Former USC classmate and fellow indie author Danny Gardina–author of the novel The Last Night and the collection The Lookout and Other Stories and founder of Kings Men Press–wrote in with a question about my last post, and LLCs, and how to set one up.
The easy answer: go to a lawyer.
No, really. I’ll tell you a bit about what I did (as I understand it), but ultimately, get thee to a lawyer. I’m not advising you to do anything (besides go to a lawyer). I’ve heard of people doing it online, clicking a button and paying $99, but I wouldn’t recommend it, mainly because a website can’t listen to your goals, understand your needs, and advise you accordingly. It’s obviously cheaper than going to a lawyer, but, well, as with so many other things, you get what you pay for.
I made up Exciting Books just before I published my self-titled collection while I was at USC. I’d long envisioned an entity called Exciting Entertainment–a sort of production company. By then I had a background in both broadcast production and publishing, so I knew a little about production and distribution. I’d just moved to LA and thought I might ultimately like to become involved in feature film production, and that was how I figured to do so. I’d have a production company. But I was also very interested in publishing, and I thought maybe I’d do that, too. Back then, I hoped I’d get a corporate bookdeal I could use to ultimately take on my own imprint as part of a bigger company–I very much wanted to be a creative director at a small imprint of Random House or Grand Central.
I published my collection with the Exciting Books designation on it.
When I published Meets Girl a few years later, I did the same thing.
I had not yet spoken to a lawyer or formulated a business. I was still studying business and marketing. I did not yet know about the idea of separating one’s assets. I knew very little.
Just after Meets Girl was published, I did a collection called Sparks with a guy named Simon Smithson. Simon had the great ideas and came to me with it, and my role was to basically produce the thing, while he had a vision for marketing it and building its buzz. It was small and did okay and in the end we split the revenue and called it a day–the revenue being roughly equivalent to what I imagine the two of us would have left as a tip after a couple of steaks together.
A few months after that, though, I reviewed Nick Earls’ Perfect Skin as I was completing my MBA, and tweeted at Nick that I had posted it, as well as expressed some disappointment it wasn’t out for Kindle. I told him if there was any way I could help him, I’d be happy to. Fast forward a couple of days and we were talking about digital distribution and strategy and publishing, and fast forward a couple more days and I woke to find an email from his agent in my inbox. They were interested in going forward, in signing agreements, in publishing with me, and that was when I knew it was time to make things official.
I was already in Pittsburgh, and I drew on my network to make the connections I needed. I contacted a law firm, set up an appointment, and drove over with my then-fiance (now wife), who had already edited everything I’d ever published and whose guidance I knew I needed in going forward.
The lawyer was great, and we sat down for more than an hour while I told him what I wanted to do and he explained my options.
I’d already known I wanted to do business via limited-term licenses, rather than by purchasing rights to publish. In fact, before I went into that meeting I developed our business model so that I knew exactly what we wanted to do and how. Given that there’s no such thing as out-of-print anymore, just as there’s really no such thing as shelf life, I knew that I wanted to offer authors I worked with something different. I didn’t want to tie up their rights. I didn’t want to print their books, even. I just wanted to take what they’d written and make it digital and facilitate sales on digital platforms.
Which was already changing things such that my old ideas no longer made sense. “Exciting” always has, for me–because I aspire to it in the sense of science, where to “excite” an electron means to increase its energy to a new, higher, measurable level. I wanted to literally “excite” publishing, bringing it to a new level, and because of that, “Books” no longer made sense to me–I thought of books as paper and novels, and I needed more flexibility. I thought back to the ideas that had revolutionized publishing–the technology, the movable type, the printing press on which books had been made on paper.
And I realized that was what I wanted to do. Just as the printing press produced paper books, so did I want to produce digital stories–novels and poetry and essays all. No bindings. No limits. I wanted to be a press, and thus was born Exciting Press.
In discussing my ideas with the lawyer, the ideas of sole proprietorships and corporations and etc. came up. I decided on a limited liability company–I wanted to own Exciting Press myself, and I wasn’t going to open it to shareholders and such, so I didn’t figure on the whole “corporate” route. This is also why I’m creative director of Exciting Press, and not CEO–LLCs, for the most part, don’t have CEOs, more like a manager. I can probably call myself whatever I want (I think a lot of people online tend to), but I didn’t want to; I’m a writer and publisher, and thus precision in word means a great deal to me (this is also why I don’t use terms like “traditional” or “self-publishing.” I think they’re imprecise and inaccurate.
There were a couple of other things to consider, as well. First was that I’d never envisioned only books–what about production? What about Exciting Entertainment? But by then I’d also begun teaching, and I’d also started to offer some publishing services, taking on a few clients to help them make books, so what I was doing wasn’t just Entertainment anymore.
I decided on Exciting Endeavors LLC.
When creating an LLC, though, one requirement is that one always use the LLC designation whenever mentioned. I thought that might become cumbersome quickly, though, and the solution was simple: fictitious names. Fictitious names are simply, basically, what an imprint at a publishing company or a subsidiary of a corporation are. They’re part of the greater entity, but they’re the brand by which that entity goes to market. They’re also called DBAs, or doing business as, which I liked because that was what I wanted.
So after settling on Exciting Endeavors LLC, I created four disparate fictitious names. Obviously, one is Exciting Press, for publishing. In case I found myself in the position to offer services (and wasn’t going to publish a book as Exciting Press), I created Exciting Consulting (I’m not really using that. Mainly because there are too many corporate publishers now offering publishing services via scammy operations like AuthorSolutions and etc., and I want to differentiate myself from them. I’ve been approached many times to lay-out an ebook or to design someone’s cover, but in the end right now I’ve found myself focusing more on Exciting Press and the authors I’ve signed to work with, and I’m sure we’re all happier that way).
[Sidenote: don't pay AuthorSolutions any money. There are better freelancers out there who can provide everything they do better and cheaper. Don't pay an agent to push a button for you, and then give him or her 15% of your revenue. Times are changing fast, yes, but there are a lot of people taking advantage of those changes in some ways that may not be outright wrong or illegal but are certainly questionable.]
The other two fictitious names created were Exciting Media, for what didn’t fall under publishing (games, apps, whatever), and then Exciting Endeavors, so I didn’t have to use LLC every time and further because who knows what I’m going to do down the line?
I’m not saying those decisions are right for you. I don’t know. That was why I developed a model for what I wanted to do, and how, and then took that model to a lawyer to figure out what I needed to file to make it happen.
How do you do those things? Start with the model. What do you want to do, and how? Even if you don’t want to ultimately work with other authors, I think you still need to approach publishing as a professional, and more so than getting paid that means completing the necessary requirements to do so. Registering an LLC (or corporation, or sole proprietorship, or whathaveyou). I think it’s a really good idea to keep personal assets separate from professional assets, mainly because intellectual property and digital rights are so new and ever changing and it’s just a damned good idea to cover your ass.
After you’ve developed your model, and have a plan, take it to a lawyer. Who may well tell you, “Eh, don’t worry about what the internet guy said. The chances of that are slim. Just become a Corp-S.” Who knows? I don’t. I just know that I went and talked to mine and he listened carefully and helped me make decisions for which I’d have otherwise had no context whatsoever.
There’s also the issue of taxation. In writing, Danny mentioned California’s tax “for the pleasure of doing business in the state,” which basically means that the moment you legally register you need to pay those taxes. Which may not be economically feasible if one isn’t making enough–and let’s be candid that most don’t. Most business lose money at first, and really the only reason Exciting Endeavors isn’t actively hemmorhaging capital is because digital publishing requires literally no investment up front, so we have no operating costs that I hadn’t already personally incurred. I don’t know anything about taxes, either–I have an accountant who handles that. I just give her the documents, and she makes sure the right things happen. She’s also the one who advised me to take just a partial amount of refund in case revenue started to increase and I had to pay taxes more often.
Or something. I’m not sure. That’s why I go to them.
I think that’s important. It seems like a lot of writers outsource tasks like marketing. A lot of authors claim “they just want to write.” So they get agents, and corporate publishers, and hey, that’s fine if it’s what they want. But I’ve also seen a lot of authors mention the day they spent with their taxes and a calculator, and I wonder if the 15% they’re paying their agents and the who-knows-how-much-the-corporations-take wouldn’t be better spent outsourcing the important stuff like legal contracts and taxation. And I know legal contracts technically fall under agents’ purview, but sometimes I wonder whether it actually should (mainly because I see very, very few agents with JDs. Or MBAs, for that matter). I’ve seen the kinds of contracts corporations use for book contracts, and honestly, when I created Exciting Press’ license agreement, those contracts were very much on my mind. Corporate contracts are huge and long and restrictive and tend to try to make sure that the corporation gets as much as it can; Exciting Press’ license agreement is two pages long and designed to be read and easily understood by authors (though we always recommend they seek some sort of advice about those contracts, or any contracts, really, before signing).