicating a whole post.

Free Photos business exchange picture, Author: zcool.com.cn, from All-free-download.com

Free Photos business exchange picture, Author: zcool.com.cn, from All-free-download.com

Many authors use their real names everywhere and certainly it keeps things simple. I’ve also seen lots of authors who work their finances and legalities (money, taxes, bank, legal, copyrights, barcodes, etc) under their real name but use a pseudonym on the cover of the book and on social media. Personally, having no real legal rights to my pen name just feels like asking for trouble.

My goals in setting up the pen name legally from the start were thus: First, I wanted a bit of separation between the real me and the pen me. Second, I wanted to be able to keep all finances separate, both now in spending money to get started, and later, because I figure the more books out there (and hopefully growing income) the more complicated and expensive it will be to change. Third, I never want to find myself in a stressful and expensive legal mess.

There is very little solid information on this online, and over and over I read that you should consult with a qualified attorney as well as a certified public accountant (ideally both should be versed in issues specific to authorship like copyright issues, royalties, etc). I did, although I felt comfortable with the folks who already know my unique financial situation and whom I trust. I will attempt to put what I took from the process here in layman’s terms in hope’s that it’s helpful to another author. A caveat, however: do your own research and consults to figure out what makes sense for you, in your state. I am absolutely not qualified to give legal advice.

Many states require that if you do business as anything other than your legal name that you register a DBA (Doing Business As). I fully expected to go that route, but guess what? A DBA’s purpose isn’t to hide your real name. Quite the opposite in fact, it’s actually to provide the public with names of owners behind a fictitious business name. Basically, you are required to notify all counties you might do business in that person X is now doing business as person Y, and yes, this information is publicly accessible. So, whoa, a DBA in NJ is more like shouting your name to the world than hiding it…and just how many counties would that be? More information at: http://www.sba.gov/content/register-your-fictitious-or-doing-business-dba-name If, however, a DBA is right for you, you or your lawyer can register it via your county clerk.

In my case, both the lawyer and accountant urged me to become, with the pen name, a sole-proprietor LLC (a member-managed single-member limited liability company, taxable as a sole proprietorship). First, this affords more privacy than a DBA when it comes to the general public. And on my copyright pages I am legally allowed to put “JB Schroeder, pseudonym” and not list my real name at all. It also allows me to set up a bank account and credit card under that name, which I wanted for privacy and financial reasons. The LLC in conjunction with the bank account separates my pseudonym from my personal finances, my husband’s finances, and our joint finances. This is important come tax time, and in case of any eventual legal issues. The liability protection is basically none (but I’d at least have a leg to stand on if I ever needed to involve lawyers). I believe it also blocks anyone else (at least in same state) from using the exact same name. There is a fee of $125 to register the LLC with the state of NJ. The lawyer’s fee was heftier, but worth it because I’m confident that it’s done correctly and is my best option at this time.

Do realize that being an LLC does not mean that I am incorporated. If you are considering incorporating, be aware of two things. One, other authors tell me that it doesn’t make sense until you are making six figures regularly. And two, per my lawyer, incorporating means you must act like a multi-person corporation, even though it’s likely just you. Following the structure/rules/obligations of a corporation down to the letter sounded stressful, time-consuming, and rather ridiculous, but it’s a must—otherwise you might face legal or tax trouble. Beyond that, do your own research as I didn’t look into the details of incorporation.

Good luck making the decision for yourself, and please feel free to share any knowledge you’ve gleaned on this topic in the comments. I’ll cover what to do with this information next time.

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