Any information contained in this article should be construed as legal advice and is not intended to be a substitute the appropriate legal or other professional advice in your jurisdiction.
So, writing a novel is one part of the process, but actually making it a living? That’s a whole other ballgame.
Whilst I’m still working on my WIP, I’ve been looking around articles about publishing (those of you who received my Summer Newsletter would have read my thoughts on Traditional Vs Self Publishing). However, as well as publishing, you need to know a thing or two about what you’re actually selling, how to run a business, and all things legal.
Which, as it happens, is something I know a thing or two about.
Types of Legal Entities
I’m going to start these articles with an initial look at the different types of legal entities that you can get and what they mean.
Setting up as self-employed (which is what we writers are when going into business) means you have different options as to what legal entity you want to use. This will depend on your own situation, jurisdiction, and legal requirements where you live.
The below is based on the law where I live – ie England.
The business is owned and managed by one person, and there is no separate “legal entity”. It’s also called an “unlimited liability”, because all the debts and after-tax profits are yours and yours alone (ie not belonging to a separate company).
There is less regulation (unlike a limited company), but there is also more risk because you’re completely liable for the debts.
It’s a nice, easy setup, with lower running costs. A good starter-for-10 position.
Like a “Sole Trader” entity, these are subject to an “unlimited liability”. However, unlike a sole trader, a partnership has a number of people pooling their expertise, money and therefore, risk, into the business.
There is something called a Deed of Partnership which is drawn up to identify what capital is owned by what individual, how profits & losses are divvied up between the Partners, and which partner is designated as the Bookeeper.
For writers, given we are an isolated secluded bunch, are less likely to use this model, as it requires another person!
There are two types of limited companies – private limited companies, and public limited companies. I’m going to only talk about private limited companies, as that’s going to be the most relevant to the writer’s situation.
Limited companies are different to a “sole trader” or “partnership” setup because they have a limited liability. The Company, under law, is considered a separate legal entity to the person who owns it (the shareholder). This means the debts & profits are owned by the company, instead of the individual.
However, Limited Companies are subject to very specific rules (mostly from Companies Act 2006 and related legislation & regulation). There are laws about how directors should conduct themselves, laws about how to buy & sell shares, and even laws about what you can name it. You’ve also got to register the company at Companies House, and keep the information & accounts details up to date on a regular basis.
This option is most likely to be relevant for those writers who are earning significant amounts of money, or who have debts they want to put through a company.
Business isn’t complicated, but you do need to do your research
The type of entity you pick might change over time, depending on your circumstances, your career and how you’ve set up your business. Do your research, get proper advice from those who have done it before and other professionals. Like anything, being self-employed has its risks. It’s not impossible to do (look how many people do it!), but it’s not something to go into flippantly.
Photo by Brooke Lark on Unsplash
- How To: Smash 50k words in a monthIt’s November, which means its Nanowrimo month for many people. Good luck to those who are tackling the mammoth 50,000 words in a month, … More How To: Smash 50k words in a month
- Top 3 tips for writing Multiple POVsAs a fantasy reader and writer, I’m most comfortable in the world of 3rd person POV. However, if you’re writing a fantasy epic, how … More Top 3 tips for writing Multiple POVs
- How To: Writing Sub-PlotsSub-Plots are a key part of any story, especially a fantasy one. You have to keep a careful eye on how many you have … More How To: Writing Sub-Plots