Archive for April, 2009

Starting Up

Tuesday, April 21st, 2009

The old “I’m just publishing my book, not starting a business” fallacy has reared its head again. So, if you already know all there is to know about founding your press, go away. You’re going to be seriously bored by this post. Or, better, stay, and tell me what I omitted in the comments!

First, any time you’re getting money for anything, it’s a business. And no matter whether profit is your primary goal or not, if you don’t at least break even, you won’t be accomplishing any goals for long. Money does matter.

Now that we have that settled: you need to decide what type of company you should have. If you don’t choose at all, you have chosen a sole proprietorship. This is the default, but it’s not necessarily a good choice for you. Your other choices are partnerships (general or limited), LLCs and corporations (S-corps or general). My personal preference for most publishing companies is an S-Corp. Why? Because it has the most upside potential, and I’m an incurable optimist. If you become successful, converting an S-corp to a general corporation, and even eventually selling stock to the public is less of a seismic shift.

Corporations offer about as much protection of your personal assets as you’re going to get, assuming that you actually do the annual paperwork, and treat the company as a “real business.”

Digression: If liability is a concern, you should also get media and general umbrella liability policies, at a minimum. I am aware of exactly two agents in the U.S. who know media liability policies inside and out. Toddle on over to the Reference Desk’s web directory to find them.

With an S-Corp, you do have to file corporate tax forms, but the profits get passed straight through to stockholders’ personal income, so you’re not double taxed. In fact, if you pay yourself a reasonable salary, there’s a very nice little effect. The profits aren’t generally subject to employment taxes such as Social Security and Medicare. Just play it straight, and this can work out well.

You should probably do more research on this subject. Depending upon the size of your effort, you might want to consult a tax attorney, buy one of the many good books on the subject, or just do an Internet search.

Whatever form you choose, you will need an Employer Identification Number (EIN), whether or not you contemplate hiring employees. After all, you really don’t want to hand your Social Security number to anyone who asks, but you will have to supply some tax identification number, on request, to anyone who pays your company more than a few hundred dollars per year.

Next, look up the licensing requirements for your city, county and state. Remember to get a sales tax collection or vendor’s license and identification number. If you’re not setting up a formal business entity, such as a corporation of some kind or an LLC, then you will probably need to file DBA notices (Doing Business As) in some public record. Google is your friend when you are searching for the latest local regulations on such things.

Digression: Remember to file Use Tax on anything you buy without paying some state’s sales tax, if it’s not to be resold. Individuals are supposed to pay this, but rarely get caught if they fail. Companies are routinely caught, and the fines and penalties are quite painful.

Set up an accounting system, and one for handling your orders and your contact database. There will be other needs for information handling systems, policies and procedures, and you’ll need to adjust the ones you begin with as things grow, but you must have something in place before you launch, or you’ll be overwhelmed.

And, no, a check book and and a shoe box are not enough!

The rest of the drill involves actually publishing the books and selling them. Those are fodder for other posts and for other people. I do hope, however, that this gives you a basic rundown on the launch of your business.

Google and the Big Publishers

Monday, April 20th, 2009

Why did the larger publishers settle with Google? It’s pretty simple, I think.

Google has a lot more money to fight on this issue than even large publishers can spare.

More, the precedent set when Google was sued for scanning and indexing web sites might seem to apply to books and book scanning. After all, judges aren’t usually from an intellectual property background. Even IP lawyers often don’t really understand all of the ramifications of an event in our complicated industry, and this infringement takes us deep into complex territory.

So, the publishers looked at those two pieces of information, and decided to settle for something rather than take the chance of spending unbelievable amounts for legal fees and in the end, losing an enormous amount.

Is this settlement better for them than for us? Of course it is. Is it better for all the parties who crafted it than it is for us? Naturally.

Is it the best deal we’re likely to get? Yes. Even if you pull your books out of the settlement, all you end up with is the right to sue. Google can, and probably will, still infringe your rights. If you sue, you will face the same Hobson’s choice that the larger publishers did.

Is this just? No. Is it right? No. Has Google failed in its pledge not to be “evil.” According to their lights, no. They see the action of rights holders as evil in preventing Google from accomplishing something that they feel is a great social good, when we’re (again, in Google’s view) acting only for our own gain.

This is one of those quasi-religious arguments where every side is convinced that it’s right. And it’s one where you may have to settle for what you can get, in order to avoid a Pyrrhic victory or an annihilating defeat.

Or so I see it.

Oh, and if you’re not a US author or US publisher, should you care? Oh, yes. Your books will be scanned just like ours, if they’re in a library here. And they probably are in one library or another.