The moment you’ve self-published a book – presuming you’ve done nothing else to set up your business – you’re a sole proprietor. That’s right, you’ve started your own business, ipso facto!
A sole proprietor is someone who is the lone owner of an unincorporated business. A sole proprietorship is the business itself. It’s the most common structure for a business, especially when a person decides to work for himself.
By self-publishing a book, as an author you are now selling a product (your book). You earn money from sales, and you conduct several business-related activities – creating the product (writing and formatting), distributing your product (probably via Amazon.com) and attempting to generate sales (by marketing your title via social media or book readings).
You are not an employee of your proprietorship; you are the business owner. Because of this, you don’t pay payroll taxes or withhold income tax. BUT you do have to pay self-employment taxes (i.e. Social Security and Medicare taxes). This usually is paid four times a year by estimating your taxes.
As a self-proprietor, you are personally liable for all of your business’ debts. If your business owe a person or a company money, whoever you’re indebted to can go after your personal assets, meaning your personal checking account, your car, your house. Further, if you personally owe a creditor, they can go after your business assets, including your business bank accounts and computer.
Likewise, you also are personally liable for any business-related lawsuits. Copyright infringement issues particularly can be a concern.
On the upside, being a sole proprietor carries very little costs in terms of government fees and licensing (After all, you become one probably without even realizing it). It also means you’re your own boss (at last!).
My name is Rob Bignell. I’m an affordable, professional editor who runs Inventing Reality Editing Service, which meets the manuscript needs of writers both new and published. I also offer a variety of self-publishing services. During the past decade, I’ve helped more than 300 novelists and nonfiction authors obtain their publishing dreams at reasonable prices. I’m also the author of the 7 Minutes a Day… writing guidebooks, four nonfiction hiking guidebook series, and the literary novel Windmill. Several of my short stories in the literary and science fiction genres also have been published.