A Revocable Living Trust And A LLC For This Writer (Part 2)

This is the second part of a three-part blog post. Read Part 1 – A Revocable Living Trust.

A Limited Liability Company (LLC)

For the last six years, I have muddled through the business side of being a writer as a sole proprietorship (i.e., everything got shoved into a manila envelope until tax time). That was fine when I was selling first serial rights to print magazines and anthologies. After I started turning my reprints—and later, original manuscripts—into ebooks, I was not only a writer but also an ebook publisher. Now that I’m making more money from selling ebooks than first serial rights, it’s time to change the business structure into a limited liability company (LLC).

As a writer and ebook publisher, do I need to have a LLC for my business?

The short answer is no. If you don’t take out business loans or credit cards, don’t rent an outside office and/or invite people into your office, you don’t have any liability issues that you need to protect your personal assets from.

If you have significant income, you may want to consider forming a corporation to take advantage of the lower tax rates and benefit perks. A LLC that doesn’t elect to be taxed like a corporation is a pass-through entity for tax purposes (i.e., all income gets reported on Schedule C of your personal tax return). If tax planning is your primary concern for setting up a LLC or corporation, see a qualified tax advisor for more information.

The longer answer is yes. For my particular business situation, I’m setting up the LLC for several different reasons:

  • Having a LLC requires that you keep your business assets and your personal assets separate from each other. If you fail to maintain this separateness, a judge can declare your LLC invalid and put your personal assets at risk.
  • Unlike dealing with individual publishers for selling first serial rights, you’re dealing with the public at large when selling ebooks. Some idiot will always come along to shake you down for money. A properly structured LLC can prevent frivolous lawsuits from being filed in the first place.
  • Some of my future business plans may put me at risk for a lawsuit.

The major downside to incorporating a LLC in California is the $800 USD per year franchise tax that gets paid regardless if the business was profitable or not. Although I’m running an Internet business, and could form a LLC anywhere else in the United States for significantly less money, fighting off the Franchise Tax Board isn’t worth the trouble.

I’m forming my LLC without using an online service like Nolo’s Online LCC or consulting with an asset protection attorney. I’m comfortable with the process that I can do it myself. As I grow my business over the next few years, an attorney will need to review everything to make certain I’m doing this correct.

Next: Using A Living Trust & LLC Together (Part 3)

The Perfect Writing Desk For Five Bucks

I’ve wanted to get a new writing desk for six months. The nearby OfficeMax store had a computer desk that was more like a narrow table for $55 USD. (The other local OfficeMax stores carried the same desk for $80 USD.) As a member of the OfficeMax MaxPerks award program, I get coupons from time to time. The typical coupon is save $15 USD on a $75+ USD purchase. If I didn’t have $55 USD for a new desk, I certainly didn’t have $75 USD for a new desk and whatever else to save $15 USD.

OfficeMax recently sent me a coupon for $50 USD off the purchase price of ANY DESK in stock. The coupon was loosely worded. I went to the store, picked up the desk, and presented the coupon the cashier. Not surprisingly, the coupon didn’t scan. I think the coupon was for the $150+ USD desk sets that covered the showroom floor. The manager came over, read both sides of the coupon, found the word DESK on the box, shrugged his shoulders, and entered the override code. I got a new writing desk for five bucks.

My old desk was a computer desk with a sliding keyboard tray and a bottom panel to store the computer and printer. I got it ten years ago to replace a monster desk that didn’t survive moving to different apartments a few times. Back then I was still working in the video game industry, playing video games at home, and taking computer programming classes at school. For what I was doing then, that desk was perfectly suitable.

When I became serious about being a writer, I got a folding table for my typewriter. (Yes, Virginia, I’m that old.) This worked out just fine. I seldom wrote or edit on the computer desk itself. That work got done behind the steering wheel of my car during my lunch break, at the kitchen table, on the floor or in bed. After I gave my old Mac Mini to my friend for his birthday last year, I no longer needed a computer desk. I did need a new desk that was comfortable enough to write and edit on.

The desk I got for five bucks is five inches wider, five inches less deeper, and an inch lower than my old computer desk. I’m closer to my wall-mounted monitor, have free leg movement underneath with no bottom panel to block my feet, and the height is comfortable for writing and editing by hand or keyboard. The only drawback is the black finish that makes the dust too visible and I have a feather duster nearby to make the dust less visible.

The new table helped wean me away from editing on paper to editing on computer, something that I been trying to do for ages. With most of my short story submissions being sent by email, now was the time to embrace the mythical paperless office.

At five bucks, this new writing desk was a steal. Thanks, OfficeMax!