Should I Start an LLC for My Publishing Company?

Starting a limited liability company (LLC) for your publishing company can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a publishing company, lawsuits can arise from things like a data breach that exposes your clients’ financial information or contract disputes with one of your hired writers.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your publishing company seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Glasses, a tablet, a newspaper, a pen, and a mug of coffee on a table

Do I Need an LLC for a Publishing Company?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Publishing Company

By starting an LLC for your publishing company, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Publishing companies will benefit from liability protection because of the risk of trademark infringement, financial data breaches, and even workplace accidents.

Example 1: One of the editors at your publishing company left a number of mistakes in a client’s book that unfortunately made it into the published version. As a result, the book’s sales were extremely low as word began to spread of its poor quality. This prompted the customer to bring a negligence lawsuit against your business. The LLC structure would protect your personal assets from any business liability extending to them.

Example 2: After an employee at your publishing company was mugged while walking home, your business suffered an extensive hack that involved a number of clients having their financial information leaked. One of the customers suffered great monetary loss as a result of this leak, which pushed them to sue your business for this data breach. In the ensuing litigation, any liability of your business to pay compensation is completely limited to your business’s assets.

Example 3: A customer was walking around the offices of your publishing company when he tripped over a stack of paper that had been left on the floor. As a result of his fall, the customer incurred a broken nose and decided to sue your business. Limited liability would protect you from being held personally liable to compensate the plaintiff.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Publishing Company

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a publishing company owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Publishing companies rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Business insurance creates a layer of protection between a business’s assets and liabilities, which publishing companies especially value due to the unique set of liabilities this industry faces.

Common Situations Business Insurance May Cover for a Publishing Company

Example 1: While visiting your publishing company to discuss business, an author slips on wet flooring in the restroom, breaks an arm, and decides to sue for damages. General liability insurance would pay for your legal defense and any required settlement.

Example 2: A competitor files a libel lawsuit against your business. While you disagree with the accusation, you know you need to hire an attorney right away. General liability insurance would cover your legal defense costs.

Example 3: As an employee carries a box of books in from the warehouse, he accidentally knocks over a visitor to your office. The visitor falls, breaks a wrist, and asks your company to pay for his medical treatment. General liability insurance would cover his medical expenses.

Other Types of Coverage Publishing Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all publishing businesses should obtain.

Product Liability Insurance

While you publish books to share stories and information with the public, there’s always a chance someone might decide your product caused them harm. In the event of a lawsuit, product liability insurance would cover your legal fees and any required settlement.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time workers. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident.

Commercial Property Insurance

You made a major investment in the equipment, supplies, furnishings, hardware, software, and real estate needed to run your business. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as the business materials stored there.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance.

Read our Publishing Company Insurance article for more info.

You can expect to need around $16,000 in order to launch your publishing company. No more than $10,000 of this should be needed for pre-launch advertising in newspapers and online, and up to $5000 should be needed to edit, proofread, and publish a book.

Visit our How to Start a Publishing Company guide to learn more about the costs of starting and maintaining this business.

If you run a publishing company out of your home, the main operating expenses will be related to publishing your content, which includes editing, proofreading, and possibly printing.

Learn more about running a publishing company.

A publishing business makes money by selling its authors’ books.

Learn more about starting a publishing company.

The publishing industry is changing quickly as readers transition to digital publications, but it is still a multibillion-dollar industry. An advantage of the transition to digital media for publishing companies is that the cost of publishing is now much lower. This provides an opportunity for great profit margins.

Learn more about starting a publishing company.