by Isabo Kelly
At the request of our
lovely new Keynotes editor, because I’ve handled the money end of a
self-published anthology, I’m taking a step away from the craft-focused
articles to talk a little business. This is specifically geared toward
self-publishing box sets or anthologies, and I’m going to go through what I and
my co-authors have done as well as touch on what other groups have done. I’ll
also provide a couple of references that I’ve found helpful.
BUT PLEASE NOTE: I am
NOT an accountant, a lawyer, or anything like that, so please always consult a qualified
professional for tax or legal questions.
The anthology I’m a part
of, GOING ALL IN, was put together with fellow chapter member (and our
bookseller of the year for 2013!) Stacey Agdern and Cassandra Carr. I took on
the money management end of the anthology and have had to learn a bit about tax
requirements as a consequence.
Now, some groups who put
together multi-author box sets or anthologies set up a separate business entity
like an LLC, get their own tax ID number for that business (an EIN), sometimes
even set up a business bank account, and publish via specific vendor accounts
dedicated to that separate business.
We weren’t that
organized for our anthology.
Since I already had two
of the necessary three vendor accounts through which we wanted to publish the
book, and because I was the one who felt comfortable handling the money, we
published using my accounts. This means my personal Social Security Number is registered
with the vendors, and so all the money that comes in is recorded to my SSN. This has tax
implications, so all the necessary paperwork has to be in place at the end of the year.
For book distribution,
we used KDP (Amazon), Smashwords (for distribution to iBookstore, Nook, Kobo,
etc…), and All Romance eBooks. Both KDP and ARe provide great accounting
statements which allow me to separate out income for the anthology from my
personal books quite easily. Smashwords’ statements are a bit more convoluted,
but it’s still easy enough to separate out the various sales.
Once I’ve got all our
monthly royalties added up, I split it three ways and send each coauthor their
payment via PayPal. This has the duel effect of being both an easy way to send
money, and it provides me with a record of every payment I make to them. (As
far as I’m concerned, a paper trail is always a good thing in case of an
audit.) I keep track of the payments and royalties paid out in an Excel
spreadsheet and (try) to send my co-authors an updated version of that
spreadsheet every month so they can see our actual numbers.
For TAXES, because the
total royalties are recorded to my personal SSN, I receive a 1099-MISC from the
various vendors in January with the total amount of money I received for the
previous year. In turn, I have to issue 1099-MISC forms to my two co-authors
for the portion of royalties I’ve paid to them. I have to keep on file their
W9s, which is a tax form giving me permission to use their SSNs for the
information filings (the 1099s).
For ROYALTIES a
1099-MISC has to be provided for earnings over $10. A $600 minimum is required
for issuing a 1099 to other consultants and contractors—for example a cover
artist you’ve hired and spent more than $600 on over the year—but because the
limit is much much lower for royalties, you will almost always have to issue
1099-MISCs for royalty payouts.
AGAIN, I’m NOT an
accountant; please consult a tax professional for specifics and to verify this
information each year—tax rules change frequently.
For those groups that
form their own businesses to publish anthologies or box sets, most of this work
is done by a professional tax accountant hired by the group.
For more of the basics
on tax information for self-publishing, a book I’ve found very helpful is TAX
TIPS FOR AUTHORS 2014 by NS Smith, EM Lynley. She is an accountant, a
self-published author, and updates her book annually (or has up to this point)
to accommodate new regulations. You can also contact the IRS directly for information
(though I’ve heard reports that it might take several phone calls to get
someone who understands your questions as they aren’t all versed in the
specifics of self-publishing/small business regulations.)
Again, it’s always best
to get the help of a qualified tax accountant—one who is versed in small business
taxes—for tax issues and questions. (I’m just gonna keep repeating that.) Another
book I’ve found very helpful with both tax and other self-publishing
information is THE NAKED TRUTH ABOUT SELF-PUBLISHING by The Indie Voices. The
book has articles by 10 NYTs bestselling self-published authors and covers a
variety of topics, including box set publishing.
Would I do this again? I
will for another anthology with Stacey and Cassandra, but I would hesitate to
go this route with any larger group. For a full box set with 8 to 10 authors in
it, I would consult with an attorney and consider forming a small business
specifically for that venture. (I’d also pass the money management on to someone
else *g*). However, for a small anthology with just us few authors, this way of
doing things worked just fine.
The business choices you
make will depend entirely on your comfort level, the qualifications of the
authors involved, and the magnitude of the project you’re taking on. For those
who want to embark on this adventure, I wish you all the best luck and success.
(And consult tax and legal professionals! *g*) Good luck!♥
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