The parts in this series so far are How to Write an Ebook: The Guide, Why It’s a Good Idea, Choose a Sellable Topic, Preparing to Write, Writing Tips from a Non-Writer, Editing and Naming and Formatting.
Disclaimer: I’m not an accountant, a lawyer, a tax expert or any other professional of the legal type. This is not financial or legal advice I’m offering, just my own $.02.
So, now you need to set yourself up to sell the ebook you've just created. There are a bunch of things you'll want to be sure to have in place before you actually start making money. Some of these you may already have in place, so I won't go into great depth about them but if all of these are in order before you launch, you'll be grateful.
I will assume that most of you have already completed the steps to start you own business, but I thought I'd throw in these first few resources for those who might not. I didn't do things in this order, but if I had to do it all over again, this is how I'd go about it given the laws in my state. Check how things work in your state before you dive in.
Got a business address?
You'll be asked for a business address in lots of places, so having an address to use other than your home address is a good idea. You can apply for a P.O. Box online (price depends on size and length of contract but it's pretty reasonable), find a box at a UPS Store (or similar store) or use another offsite address where you can collect your business mail.
As for a name to go with your business address, if you don't already have one, verify that you can use your own name at first and add your business name later. The other option would be choose a business name right at the beginning, but if you do, be sure to do a search with your county/state first so that you don't use a name that's already taken (see the next step).
Establish your business.
Here's the first place you can use that new address. Consult your local Small Business Association (SBA) office for rules and regulations regarding business setup in your state. (Sorry for the U.S.-centric info here. No offense to my non-U.S. readers.)
Consider getting an EIN.
This will eliminate you having to use your Social Security Number on business-related documents. You can get one at any time but here's a chart to know when you definitely need one. You can apply for one easy peasy and get it instantly here.
Get a business bank account.
This is just a good idea no matter how you make business income, online or otherwise.
Think about income tax.
It's likely you will have to pay income taxes on your ebook income. Keeping records from the start will make tax time a lot less stressful. Also, check with an accountant or estimate what your income tax will be and set aside that amount for taxes. Find out if you will need to pay quarterly estimated taxes (here are the dates they are due — might be good to mark these dates on your calendar). You might also sign up for eftps to make your estimated tax payments online. You can also pay by phone. I do our own taxes using TurboTax which makes personal and business taxes easy. Good resource: Tax Tips for Bloggers
Determine whether you'll need to charge sales tax.
Your state may require you to charge sales tax on your ebooks (mine does) so make sure you check on this before you start selling. I was a bit late in the game to this so I had to do some catch-up which wasn't so fun. To find out whether or not you'll have to charge sales tax, find your state here.
Set up a PayPal account.
It's hard to imagine doing business online these days without a PayPal account. So many people use PayPal and are familiar with how it works. I use a Premier Account which is free. (Here are all the types of accounts.) A Premier account works fine unless you are working with others who will also need access to the PayPal account, in which case you should go with Business.
Link your bank account to your PayPal account.
I believe this step is outlined in the setup process in PayPal, but make sure you link your business bank account to your PayPal account so you can transfer funds between the two.
Don't keep money in your PayPal account.
This is sort of a sidenote, but I don't keep money in my PayPal account. Not only would it be goofy since my business checking account earns interest and PayPal doesn't, but PayPal has been known to freeze funds if they suspect suspicious activity (definable by them), which can lead to major headaches (here's an interesting post on that topic).
Set up a way to track your money. Then TRACK IT.
Use whatever works for you, but the main thing is to be able to track what goes in and what goes out. Many people use QuickBooks for their business accounting. You might also try Outright which automatically links to your PayPal account. (Outright used to be a free service but they are now moving to a paid-for model.) Or, you can use a simple ledger (any spreadsheet will do). Personally, I use a simple spreadsheet ledger to keep track of income and expenses and I use something called Budget (for Mac; also available for Windows) to balance bank accounts and I LOVE it. It's a computerized version of the envelope system.
Decide how you'll spend your money before you make your first sale.
When you start making income, it's easy to be dazzled by the numbers and forget that much of that income is already earmarked. I suggest you make a list of your expenses related to the ebook sales. For me, they are:
- Affiliate Payments
- PayPal fees (these are automatically deducted from each transaction).
- E-junkie fees. (I'll talk about how to set up e-junkie a future post, but for now, know that it'll cost you to use the service. Thankfully, it's only $5 a month if you have less than 10 digital products.)
- Set aside income taxes.
- You might also consider taking some off the top for things like tithe or retirement.
In order to keep a handle on your finances, I highly recommend you map out a spending plan before the money starts coming in. This will help you maintain a realistic and smart approach to your income and will prevent you from finding yourself in a predicament when a payment comes due.
Anyone else wanna chime in here? What'd I miss?
Read the next post in this series: How to Write an Ebook: Pricing.
Disclosure: There are affiliate links in this post.
Other posts in this series
- How to Write an Ebook
- How to Write an Ebook: Why It's a Good Idea
- How to Write an Ebook: Choose a Sellable Topic
- How to Write an Ebook: Preparing to Write
- How to Write an Ebook: Writing Tips from a Non-Writer
- How to Write an Ebook: Editing and Naming
- How to Write an Ebook: Formatting
- How to Write an Ebook: Setting Up Accounts
- How to Write an Ebook: Pricing
- How to Write an Ebook: Distribution
- How to Write an Ebook: Creating a Sales Page (or Site)
- How to Write an Ebook: Preparing for Affiliates
- How to Write an Ebook: Taking care of your affiliates
- How to Write an Ebook: Paying your affiliates
- How to Make Your Ebook Available on Kindle & Nook