Two Choices: When Your Book Becomes a Business

Share on Facebook0Share on Google+0Tweet about this on TwitterEmail this to someone

Congratulations on selling your first (of many) books. It feels great, doesn’t it? There is no better feeling than to have a stranger take a chance on the world you’ve created for them.

There are however, some precautions you should take if you’re interested in turning book sales into an income stream.

First and foremost, you need to be a business. This means you need to decide what type of business you are. By forming one, you’re declaring how other entities, like the government and other businesses, interact with you. In exchange for this extra work to setup and operate, you get advantages like the ability to claim operating expenses and, sometimes, a better tax rate. There’s a psychological advantage, too: when you create a business you declare that writing is a viable way to earn a living.

In Canada, there are three types of businesses: sole proprietorship, partnership, and corporation. Let’s take a deeper dive on the two that are most likely to apply to you, you book selling machine!

  • Sole proprietorship is where you, the owner, assume responsibility for it all finances: debts, assets, and profits.
  • Corporation is where the incorporated entity assumes responsibility for all liabilities, and is owned by shareholders.

The option right for you will depend on your aversion to risk, willingness to incur cost to setup a business, and your appetite for ongoing operating costs and tasks. Here’s a brief summary table of key considerations:

Consideration Sole Proprietorship Corporation
Startup Cost Low Moderate
Taxation Owner’s tax rate Corporate tax rate
Regulation Low Heavy. You are required to have legal documentation in place, have regular meetings, and are required to maintain documented proof.
Liability Liability for the business owner Liability for the corporation

This list is by no means exhaustive. To better understand the specifics of sole proprietorship and incorporation, I advise you to consult your local government sites, your lawyer, or your accountant.

Share on Facebook0Share on Google+0Tweet about this on TwitterEmail this to someone
The following two tabs change content below.

Andrew Gaudet

Asker of Questions
Andrew has worked in sales and management for more than a decade. His favorite books include Star Wars "Hier to the Empire" trilogy by Timothy Zahn, "Raw Shark Texts" by Stephen Hall, "7 Habits of Highly Effective People" by Stephen Covey, and "Paris 1919" by Margaret Macmillan. "No plan survives first contact" - paraphrased from Helmuth von Moltke.

Leave a Reply

Your email address will not be published. Required fields are marked *