Now that we’ve managed to write and publish fourteen books, it’s time to pass along some of what we’ve learned in the process. The topic of “authorpreneurship”, which covers the business side of being an author, proved popular at the book conventions where we taught classes this year.
Authorpreneur is a derivation of “entrepreneur”, a term used to describe a businessperson who is usually the founder of a start-up company. Tech-savvy, agile and resilient, authorpreneurs share the traits of an entrepreneur. They grasp the nuances of social media and use it to help with brand-building and cross promotion. Those who love dealing in data (number-crunching) also employ analytics to help them them determine just how they’re doing with their online presence. They understand that these days, being an author requires one to also be a businessperson.
Perhaps the most important aspect of authorpreneurship is that it exposes the fallacy of the ultra-passive, “If you write it, they will read it” approach to reader acquisition. Most authors are well aware that besides writing the very best book they can, they need to work harder on making that book discoverable. How do they do it? Let’s start at the beginning.
Setting Up the Business
There are a number of steps anyone needs to perform when starting their own business, and those steps vary by state. Speak with a professional, preferably an accountant who is also a lawyer specializing in businesses. They will help determine if the business should be classified as a sole proprietorship (applicable to most, especially those just getting started), a limited-liability corporation (LLC), or S-Corp. Then apply for an Employer Identification Number (EIN) from the IRS. It’s free and acts as a sort of substitute for your social security number.
Next, set up an imprint or legal entity to provide a more professional presentation. Create a publisher name and register it as a “DBA” (doing business as) with the secretary of state. NOTE: This will vary by state and should be covered when meeting with the accountant/lawyer.
Be sure to apply for any business licenses if they’re necessary for where you live, and if you plan to sell books at local events, be sure to collect sales tax (if applicable) and file as per your state’s requirements.
Reserve the domain name (URL) associated with the imprint name, or your author name if it’s available.
Set up a dedicated business checking account using your DBA or LLC or business entity name. This is the account you’ll provide to book retailers so they have a place to deposit your royalties. And that EIN you got from the IRS? That’s the number you’ll provide the book retailers instead of your social security number when setting up those accounts.
Setting Up the Accounting
Like any business, an author’s business means there are numbers to track. Numbers for expenses. Numbers for royalties. Numbers for book sales. If you set up the means to record and track the numbers at the start, you’ll find tax season much easier to weather. Even if you’ve been at this awhile and don’t have the mechanisms in the place, you can start now.
Set up a spreadsheet for expenses. Start by downloading a Schedule C from the IRS. That’s the form you’ll use to report all your business income and expenses. See those line items in Part II that start with Advertising? Those are the categories you’ll be tracking. Your spreadsheet workbook should include a page for each item that’s applicable to your author expenses. At the very least, you’ll need pages for Cost of Goods (where you’ll record what you pay for print books for signings, editors, proofreaders, etc.), Advertising, Car (track your mileage for attending book signings and driving to and from the airport to attend book conventions), Office Expenses (postage, printer ink, paper, writing utensils, folders, etc.), Travel, Meals & Entertainment (for the expenses you incur while attending book conventions and signings or meeting with your agent or publisher), Legal & Accounting, and Capital Expenditures (computers and other equipment that can be amortized and depreciated over time).
Next, record and keep all your receipts. Doing this means you won’t have to pay your accountant to do it, saving you money at tax time.
Set up a spreadsheet for royalties. You’ll want to include a page for each book with columns for each retailer showing your total book sales and total pages read (for subscription services such as Scribd and Kindle Unlimited) as well as a page where each retailer’s numbers are totaled. The running total at the bottom of each column will make it easy to answer when your mom asks you how many books you sold.
International Standard Book Numbers (ISBN)
As an authorpreneur, you are publishing books. That means you need ISBNs. Don’t let anyone tell you they’re not required—most retailers require them, in fact. They are the mechanism by which book sales are tracked, so if you ever hope to see your book on a bestseller list, buy and use them. This also ensures that you (or your company) will be listed as the publisher and not some book retailer. Oh, and they’re deductible.
Each book format requires a number (ePub, paperback, hard cover edition, and audiobook). The only exception? Mobi files for Amazon. They are assigned an ASIN by the retailer, so there’s no need to “spend” an ISBN on that format.
Once you have your ISBNs, go to http://myidentifiers.com. Sign in and choose My Account > Manage ISBNS to assign each number to a specific book and its format (once you finish writing them but before you publish).
For each number, there are four “pages” of online information to provide. You need only fill in the fields marked with a red *, including the book’s title and book description (this can be the book blurb). Upload a cover file as well as a PDF of your manuscript. Other information you need to provide includes the contributor information (author), format and size, genre, sales and pricing. Your user interface on myIdentifiers will show a green icon next to an ISBN listing if your book’s information is complete. If you see red, it means a required field needs to be completed.
This brings us to the end of Part 1. Be sure to leave a comment if you have questions or need clarification! In Part 2, we’ll cover the organizational aspects of your author business.