How to Start a Literary Agency

Start a literary agency by following these 10 steps:

1. Plan your Literary Agency
2. Form your Literary Agency into a Legal Entity
3. Register your Literary Agency for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Literary Agency
6. Get the Necessary Permits & Licenses for your Literary Agency
7. Get Literary Agency Insurance
8. Define your Literary Agency Brand
9. Create your Literary Agency Website
10. Set up your Business Phone System

We have put together this simple guide to starting your literary agency. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Literary Agency Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a literary agency?

If you are willing to start simple, then there are very few costs involved in opening a literary agency. For example, many agencies start with the owner as the sole agent, and that agent typically works from home. This is because it is very easy to correspond digitally with various editors and writers through things like email and Skype. Thus, you could open your business for less than $5,000. Almost the entirety of that money can go towards designing a professional website and advertising your services via newspapers and trade publications. Other forms of advertisement (such as social media) are essentially free, and there is no special licensing requirement for opening your business. You should also print some professional business cards to give to the various clients, potential clients, and editors you will meet.

What are the ongoing expenses for a literary agency?

Functionally, there are almost no ongoing expenses if you work from home. You may periodically have business lunches with clients and editors (which can later be written off via taxes), but just about everything can be done from the comfort of your home, and most of your best advertising will be done via online venues, just as most of your communication will come from email. Effectively, the only job-related expenses each month will be business lunches, gasoline for business-related travel, and the cost of hosting your website (which should be less than $250 a year).

Who is the target market?

You will have a diverse array of clients, but the best ones will always be those who react well to criticism. A major part of your job is discovering the most marketable angle of clients' work and recommending changes, and clients who are receptive to these ideas are much easier to work with.

How does a literary agency make money?

Most literary agents make money by working on a set commission. Therefore, whatever payment their clients eventually get from a publisher, an agent would typically get about fifteen percent of that amount.

How much can you charge customers?

As mentioned before, you can charge your clients up to fifteen percent of whatever they get for the sale of their book, though you may go as low as ten percent. This commission model creates a natural writer/agent synergy as you are both invested in getting the highest payment for the book possible!

How much profit can a literary agency make?

Your exact profit will be dictated by the number of clients you have, the number of sales you make, and the amount of money those sales make. Some veteran agents guess that between $50,000 to $75,000 is the average salary, but successful sales (particularly sales that may eventually translate to major Hollywood movies or television shows) can propel your business into a six-figure income. Regardless of the profit, the virtually non-existent overhead means that most of what you bring in translates to profit for you!

How can you make your business more profitable?

Make sure you are familiar with how to sell and market books as electronic texts; this allows for another revenue stream regarding the books you sell. Make sure your marketing of your own business emphasizes your close and personal relationship with authors; this allows you to distinguish yourself from major agencies that may make their authors feel like virtual strangers. Finally, don't be afraid to steer your agency towards the most profitable genres: if mysteries and romances are the hottest sellers, make sure you are actively seeking those books out rather than trying to market a dynamic new genre of a book that has no proven sales value to publishers.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your literary agency is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

In most states, it is necessary to obtain a literary agent license. Certain state permits and licenses may be needed to operate a literary agency business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Certificate of Occupancy

A literary agency is generally run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease an office location:
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a literary agency.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

• If you plan to purchase or build an office location:
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your literary agency will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

It should go without saying, but this is a business for those who love literature. This is not only because you will be doing so much reading, but so you can understand the literary market into which your clients are trying to publish. It's also a good job for those who like to help others, as you will essentially be your client's only advocate in the intimidating processes of publishing and selling their work.

What happens during a typical day at a literary agency?

In no particular order, your daily activities include discovering new clients as well as communicating with the clients you have. You will also have meetings with editors from different publishing houses that may eventually buy the works of your clients. The job also involves writing things like pitch letters for these editors and submitting formal copies of manuscripts to them. You will also be in charge of reading your client's’ books so that you are prepared to properly market them to publishing companies and the public.

What are some skills and experiences that will help you build a successful literary agency?

Prior experience as a writer can help you in dealing with writers. Similarly, formal education as an English major or a related field can help you pick out some of the best submissions from authors. Finally, if you already have relationships in the publishing world, it can help you hit the ground running when it comes to helping your clients.

What is the growth potential for a literary agency?

The growth potential for this business is modest, with a projected three percent growth projected between 2014 and 2024.