From Tara, the Despicable Muse of Indie U:
We're back with the delightful Suzan Harden, an independent author who is sharing information on creating a writing business plan. If you missed the first post, Why Go Indie?, take a moment to catch up with us.
While Suzan has some great information to share, she'd like to cover her tush inform you that she is no longer a licensed attorney. That means you should not construe the following information as legal advice. Like any good ex-attorney, she recommends consulting a licensed attorney if you have any legal concerns.
Quick Recap: Yesterday, You, the Publisher wrote the first draft of your Executive Summary. Today, we'll be going over business housekeeping and starting a business costs list.
Day 2 – It's a Business; Treat It Like One
By Suzan Harden
For writers who go the traditional publishing route, the concept of becoming a business is foreign. The publisher takes care of registrations and licenses, sales-related taxes and so on.
When You, the Writer becomes You, the Publisher, you have to take care of all this (or at least have a clue whether you need to worry about it). Let's take a look at some common factors indie writers need to consider.
1. Business Formation for Indie Writers
Most writers, whether traditional or indie-published, form a sole proprietorship. This means one person owns and is totally responsible for all the business debts and legal obligations. Usually, you don't have to do anything fancy to start a business as a sole proprietorship. You can even use your own social security number as your business ID for IRS purposes. If you want to work under a pen name, that's okay, too.
Some counties may require you to file a form for a home-based business license. You may need to file another form if you want to work under a pen name or a business name. In the county where I live, I can file an Assumed Name form (also known as a DBA, which stands for Doing Business As) for my publishing company for $15.00. The rules in your local jurisdiction may be different.
You may need to look at a business structure that is more sophisticated, such as a corporation, if you have significant assets you wish to protect. If you are in this position, I strongly suggest putting your business plan together first and then making an appointment with your attorney. By seeing the entire breakdown of what you hope to accomplish, your attorney can better advise you on how to protect yourself.
2. Accounting for Writers
Every writer needs to maintain accurate records. You can track your business expenses and income in many different ways. I use Quickbooks, but you can use a spreadsheet, a notebook or any other accounting software you want.
Having a DBA filed will allow you to open a business checking account in your business's name. Even if you don't file a DBA, you should have a separate bank account, because some retailers, like Amazon, deposit your money directly into your account. Should some hacker get a hold of your bank information through Amazon, it could be disastrous for you personally if you are only using one account.
Money Saving Tip: With the financial meltdown, quite a few reputable banks are offering free checking. Take them up on it!
Save ALL your business receipts. Even better, have them organized. (Personally, I scan mine to keep from having zillions of bits of paper cluttering my office.) A good system will save you and/or your accountant headaches in April.
Again, I STRONGLY advise you to keep you business accounts separate from your personal accounts and document EVERYTHING. It'll save you a lot of grief if the IRS comes knocking.
3. Insurance Needs for Independent Writers
Does a single writer publishing her own works need business liability insurance? That's a maybe/maybe not question. A traditional publishing company usually covers its writers under a company policy.
As an indie, it's your call whether you need it. If you're writing biographies or memoirs, I'd say yes — there's a greater likelihood that someone may sue you if he or she doesn't like how you portrayed events in your book. Otherwise, you could skip it for now.
You may need to consider other insurance needs. One type of insurance I strongly suggest you update is your homeowner's/renter's policy. A few writers I know lost their home offices and equipment when Hurricane Ike slammed into Houston back in 2008.
Talk with your insurance agent (or find one) and make sure you have coverage. This may mean getting a separate rider, depending on your insurance company, but it'll be worth the money if you lose your laptop in a disaster or someone steals your equipment.
Making a Writing Business Plan Part 2: Business Expenses
What do the aforementioned items have to do with a business plan for writers? You may need to factor in certain business expenses related to each item.
Time to get out your pens and paper again! You're going to make three columns.
- Use column one for one-time-only or occasional costs. This should include consulting your attorney, paying to register your website's domain name, etc.
- Place yearly costs in column two. This may include paying for website hosting, maintaining your business license, paying self-employment taxes, or hiring a tax accountant.
- Add monthly costs to column three. This is where you'll put things like your insurance premium (if you pay it on a monthly basis), the cost of Internet for your business, office supplies, and the percentage of the utilities that you use for your business.
You'll need to itemize the expenses you know you'll incur as an indie publisher. If you're not going to do a particular item, then simply list zero; you may add that expense later.
Note: If you looked at the SBA template I mentioned yesterday, you'll notice marketing under this section. Frankly, I don't agree with that placement. For writers, marketing must include your brand, which goes more toward your personality than slapping a cool logo on a product. Therefore, marketing and promotion will get its own post on Saturday.
After you tally your expenses, hang on to this sheet. We'll be adding to it during the rest of the week. Tomorrow, we'll discuss the one thing every new business owner forgets to add to her business plan.
If you have questions, I'll be happy to answer them. If you're too shy to leave your question in the comments, feel free to e-mail me at email@example.com.