How to create a corporation/LLC as an author

So you’ve decided to take the leap and form a corporation or LLC to house your book or your back-end business. Having helped my clients form hundreds of corporations and LLCs–and being an author myself–I will attempt to demystify the process and make it less intimidating. This post will cover general steps that are required in many states, but first, let’s get the legal stuff out of the way…

**DISCLAIMER: I am not a CPA or an attorney and the topics discussed are examples used by past and current clients. No two situations are alike and techniques that work for one person may not work for another. No action should be taken in regards to any of the subject matter in the blog unless under the guidance of certified professionals such as CPAs, attorneys, and financial advisors.


The question I get asked most often is do I need a C corporation, S corporation, or an LLC?  All have advantages and drawbacks, and the answer will depend on several factors:  what personal tax bracket you are in, whether you are married or single, whether you have a job in addition to operating a business, what kind of fringe benefits you wish to offer yourself, etc.

One thing I will tell you is to stay away from CPAs or other “experts” who tell you, “you should always form an LLC” or “you should always avoid a C corporation.” There is no “always” when it comes to business because we all have unique life situations that can affect how we get taxed, and one person’s situation may be best suited to an LLC while another may be best suited to an S corporation or C corporation.

The real answer is that it does not really matter which entity you choose to form, because if you find out along the way that you are missing out on some tax savings, you can easily move between the 3 entities.  For example, a C corporation can switch to an S corporation and vice versa.  LLCs can elect to be taxed as a C corporation and all this can be done with the filing of an IRS form.  So don’t get caught up in analysis paralysis. Choose one that seems to work for you, or seek the advice of an expert that can really look at your situation and choose an entity that benefits YOU the most.  

That said, here is some info on some of the basic tax differences between a C corporation, S corporation, and LLC:

C corporations – taxed a flat 21% at federal level, plus state corporate tax.

S corporations – taxed at personal level. Percentages increase as income increases..

LLC – taxed at personal level. Percentages increase as income increases.

So, you can see that the major difference is the flat tax of 21% versus the variable personal tax rate. Personal tax brackets in 2021 range from 10% to 37%, depending on how much money you make.  You can see how an S corporation or LLC may be the right choice at the beginning when profits are lower as you are only taxed at 10% for the first $10,000 you make, approximately. Once your income reaches about $40,000, the tax rate jumps to 22%.

Since a C corporation is only taxed at a flat 21%, you may want to switch to this entity type once your business income reaches a certain level. This way you can enjoy increased profits while maintaining the same tax rate.


Keep in mind that the steps are virtually the same for either entity (corporation/LLC)


Choose a good name for your company. Ideally, the name will not have your name or initials in it. This adds another layer of privacy and also makes your company look more professional.  Entrepreneurs love to use their name or initials–my first company name was “MDW Enterprises, Inc.”– but it gives the impression that you are small time.  I eventually changed the company name to the more general “Augmentus Business Solutions.”  The name comes from a combination of the words “augment” and  “us,” which felt appropriate given the assistance I was providing clients in the growth of their businesses.

Come up with several variations on the name you create in case it has already been taken.

Go to the Secretary of State database and perform a search to see if the name has already been taken. Some states are pickier than others and may reject your filing if the name is too close to others. If you are forming a corporation, you will also need to check the LLC database as the filing can get rejected if the name is too close to that of an LLC and vice versa.  Some states (such as California) require you to do a separate name search for both entity types while others include both in a single database.

For example, A-Plus Construction, Inc. may be denied if there is already an A-plus Construction, LLC.  Sometimes you can get away with adding a variation on the name–“A-plus Construction Enterprises, Inc.”–if the representative at the Secretary of State’s office is in a good mood.  If the name still gets rejected, try something like “A-plus Building, Inc.” or “A-Plus Builders, Inc.”  

You’re going to be stuck with your business name for a long time, so make sure it’s something you can be proud of.


The next step is to prepare the Articles of Incorporation for corporations (Articles of Organization for LLCs). The articles contain the entity name, business address, mailing address, registered agent, purpose statement, and the incorporator. LLCs require you to list the management structure: member managed, or manager managed.

Most states allow you to file the articles online at the Secretary of State website.  Some states require you to mail in a hard copy to the Secretary of State’s office.

Filing fees are generally $100-$200. However, they can go much lower and higher depending upon your state, as low as $45 in Arkansas and up to $300 in Texas.


The IRS will issue your business an EIN (Employer Identification Number), otherwise known as your business Tax ID.  It is a good idea to wait until your articles and business name have been approved by your state before you go get a Tax ID in the business name. You do not want to obtain a tax ID too early and find out that your business name has been rejected by the Secretary of State. You would have to go get another tax ID from the IRS and shut the other one down.


These kits obtain stock certificates (membership certificates for LLCs) and stock ledgers that record to whom you issue stock.  Be sure to issue yourself stock right away.  If you get sued and you have not completed this step, the suing party may be able to pierce the corporate veil and come after your personal assets by claiming that you were not acting as a legitimate business.  

Many kits run between $50 and $100 and come with templates for bylaws (membership agreements for LLCs) which outline the rules that you can choose to adopt for running your corporation. Be sure to also complete this important step as to maintain asset protection. Some of it is straightforward, and some of it may require you to seek the advice of an expert.


Most banks require your tax ID and your Articles of Incorporation to open a bank account for your business.  Other banks may require other documents, so it is a good idea to call your bank for a list of required documents before heading down there, so you don’t have to make multiple trips.


By law, every corporation or LLC must have a registered agent. A registered agent is a person or entity that is available for someone to serve a lawsuit during normal business hours. You can be your own registered agent if you have someone at your office during normal business hours Monday through Friday. However, if you are running your business from your house as a solopreneur and you are out meeting clients during the day, you can get into trouble by not being available for a lawsuit to be served. It is not always a good idea to have your home address listed on public record. Thus, you may want to hire a company to act as your registered agent. This adds a layer of privacy for your personal residence and ensures that someone will be available 100% of the time during business hours. Registered agents typically cost $75-$150 annually.  My company offers registered agent services for our clients in CA for $100 and we include the annual filing of the statement of information (including the $25 state filing fee).


In most states, you will have to file an annual document that lists your business’s physical address, mailing address, and registered agent. Many states have their own version of this form, which may require additional information. 

This report typically keeps the state up-to-date on any changes in mailing addresses or corporate headquarters for your business entity, any new company directors and their addresses, and sometimes even earnings for the year as the price of the annual report can sometimes be based on revenue.  These reports can range from as little as $0 all the way to $500 or more depending on the state of incorporation. Some states charge an annual fee in addition to the annual report fee. Nevada charges $500 for its annual fee (business license registration) and another $150 for the annual report of officers and directors.

These states charge $0 for their annual filings: Arizona, Idaho, Minnesota, Mississippi, Missouri, New Mexico, Ohio, South Carolina, and Texas.

Colorado, Hawaii, Kentucky, Montana, Nebraska, New York, and Utah charge $20 or less for their annual report filings.


Remember that you will have to file a separate tax return for your business in most cases: IRS Form 1120 for corporations, IRS form 1120-S for S corporations, and IRS form 1065 for LLCs with multiple members. Don’t forget to also file a state tax return if your state requires it (most states do).

You will have to pay a CPA to file taxes for your business entity which can typically cost between $250 and $500 each year for a simpler tax filing. CPAs can charge up to $1000 and beyond for more complicated business filings, but that usually happens when you have several different types of income that are difficult to track–usually if you have this problem, you are making a lot more money and can afford the increased professional fee.


Be sure to keep up on your annual fees, annual document filings, and tax returns.  A state may revoke your corporation or LLC if you do not. Most entities require some sort of annual meeting.  Corporations require annual meetings to elect officers and directors and even meetings for major decisions or corporate actions such as purchasing equipment or vehicles, signing leases, adopting employee benefits packages, etc. If you get sued and you have not completed this step, the suing party may be able to pierce the corporate veil and come after your personal assets by claiming that you were not acting as a legitimate business.  


The short answer is yes. However, if you live in one state and file in another to avoid paying taxes in your home state, you will most likely lose that battle. I had a client in California that decided to file a corporation in Texas since Texas has a lower corporate tax rate at only 1%. He was attempting to avoid the California corporate tax, which is one of the highest in the country at 8.84%.  

I warned him against this course of action since California’s Franchise Tax Board has been referred to as being even more aggressive than the IRS. They were able to locate my client’s corporation in Texas and they contacted him with the happy news that all the income the corporation had generated would also be taxed in California since he lived in California and owned 100% of the shares. My client now had to pay taxes and annual maintenance fees in both states, costing him a lot of money. 


As an authorpreneur, you wear many hats. While you can choose to figure the process out yourself, you don’t have to go through the process of setting up a corporation or an LLC alone. You can hire someone to help you with each part of the process. My company provides a consultation in which we look at your individual situation and go over options with you. The fee we charge can be credited toward forming your corporation or LLC if you choose to use us for your services. We make the process super easy, which means you can get back to writing and publishing that bestseller.  

Do I need a corporation or LLC as an author?

My first book is one of my many business ventures. As an avid traveler, I’ve developed a unique insight into how to make the most of my experience. I’ve found that my approach to travel is something that not a lot of people have thought about or tried, which motivated me to write my first book International Travel Secrets. I went into self-publishing because traditional publishing takes too long and I discovered it wasn’t that hard to do it myself. I was excited to get my book out to readers so that they could see that they can make travel even more accessible than ever before.I put the book into an existing corporation that I opened in 2005 where I place all my prior businesses until they become big enough to form a separate corporation. 

Self-publishing can involve more than just writing and marketing. If your books generate enough revenue and become more of a business, you may want to consider how a corporation or LLC may benefit you. Let’s take a look at when you MAY NOT need a corporation or LLC and when you MIGHT. But first, let’s get all the legal stuff out of the way:

**DISCLAIMER: I am not a CPA or an attorney and the topics discussed are examples used by past and current clients. No two situations are alike and techniques that work for one person may not work for another. No action should be taken in regards to any of the subject matter in the blog unless under the guidance of certified professionals such as CPAs, attorneys, and financial advisors.


Each author is on a singular journey towards success. Not everyone will be checking sales totals every day, nor will they have the same idea of how much they want to make for the month or the year. 

I have a colleague who wrote a book for fun, in which he explores in a humorous way what he thought were the worst ideas in history. It is a great book, but he probably only sells a few copies per month (according to Publisher Rocket). He has a successful career in animation and does not need the money from the book, so he does not promote it or attempt to foster sales in any way. Setting up a corporation in his situation would be a waste of time and money.

When it comes to setting up a corporation or LLC, if your book and other business activities are not producing at least $10,000 a year, then a corporation may not be right for you. Also, if you plan to earn less than $40,000 per year as an individual from all sources (job, book, business, investments, etc.), or as a married couple you plan to earn less than $80,000 per year from all sources, then a corporation or LLC may not be necessary for you.


You may be growing your author business or you may have that runaway hit. If your book royalties and/or business revenue are more than $10,000 per year, or if you’re certain you’re going to generate $10,000 or more from book royalties and/or business income, then you may want to set up a corporation or an LLC. 

Some possible author business situations where a corporation or an LLC may be advisable for you:

  • You offer back-end products or services in relation to your book.
  • You operate a business of any kind, even if it’s not related to your book.
  • If you’re paying more than 21% in taxes as an individual or as a sole proprietorship (also known as a DBA or FBN).
  • You have assets such as retirement accounts, real estate, investments such as stocks, mutual funds, or cryptocurrency that you want to protect against potential lawsuits.

If you’re more than just an authorpreneur, here are other situations that you may want to think about if you haven’t yet set up a corporation or an LLC:

  • If you plan on applying for business loans or credit lines at any point.
  • If you plan on raising money from investors to fund your business venture at any point.
  • If your book or your business is in high-liability industries such as medical, dental, construction, restaurants, etc.
  • If aging your corporation or LLC is important for your plans.
  • If you know you’re going to succeed no matter what.


You’ve put so much thought into your words and you’re hoping readers resonate with what you’ve written. But the impact that your books create are out of your control. The last thing you need is to be sued because of what you wrote. There is a liability attached to your product, and we live in a litigious society. I have heard on several occasions that  75-80% of the world’s lawyers reside in the U.S.  Also, the U.S has the highest litigation rate in the world at 5,806 suits filed per 100,000 people as compared to Canada’s 1,450 (Source: While authors often don’t think about being sued, it is a reality that we have to be aware of.

Nonfiction tends to create more liability than fiction as it usually offers advice or a course of action. Readers may follow an author’s advice and sue them if they experience negative results despite any disclaimers you have at the beginning of your book.

Don’t think you’re off the hook as a fiction author. Fiction typically doesn’t offer advice or a specific course of action, but that does not mean it’s exempt from liability. Today, anyone can get offended or have an issue with your book. Even children’s books can carry liability, so make sure you protect yourself from would-be judgment seekers looking for easy payouts in court.  

Authors with back-end businesses are producing liability on two fronts: the book and the back-end products and services.

The point: no author is completely safe from impending lawsuits. All you can do is take steps to protect yourself and forming a corporation or an LLC can do just that. One purpose is asset protection. Corporations and LLCs provide a barrier that help protect your personal assets from being taken by someone who sues your company. If you set up your corporation or LLC correctly and maintain it properly, you can add a layer of protection for your home, vehicles, savings accounts, retirement accounts, investments, etc.


In growing your author business, you know the benefits of working on your writing and improving how you market your book. In addition to mastering your craft and implementing new marketing strategies, you can take into account the benefits of setting up a corporation or an LLC for your author business. A few advantages to a corporation or an LLC include:

  • It can cut taxes 10%-70% depending upon the author’s individual situation.
  • It can LEGALLY move many of your personal expenses to business expenses, thereby getting valuable tax deductions, including medical expenses, auto expenses, education, travel, mobile phone, portions of your mortgage, and utilities.
  • It can help protect personal assets if authors are sued because of their book contents. 
  • It can avoid costly probate when passing book rights and royalties (along with other assets) down to children or other beneficiaries when you pass.

One of the more fun things authors can do is transfer many of their personal expenses to their corporation.  For example, an author can set up an HRA (Health Reimbursement Arrangement) to reimburse medical expenses, including insurance premiums, deductibles, prescriptions, dental expenses, eye glasses, or almost any non-elective medical expenses.  This becomes an expense to your business, but you do not pay taxes on the money you receive for the reimbursement.  You just made your medical expenses tax deductible by having your business pay for them!

The fun part about setting up a corporation is legally getting your corporation to pay for your life.  As an employee of your corporation, you are entitled to certain employee benefits. These are not as easily available to LLCs, but there are ways to make it so that they are.  Here are some personal expenses that your business can pick up if you set it up correctly:

  • Home rent or mortgage (through offering office space) $500-$1000
  • Car, repairs, gas, (through a car lease) $250-$500
  • Medical expenses (HRA) $250-$800
  • Travel – flight, hotel, tours, food
  • Cell phone $75-$150
  • Gifts $100-$500
  • Retirement up to $19,500 for solo 401(k)
  • Dependent care – $10,500
  • Buying clients meals (friends, parents – if you do business with them)
  • Education – school, seminars, books, online courses
  • Dues – business groups, networking groups, etc.

You will have to create the proper paperwork in the form of meeting minutes and corporate resolutions in order to set these employee benefits in motion, but it’s well worth the work.  Keep in mind that if you have more than one employee, all employees must be treated equally as far as benefits.  But, that’s the beauty of being an author–you are usually the only employee necessary for your corporation.


An advanced strategy for protecting your book rights is to set up two corporations (or LLCs). One corporation owns the books rights and licenses the book rights to your second corporation, which will distribute your book to Amazon, Ingramspark, etc. This can help stop a creditor or judgment from getting access to taking the income-producing engine (your book) from you. 

This tactic can also come in handy for other types of businesses you own: have one corporation own expensive pieces of equipment and lease it to the corporation that signs contracts with customers.  This way construction equipment, photography equipment, vehicles, etc. can be protected if a client sues your business.

It can be expensive to maintain an additional corporation or LLC, so make sure that the revenue you are generating makes up for this additional expense. 


Writing and self-publishing can go beyond just these two steps. For many of us, we need to switch between our author and entrepreneur hats. For some authors who have chosen the corporation or LLC route as part of their business, they can have peace of mind regarding liability and can free up more money to go into improving their writing and their writing business, along with many more attractive employee benefits. While self-publishing isn’t difficult to do on one’s own, it may not be the case when setting up your corporation or LLC. Many authors outsource their marketing, accounting, and other parts of the business so that they can concentrate on writing. You can certainly set up a corporation or an LLC yourself, but don’t be afraid to hire an expert. Just as your writing has grown from being something that you made to something you put out into the world, you want to make sure that you protect your passion and what has been attached to it from anything that could derail you from reaching your audience.   

Sample Page

This is an example page. It’s different from a blog post because it will stay in one place and will show up in your site navigation (in most themes). Most people start with an About page that introduces them to potential site visitors. It might say something like this:

Hi there! I’m a bike messenger by day, aspiring actor by night, and this is my website. I live in Los Angeles, have a great dog named Jack, and I like piña coladas. (And gettin’ caught in the rain.)

…or something like this:

The XYZ Doohickey Company was founded in 1971, and has been providing quality doohickeys to the public ever since. Located in Gotham City, XYZ employs over 2,000 people and does all kinds of awesome things for the Gotham community.

As a new WordPress user, you should go to your dashboard to delete this page and create new pages for your content. Have fun!