To create a tiny publishing company...

[Nick B]

As many of you know, I am collaborating on a sci-fi series, starting with the novel Liberator. Now, the question I have is this: Would it be wise to start a tiny publishing ordinary partnership to simplify ownership issues and so on?

The reason I ask is that Amazon don't seem to recognize that two (or more people) may in fact write a book and want to publish direct. It appears that one of you must become 'The Author' for payment and so on. So if we create a small business as an ordinary partnership, we register with Amazon as that publisher, so all payment goes to that account and we simply pay ourselves from that.

Why go to all this trouble? Well because if we have written say 6 novels under the collaboration, and I have written 2 more as myself and Darren has written another 3, it gets a bit sticky as to sorting the payment for those 6 collaborative works...
It would be nice and easy if Amazon would allow joint publishing and split earnings, but it seems they dont.

Any ideas, or opinions on this? It isn't as though running a simple partnership is difficult work, so seems like an option to me.

 

[ratsy]

You don't technically need to start an official company by my understanding, but you will want to have some sort of a contract done up between the two of you to avoid any issues. The idea would be, one of you link your bank to the amazon account, and when you get paid, you would be obliged to paypal or transfer half the funds or whatever your agreement states. It may seem like you will never encounter legal issues, but what happens when there is an issue and no contract in place...bad stuff.

 

[Ray McCarthy]

I've had partnerships and private companies, even one horrid "Co-operative", horrid things. I've been a "sole trader" too. Companies are pain as you need a real accountant at least once a year and filing accounts etc. With just two people a legal partnership trading as (officially) <insert name> is fine. Also since your only liability likely is if you are sued for defamation (company no protection) there is no reason to have a Limited Liability private company or a public one selling shares. It's just to manage royalties.
You sometimes see things like Joe Smith & Mike Jones T/A Cornycopia or whatever and you can even register a trademark and all.

If I was installing satellite systems or electric garage doors, I'd have a company, but even as a sole trader you'd need public liability insurance.

I like writing. No money tied up in stock, no real liabilities, little capital equipment and as long as no-one thinks they are being insulted by your writing you're grand

 

[Nick B]

An 'Ordinary Partnership' in the UK seems to be a very simple thing, you register a name with HMRC, no need to bother with companies house or anything and as long as you arnt making over £83k a year, no vat register either. Assumably you can have a single bank account for that partnership and pay both parties from that equally. Possibly even holding some capital back in case we decided to do something dumb like get some prints done.

This would get around one of us having to 'hold' the bank account. In the unlikely event of say, the bank account holder getting hit by a bus or something and the whole thing getting messy. Or if one of us went bankrupt, or got divorced and so on.. Things that can make life unhappy.

It appears an Ordinary Partnership doesn't really need much looking after and isnt really any different from a sole trader, except there are two of you. No much in the obligations or expenses side of things.

 

[Ray McCarthy]

P.S.
The "Publisher" entered in Amazon in book details doesn't have to be a company or even any registered entity.
CreateSpace and Smashwords "are" publishers* as well as Retailers, if you use their ISBN instead of your own. A single ISBN is expensive, a block of them is much cheaper. However you don't need to EVER use any ISBN of your own to call yourself a publisher. It's just an identifier, that's why a different size book has a different ISBN, if it has one at all. Books don't have to have an ISBN.

[*Actually sometimes Amazon is a Publisher too, even when they don't issue you an ISBN)

 

[Ray McCarthy]

It appears an Ordinary Partnership doesn't really need much looking after and isnt really any different from a sole trader, except there are two of you. No much in the obligations or expenses side of things.

Yes. Totally correct.

It doesn't seem to have changed much since I entrepreneured in UK, and Ireland is pretty similar.

The only issue with a joint bank account (Moneybox BBC R4 today or yesterday) is that you can't get taken off it without both you agree, and if one person goes mad running up an overdraft, or something, the bank can get money off either of you. Or if the account somehow gets a bad credit rating, you both have that when you apply for a personal loan or credit card as an individual.

 

[Brian G Turner]

Any ideas, or opinions on this?

I'd recommend talking to an accountant about the pros and cons of being a limited company vs a partnership. Both involve legal obligations you need to be aware of - and potential income advantages.

 

[HareBrain]

In terms of needing an accountant for a limited company, that's not really true. I've never used one for mine, and though I was an accountant in a former life, the principles necessary are readily understandable by any intelligent person, and online filing is quite easy.

 

[ratsy]

I met with an accountant about my sole proprietorship, just to get advice. Didn't cost me a dime and got some really great information. Can't hurt.

 

[Ray McCarthy]

and though I was an accountant in a former life, the principles necessary are readily understandable by any intelligent person

You overestimate the ability of non-accountants. In theory you are correct, though like suggesting you don't need a solicitor to buy & sell a house, the truthiness depends on the individual!

 

[HareBrain]

You overestimate the ability of non-accountants.

I'm assuming that not paying someone else £100/hr to add up a few figures is a strong incentiviser to learn.

 

[Nick B]

Im fairly sure I can manage tax returns haha, I'm just looking into a partnership to have clear, simple money handling that wont leave anything ambiguous or open to challenge.

 

[Ray McCarthy]

I'm assuming that not paying someone else £100/hr to add up a few figures is a strong incentiviser to learn.

Are any accountants still your friends?

 

[The Judge]

Effectively you already have a partnership -- you've written a book together, and you have agreed to share the costs of self-publishing it and to share the profits. As a lawyer, I'd strongly suggest that you put something in writing to confirm that relationship, eg what those shares are, how you will allocate other roles such as who does publicity, so in the event of something untoward happening such as the divorce of one or other of you, you have the agreement set down. There's no need to spend money on a solicitor to draft one (and I was charging over £100 per hour 20 years ago, so HB's accountants are well behind on the cost scale there) but think about what will or might happen and set out things clearly and simply as to who does or gets what.

A joint bank account is a sensible idea even if Amazon wasn't being obstructive, since it means you can both put money into it and the payment for eg the cost of the cover designer is paid from it, rather than from one or other of you as individuals, and that way bookkeeping will be easier when you work out profits. But avoid giving it a business-sounding name ie not something like "Fred Jones and Ginger Smith trading as Quellist Publications". I've never tried opening an account as a business, but I can imagine banks are more likely to charge for the privilege of using your money in that event, whereas I'm pretty sure you can (for the moment) still get free banking if it's just two named individuals. There are always potential problems with joint accounts, such as one party running up unauthorised overdrafts for which the other is then liable, so you'd need to speak to the bank about how to minimise such risks (eg the both of you having to sign cheques, eg bank statements to both of you) but if your potential partner were untrustworthy, then you'd face risks if all the money went into his sole account and at least with a joint account you have some oversight.

The Amazon angle, I'm not sure how it works. If, say, Fred Jones were specified as the Author, with the money from the jointly-written novel paid into a joint account, would it be possible for Fred to have payment for his solely-written books paid into a different account? Even if not, if both jointly-written and solely-written had to pass through the joint account, would it matter? Presumably Amazon sends out some kind of payment advice showing how much money is due in respect of which books? That would allow you to allocate the respective monies easily enough. (I don't know how often payment is made by Amazon, nor how often you would want to withdraw your money, but I can't see it being an onerous job -- and if the two of you are writing and earning enough that it becomes tedious, then that's the time you get a bookkeeper in!) One issue occurs to me where it might be less helpful to have one name as Author -- if Fred were noted as Author by Amazon, would that prevent Ginger being able to link to/reference/whatever the jointly-written books when she writes her own?

 

[Nick B]

Thanks Judge, the main problem is Amazon not being willing to split money. It has to go to a single account and all the credit goes to a single author it would seem.
We thought it may be better to have the money and credit go to a press, where we simply divide it. There arnt any trust issues, just the worry of potential bumps in the road.

 

[The Judge]

If the only issue is Amazon not splitting the money, then simply a joint bank account would solve that, without having to go to the lengths of pretending to be a small publisher. If the credit issue (ie Ginger not being able to take joint credit for the collaboration when she writes her own books) is a worry, then the publisher pretence may indeed be a way forward.

But if you have "Quellist Publications" named as the publisher, would Amazon balk at paying money to a joint account in the name of two individuals, rather than one that looked more official? And if QP is named as the publisher for the joint work, could each of the two of you get credit for it when you self-publish your sole works? And might QP end up getting a lot of spam mail from would-be authors?!

 

[Ray McCarthy]

"Quellist Publications" named as the publisher,

The publisher thing is irrelevant to Amazon actually. They pay the money to who ever has the account that uploaded it and claimed they have the rights (there is a tick box). You can put anything into the "Publisher" field, and I think even add more than one author who does not have to be the person with the Amazon account.

 

[Nick B]

I am assuming that Amazon pay the publisher rather than authors, if the novel's are uploaded by a publishers account. So possibly we could make an Amazon account in a name such as Bailey Bullock, have a joint account for those collaborative novels and then just have separate accounts for solo works. Have a joint bank account just attached to the collaborative account? Does that sound simpler?

 

[The Judge]

That sounds much simpler to me.

 

[Nick B]

Awesome stuff, thanks folks. If anyone knows a better way, let me know!