A Publisher's Conversation with Authors: What Must an Author Know to Set Up Writing As a Business?


It is Tuesday. Monday's madness is over, and Wednesday will take us over the hump, so Tuesday it is--for some serious discussion with authors. Tuesday talks mean to address authors in waiting and self-published authors who would like to go a more traditional route or who would at least like to take their steps with a publisher by their side. 

Following on from last week's conversation about whether or not an author should set up himself or herself as a business, if you have decided to do it, you might take into account the following steps/actions:

1. Choose a Business Structure

Your business structure affects your taxes, liability, and how you operate. The main options include:

  • Sole Proprietorship – The simplest setup. You and your business are the same entity, meaning no separate legal protection. You report income on your personal tax return (Schedule C).
  • Limited Liability Company (LLC) – Offers liability protection, meaning your personal assets are separate from your business debts. Can be taxed as a sole proprietorship or an S-Corp.
  • S-Corporation (S-Corp) – Can reduce self-employment taxes if you earn a substantial income, but requires more paperwork.
  • C-Corporation (C-Corp) – Typically unnecessary for most authors unless you plan to scale into a large publishing business.

Many authors start as sole proprietors and later switch to an LLC for liability protection.

2. Register Your Business

  • If using your real name as a sole proprietor, you may not need to register, but if you use a pen name or business name (e.g., "Jane Doe Publishing"), you might need a DBA (Doing Business As) registration.
  • LLCs and corporations must register with their state’s Secretary of State office.
  • Some states require a business license, even for sole proprietors.

3. Get an EIN (Employer Identification Number)

  • Required if you form an LLC, S-Corp, or C-Corp, or if you hire employees.
  • Can be obtained free from the IRS here.
  • Sole proprietors without employees can use their Social Security Number (SSN) instead.

4. Open a Business Bank Account

  • Keeps business finances separate from personal ones.
  • Makes it easier to track income, expenses, and deductions.
  • Most banks require an EIN (or SSN if a sole proprietor) and business registration documents.

5. Understand Your Tax Obligations

  • Self-Employment Taxes: If you make $400+ per year as an author, you must file taxes. You’ll owe income tax and self-employment tax (15.3%) on profits.
  • Quarterly Estimated Taxes: If you expect to owe more than $1,000 in taxes, the IRS requires quarterly payments (April 15, June 15, Sept. 15, Jan. 15).
  • State and Local Taxes: These vary by state and may include sales tax (if selling directly) or business taxes.

6. Track Income & Expenses for Tax Deductions

Keep detailed records of your business expenses. Common deductions include:

  • Writing software (Scrivener, Grammarly)
  • Website costs (hosting, domain fees)
  • ISBN purchases
  • Cover design, editing, and formatting services
  • Advertising and marketing (Amazon, Facebook ads)
  • Office supplies (computer, printer, notebooks)
  • Home office deduction (if exclusively used for writing)
  • Travel expenses for book tours, conferences

A bookkeeping tool like QuickBooks, Wave, or Excel can help.

7. Protect Your Work and Business

  • Copyright: Your book is automatically copyrighted when written, but you can officially register it with the U.S. Copyright Office for stronger legal protection.
  • Trademarks: Consider trademarking your pen name or publishing imprint if branding is a priority.
  • Contracts & Publishing Law: If working with a publisher, agent, or co-author, understand contracts, rights, and defamation risks.

8. Consider Business Insurance

  • General Liability Insurance: Protects against legal claims.
  • Professional Liability (Errors & Omissions) Insurance: Useful if you give writing advice or run courses.

9. Create a Marketing & Sales Strategy

  • Publishing Options: Self-publishing (Amazon KDP, IngramSpark) vs. traditional publishing.
  • Website & Email List: A professional website helps establish credibility.
  • Social Media & Ads: Facebook, Instagram, TikTok, and Amazon Ads help with visibility.
  • Diversify Income: Consider courses, consulting, Patreon, or speaking gigs.

10. Plan for Long-Term Business Growth

  • Hire professionals: A tax accountant or business attorney can help optimize taxes and ensure legal compliance.
  • Keep learning: Stay updated on publishing laws, marketing trends, and tax changes.

Bottom line: Writing as a business is just as complicated as any other business. Careful planning is needed.

See more Publisher Conversations with Authors HERE.



 Learn more about publishing from an acquisitions editor -- how to get your book proposal accepted, why proposals are turned down/accepted, and how to find the right publisher for your book. On special sale for $5 while inventory lasts at MSI Press webstore. Also available as an e-book and an audiobook.



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