How to Start a Publishing Company

printing, publication, press, publisher, printing pressThere has been a fair bit of discussion in the forums lately about authors who open a publishing company to self-publish their work.  Much of that discussion centers on whether that practice is ethical: is this author trying to deceive the readers into thinking a publishing house picked them up or simply doing business in a business-like manner.  I contend the latter.  I make furniture, no one questions my decision to sell my furniture as a woodworking business.  Similarly, as an author who produces and sells books I see nothing wrong with my doing business with book retailers under a publishing business name.  Some distributors demand this: they will not deal with the author as the publisher.

Business Name Game

Think carefully about your business name.  This name conveys an image to your readers and/or business affiliates, this is not the place for some cutesy or obnoxious “handle” like you might use for social media or blogging.  Once set up, changing your business name is not an easy thing to do.  Give it some thought, check to be sure your name is not in use already, and is not so similar to something else that you risk a law suit for infringement.  Advice on naming a business and checking for availability is offered by the Small Business Administration.

Business Sense

Have you run a successful business before?  If not, you will want to schedule a meeting with your local chapter of SCORE (www.score.org/).  This organization is comprised of retired business executives who offer advice and guidance to new businesspersons and their insight and advice can be invaluable.  Much of the service is free, what isn’t is worth the small investment.  They may ask you some hard questions about your plans; your income sources, how much you expect to make, your expenses, your marketing plans, all things that, if you haven’t thought them through already, you need to.

Business Red Tape

Opening a publishing business in the USA is similar to opening any other legitimate business.  Start with obtaining an FEIN (Federal Employee Identification Number) even if you do not plan to hire employees.  You will use this as your tax ID number so you don’t have to put your personal Social Security number on every piece of business paperwork you send out. That’s just a bad idea for security reasons.  This can be done on-line for free at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN .

Next check with your state and see what is needed to register your business license.  This will vary by state, but generally can be done on-line and for little or no cost.

Finally, register with your county for a sales tax license.  In some cases this is a mere formality; if for example you plan to produce only eBooks that will be sold through Amazon.com and Smashwords, these distributors will take care of collecting and paying sales taxes.  Your sales tax reports to the county will show that you made So-Much in sales income and So-Much of those sales were sales through a retailer.  In the end you will owe no taxes on those sales, only on sales you made directly to your readers – or possibly a small minimum filing fee.  In my county we pay $20 a year as a filing fee if our taxes don’t exceed that amount.  If you won’t actually end up paying taxes, it may be tempting to skip this formality, but in some districts, conducting business without a license can get you slapped with a heavy fine.  It’s better to do it properly.

Now that you have your documentation in order, open a checking account under your business name, get the debit/credit card and order checks.

Getting Down to Business

Order business cards and build a web site for your business.

Next go to www.Bowkers.com and buy a block of 10 ISBNs.  This will cost you $250.  Owning your own ISBNs is the only way you’re going to do business with Lightning Source as a printer, and if you want to get books into bookstores, LS is the printer you need to deal with; Createspace will not get you there because they do not conform to the requirements bookstores demand.

If you are absolutely certain that you will publish only your own work and only in eBook format, you may dispense with the ISBNs if you wish.  EBook distributors will ask for an ISBN, but if you don’t have one, they will assign their own internal tracking number.  Print books require an ISBN.

You will need a system for bookkeeping.  There are many bookkeeping software programs available, a little research on The Net will help you find and evaluate them according to your needs and budget.  You don’t have to use software if you prefer not to: a ledger and a pencil will work if you know a few accounting basics.  Or you can hire an accountant to take care of it for you.  This is often the best choice, long term, especially if you are not skilled in bookkeeping.  In most cases your publishing company will require only a basic set of books to track your expenses, assets and income. If you must track expenses for and pay royalties to authors you’ve published and distributed to many distributors, keeping it all straight can get a bit hairy.

Other professionals you will want to consider finding and working out a deal with as sub-contractors would be one or more cover artists, a professional grade editor, and if you plan to offer elaborately formatted print books, a book designer.  Obviously, if you have proficiency in any of these fields you can do this yourself.

Beyond Business Basics

From here there are many decisions to make:

  • Will you publish only your own work, or take on other authors as well?
  • How much time are you willing to invest in the publishing business instead of writing?
  • What types of books are you prepared to publish?
  • Do you have the skills or contractors to complete all the tasks needed prior to printing the book?
  • What will your business model be – fee up-front (as in vanity publishing) or percentage of sales?
  • If percentage, do you have capital to cover production expenses/wages for the books you’re publishing?
  • If percentage, have you calculated how many sales it will take to recover your investment on these books?
  • If fee up-front, how will you dispel the stigma of being a Vanity Press?
  • How and how often will you pay your authors?

Note: Using the Vanity Press business model is not necessarily a death knell: it depends entirely on the quality of the work you produce and the fees you charge.  High prices for shoddy work will earn you many complaints, but high quality work at reasonable fees may well work in your favor with authors who can afford to pay a fee up front knowing they will then keep all of the royalties.

Summary

If you plan to use your imprint to publish only your own books, most of the entanglements are eliminated, but if you plan to make income from publishing other authors as well as from your writing, you may find yourself painted into a corner as far as time and energy goes.  Consider it carefully, do your research and proceed with caution.  Who knows, you may become the next Random House.

Resources

25 thoughts on “How to Start a Publishing Company”

  1. Thanks for the great tip about create space vs. lighting source. What is your feedback on Lulu, which is another POD co.?

    1. Last I checked, Lulu also used Lightning Source as their printer/distributor. Lulu is an author’s assistance service which sells the services needed to prepare your book for printing. I have not dealt with them, but my reading of other authors suggests that Lulu does a good job and offers a reasonable value – in most cases; there are always exceptions. Like any service, they will try to up-sell you on added features whenever they can, but they’re reportedly not as dogmatic as some others.

      Since the Espresso Book Machine hit the market, more and more of these larger services are eyeballing the idea of buying one of these very expensive machines to do their printing in-house. I did not see Lulu listed on their list of clients, but expect one day they will be.

  2. I’ve been through the desert on a blog with no name,
    It felt good to be out of the rain.
    In the desert you can’t remember your name,
    ‘Cause there ain’t no one for to give you no pain.

    In publishing they can give you pain
    printing what wants to be read
    after two years, you’re out on the street
    Trying to make some bread….

  3. Allan this is brilliant stuff. It’s another blog of yours I book marking. I don’t have the money, but it certainly appeals as something if I do get the money. Thanks for this.

    1. Thank you so much, I’m glad you found it useful, Richard. Thanks for dropping in.

        1. A quick search turned up several “services” that look like government sites and charge a fee for processing an EIN application. However, going to the official IRS web site I find this notice:

          How to Apply for an EIN

          Applying for an EIN is a free service offered by the Internal Revenue Service. Beware of Web sites on the Internet that charge for this free service.

          Go to the official IRS web site, AJ and skip the fees.
          http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN

          1. Thanks for the link. I followed the one in your post and ended up at the fee page. Trying this second one now.

  5. Three points;

    (1) If you will not be selling books directly to readers in your state there is no need to get a resale certificate to collect and remit sales tax. If you get a sales tax number, your state gov will expect reports to be filed, even if you owe nothing. If you forget to file or file late, you can be fined even if you owe nothing. Avoid dealing with sales tax if you can avoid it legally.

    (2) CreateSpace can definitely supply books to terrestrial booksellers, however these stores want a big discount (usually 55%) three months to pay, and the right to return unsold books which may be tattered and dirty. It makers much more sense for self-pubbers to concentrate on online sales, and special orders from stores. Lightning Source costs more to start with than CreateSpace and is more difficult for newbies, but it may provide higher profit on each book.

    (3) No writer should be her sole editor. Even Editors who write should hire other editors.

    Here’s a blog post about naming a publishing company: http://bookmakingblog.blogspot.com/2012/03/think-carefully-about-naming-your.html

    Here’s a book about forming a publishing company: http://www.amazon.com/Independent-Self-Publishing-The-Complete-Guide/dp/0981661793/ref=sr_1_28?ie=UTF8&qid=1346103107&sr=8-28&keywords=independent+self-publishing

    1. Thank you, Michael, for your great additions. I agree with everything you said, (especially #3) but must point out that some locales take a very dim view of doing business without a license, even if you don’t sell within state. I live in one such. If we are caught doing business without a license it will mean steep fines and deep audits. This is, in part because Tennessee has no state income tax; it supports itself primarily by sales taxes, so they want all businesses to be licensed and reporting. They also claim that it helps keep undesirable elements out of the business community, but I believe it is mostly the tax issue. Fortunately the form is simple, filed annually (unless you’re making major sales, then quarterly) and out-of-state sales are exempted. It does mean another form to fill out at the end of the year, but it keeps me legal and it helps the local schools get their share of the state funding. I’m not sure how that works, but it’s in there somewhere.

  6. I have been brainstorming lately with the idea of opening a publishing house in my area. Not so much to publish my own work but the work of others. I found this article helpful and would appreciate any other advice on how to go about the start up process.

    1. Thanks for your kind words, Charity. This covers the basics. Beyond this will depend on your local regulations, services you want to offer and your experience in publishing. Like any new business the first hurdle will be in getting your company notices and convincing potential clients of your expertise. Look up your local S.C.O.R.E. office, they will be very helpful in defining your goals and finding ways to reach them.

      1. Hey Allan,

        I really appreciate your post. Thank you. It gave me some insight on this matter. But I have a few more questions. I am a newbie in business. But I wrote a book about 2 years ago and I have not been able to publish it through a traditional publishing company. Self publishing companies keep contacting me but I don’t have the money to pay upfront. I thought about saving up to publish my book through self- publishing, but I am afraid to invest all that money and not knowing which one I should trust. so I started thinking about opening my own publishing company. As a newbie, would you suggest that I put the efforts and money to open my own publishing house? Or would you suggest that I save up and invest in one of those self- publishing companies to have them published my book? If yes, which publishing companies would you suggest that I consider? Also how much in average do you think I need to open a publishing house including buying all necessary materials such as a lighting source printer?

        ps: If I do decide to open my own publishing house, initially I will use it to publish my book and then I do intend to publish other authors work as well. Please help! Thank you.

        1. Hi Miley,

          Beware of “publishing houses” that seek you out… unless your name is Stephen King, especially if they want their fees up front. These are just modern versions of a vanity press and probably will be a great disappointment to you.

          SELF publishing costs very little. But it is called self publishing because you do the work yourself. It is not difficult if you are at all computer literate. The process of producing your book can get pricy in terms of hiring an editor and cover artist. But there are work-arounds for people on a shoe-string budget.

          Submitting your work to a small/Indie press means they may reject your book if it doesn’t fit their niche, but this is less likely than when trying to find an agent and traditional publisher. Most do not offer advance payments, but will do the editing and artwork at no cost, then keep a percentage of sales. You spend nothing out of pocket.

          Again, any “publisher” that asks for high fees and wants them up front is usually making their money off the authors, not by selling books and will be a disappointment to you. Here’s an example of a good small press, check out their About/Submissions page and you’ll see what I’m talking about. http://greyhartpress.com/

          As for opening your own press, unless you have experience in editing, publishing and marketing, I do not recommend starting your own press. You can self-publish your own work under an imprint name if you want to avoid listing yourself as author and publisher. Later, if you tire of writing, you can expand your imprint, and hire the artist, editorial, promotions people you need to make a go as a publishing house. But don’t do this until you want to go into publishing full-time.

          My book offers more detail on all of this and these post can help as well:


          1. Thank you very much for your answe. When you say i wil do the work myself, what kind of work are you talking about?is lulu a reputable self publishing press!

          2. Turning a manuscript in word processor format into an eBook means “cleaning” the manuscript of formatting commands that will cause the distributor’s conversion script to choke and spit out an eBook with formatting errors. This can be tedious, but not difficult. Formatting for print books means converting the manuscript to PDF and formatting the pages with page numbers. If you want a table of contents or index, these will need to be created. And, of course, a print book has special paging considerations so that new chapters start on a new page, some recommend starting new chapters consistently on a right-hand page. There are font considerations, left/right margins on opposite facing pages, things like that. This is all covered in my book.

            You can “self” publish by submitting your prepared manuscript file directly to “printers/distributors” such as Amazon (for Kindle), Smashwords (for most everything else) for eBooks, CreateSpace or Lightning Source for print books. Lulu is an authors assistance service that will help you produce a book. As I understand Lulu, they will let you choose the level of service they are to provide: you do as much as you can to reduce costs, they’ll do the rest. I have not used Lulu, but I have not heard anyone slamming them as a scam or rip-off. Be sure you read the user agreement/contract very carefully so you understand what you are getting for the fees you pay. Don’t assume anything: if it’s not listed it’s not included. And be prepared to do most, if not all, of the promotions work yourself. Last time I checked, Lulu does NOT print books. They hire that out to Lightning Source. You can deal with Lightning Source yourself if you choose. If you need the services that Lulu offers and can pay the fees, they would be a good choice. But you would be “indie” published, not “self” published. If I design a house, then hire a general contractor who hires carpenters, electricians and plumbers to build the house, when it’s done I cannot claim, “I built it myself”. Lulu is a general contractor.

          3. Thank you very much Allan for your input. I learned alot. I will check your book out for further info. Can u please end me a link to your book?thank you!

  7. Dear Allan,
    Thank you very much for this clear, precise and thoughtfull article.
    I would kindly ask you which is the proper experience one must have and of how many years, in order to start a little publishing company? I see also that you have accomplished university studies in publishing, so I suppose also additional preparation is required. Im european and would consider from now one year ti start running an Indie press.
    Thank you in advance for your time and consideration.
    My best wishes
    Julia

    1. It’s difficult to put a number on years of experience, Julia, because of differences between people’s learning ability and intensity of their experiences. The quality of that experience and the scope of their skills is what is the real issue. Not many individuals can claim to have expertise in formatting manuscripts for a variety of publishing options, skill as a competent editor (not just a proof reader), lay-out designer (for print books), cover artist, and marketing mogul as well as accounting and business management. Each of these skills is needed for a small publishing company to succeed. Whatever skills an individual does not possess need to be brought in through employees, sub-contractors or partners. What each brings to the table will determine the quality and capability of an indie press.

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