End of the Year Drudgery

As 2011 rolls to a close, I realize that it is once again time to get ready for the tax man. The state of Missouri has already kindly mailed me the form to pay my state sales tax for the year. But that is just one small piece of owning a business which (hopefully) makes sales. Because I set up my publishing company as an LLC, the business is essentially run through on our personal tax form. But I still need to get to my accountant all the expenses and income that were incurred by the business during the year. Considering that the IRS says that you must make a profit in three of the previous five tax years in order to be considered a business and not a hobby, I always think twice about which expenses I want to declare. It is hardly fair that they will take 2009 into account since I just established the business in November of 2009, but no one has ever accused the IRS of being fair. I have not sold many books in 2011, so unless I want to declare only minimal expenses for the year, there is no way that I can show a profit for the year. The fixed expenses of website hostings and securing the domain names for myhousehistory.net and provenancepublishing.com and .net probably exceed the profits from book sales this year. Since I declared a loss for 2009 and 2010, does that mean I have to declare a profit during the next three years in order to maintain status as a business and not a hobby? I guess this is a conversation I will be having with my accountant next month.

The Business Side of Publishing

Setting up a publishing company entails quite a few steps. First you must determine the structure of the business. Sole proprietor? Corporation? LLC? When I turned to my accountant for advice, he quickly asked, "Is there any chance you can be sued?" Well, we all know that anyone can sue at any time for any thing. I suppose a person could go to a library where I suggested there was a certain microfilm available, and if the film isn't there they could sue for misinformation. That being said, the accountant suggested I form an LLC, which gives me the personal protection of a corporation without all paperwork and added accounting issues.

The second step is to come up with a name for your company. I spent a lot of time on this as I wanted to make sure it was something I could live with for a long time. Researching name selections on the Internet yielded some interesting suggestions: first and foremost, the name should be memorable and relate to what you are doing or selling; choose names with the same number of syllables, i.e. if publishing was going to be in the company name, then the other word with it should also consist of three syllables; and a suggestion that the name consist of an alliteration. For me, then, I was looking for a three syllable word beginning with the letter "p" to go with publishing. I settled on the word "provenance". By definition, provenance is a place of origin or birthplace. It seemed perfect for a company that would give birth to new books.

Next I had to go to the Missouri Secretary of State's (SOS) website and check to see if Provenance Publishing LLC was an available name. It was, and so I registered the name with this office and received my Articles of Incorporation. At this point you can decide if you want a logo designed for the company, and you can set up a bank account. Many banks require a Employee Identification Number (EIN) to open an account. You can quickly and easily obtain one online at www.irs.gov. Many people will also ascertain that their company name is available as a website, and register this domain name right away.

Once I had established the company with the SOS, I had to complete a Business Registration with the Missouri Department of Revenue. This was followed by a Missouri Tax Registration Application. Yessirree, the tax man cometh. Because I will be selling a product, I was required to fill out the Sales and Use Tax Cash Bond and mail it it with a money order to make sure I could take care of my sales tax responsibilities. Once that was received by the state, I was issued a Missouri Tax Identification number.

With my new tax id I was able to complete the Business Personal Property Registration Application for Merchant and/or Manufacturer License for St. Louis County. This will enable me to have a license to sell in St. Louis County. My last step is to stop in at my local City Hall and fill out a business application since I will be doing administrative duties out of my house. Whew! I need to publish more books to make all this worthwhile!