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Common Mistakes to Avoid When Starting Your Publishing Company
Setting up a publishing company is quite easy if you follow the rules. However, if not done well, the mistakes made can have serious implications on your business or even get you in trouble with the authorities.
Here Are the Five Most Common Mistakes When Setting Up a Publishing Company
1. Wrong Business Structure: Your publishing company can be set up either as a Limited Liability Company, General Partnership, Sole Proprietorship, S Corporation, and C Corporation. Each structure has its own pros and cons.
Limited Liability Company (LLC) and Sole Proprietorship are ideal for small businesses and hence the go-to structures for most self-publishers. However, LLCs are more recommended as they provide more separation between you and the business, protecting you and your personal assets. The flexibility of an LLC makes it a good fit for a small publishing company. If you check your favorite self-publishers, you will realize that many of them run LLCs.
In case you are not sure what type of business structure suits you best, do not hesitate to consult a professional.
2. Wrong State
If you are in the US, be careful which state you register your publishing company in because each state has different rules with different tax implications. For example, Delaware is known for being flexible and pro-business while Nevada is popular for low filing fees. Even in the same state, these rules apply differently to different types and sizes of businesses. Just be sure you have all the necessary information regarding your state of choice and, if unsure, consult an expert.
3. No Business License
Registering your LLC is not the same as getting a license to operate your business. A license gives you permission to run your business in a particular area. These are obtained from the local, state, or federal authorities depending on the rules of the area and the type or size of business you are operating. Do not open for business until you have a license.
4. Company Not Compliant
Once your publishing company is registered and licensed, the next step is to make sure that you keep it compliant at all time. This is a lifelong process for as long as you are running the business.
Always use your business title and business stationery when signing on behalf of the company. This way, there will be no argument that you might have signed in your personal capacity.
Never mix personal and business funds.
Submit your annual report/annual statement on time and as required by the law in your state.
Inform the necessary authorities of any major changes in your business.
Many small business owners often cross these blurred lines and end up getting both the business and themselves in trouble.
5. Not Registering Your Business
This is a very common mistake often made by people who assume their business is too small to bother making it official. This exposes you to a range of legal issues and financial loss due to missed tax breaks and write-offs.
Avoid these mistakes by properly researching the process or by using a qualified professional to help you set up the company.
Written by Readers’ Favorite Reviewer Faridah Nassozi