Sole Proprietorship

windyrdg said:

Don't let people tell you that you have to pay a lawyer to form a corporation. I've done it several times without help. Find out from your Secretary of State what forms are required...usually the articles of incorporation and one or more of their forms such as name and address of directors, etc. Provide those and a check for the filing fees and you'll get your Certificate of Incorporation in the mail.

You can find examples of the Articles in a library book.

One other thought. I'm currently exploring self-pub options myself. If you establish a company you'll want a website in the company's name, a PO Box or, better yet, a box at a mail drop where you have a street address and "suite" #, and possibly letterhead, invoices, etc. There's a cost and hassle to each one of those and they will have to be maintained as long as you remain in business.

Given that most self-pubbed books sell less than 50 copies, it's an endeavor not to be undertaken lightly.

Peace and Blessings

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BenPanced said:

Yeah, you can find self-incorporation forms at either Office Max or Office Depot for under $100. Even with the correct filing fees, it's still cheaper than hiring a lawyer.

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ResearchGuy said:

For whatever it is worth, in California, I needed a business license from the city (and probably would in most cities and counties in the state). I also needed a "home occupation" permit because I work from my home (simple bit of additional paperwork, since I don't generate traffic or manufacture anything or the like), an add-on to the business license. I got the license when all I intended to do was editing and related services, but it was simple to add on publishing when I started doing that (on a very small scale) last year.

Because I am selling taxable things (books) directly, I need a California seller's permit, and have to collect and remit sales tax. (I did not need the seller's permit during the years when all I offered was nontaxable services.) MD has a sales tax, and presumably pretty similar requirements.

I joined my local chamber of commerce very early on (shortly after I started the business), but I doubt that would be useful for what you propose. But it might be if your audience is local business people.

I use my own name in the business, and nothing else that triggers a fictitious name permit requirement. If I were, say, SuperDooper Publishing, I'd need the fictitious name permit, which would require some paperwork, a fee to the county, and the expense of publishing notice in a suitable newspaper.

I bought some business cards (nothing fancy), but don't bother with letterhead (I print what I need on my inkjet).

I have bought pens with business name as promotional handouts (probably not something useful for you, and not particularly useful for me, either).

Business income and expenses are reported on Schedule C, along with the rest of your tax return. If you keep careful, accurate records, then you should have no difficulty, whether you do your own or have your taxes done by a tax service or accountant. However, you should learn the ins and outs. For example:

http://www.irs.gov/businesses/small/article/0,,id=109807,00.html

http://www.smallbusinessadvocate.com/small-business-articles/beware-of-the-hobby-loss-rule-2023

http://www.irs.gov/publications/p535/ch01.html

Note the rules about deducting losses. There are some catches. And of course some kinds of deductions are audit triggers (home office deduction being a biggie).

If I were you, I'd chat with folks at the local SCORE office (you can track one down via www.score.org to help you get organized and to figure out what you need to do. Chances are, it is pretty similar in MD to what is required in CA. But not necessarily.

Thousands and thousands, if not millions, of folks run small businesses as sole proprietorships. You might want to get a book on starting a small business (Nolo Press publishes such books) and read about the ins and outs and options.

--Ken

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jfreedan said:

LLC are very easy to form. I've formed several. All you have to do is draft an operating agreement and send a form into your state's corporation office. You can download everything you need from the state corporation website. Registeration normally costs about 100$ and there is an annual filing fee as well. That's about it. Some states also require you to keep meeting notes and such, but some states do not. All of this is normally explained on the state website.

Both the operating agreement and meeting notes are not things you need to show anyone when you register; they are only documents you'll need if your operation comes under review, or you get sued, or you want to sell shares, or whatever.

A sole proprietorship offers you no legal protection. If someone sues your LLC, they can only sue the company and your private assets will not be touched. Likewise, if someone sues you they cannot sue the LLC. If someone sues you when you are a sole proprietor, they are suing you as an individual and could potentially take every asset you own, like your house, car and so forth. Maybe even the publishing and royalty rights to your copyrighted work-- which is why they should be secured inside an LLC.

With an LLC, you are taxed you like an individual, so it's fairly easy to file taxes for. I honestly believe everyone should have an LLC to keep their important assets in, just in case someone tries to take you to court for something ridiculous, they won't be able to take your house, car, boat, etc and so forth if you happen to lose. The unfortunate thing about law is that both lawyer and judge quality is not consistent and sometimes judgments are made that shouldn't have been made. That's why there are appellate courts.

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