Q&A: What are the tax advantages and disadvantages of a textbook author setting up an incorporation rather than operating as a ‘sole proprietor’?

Q: “What are the tax advantages and disadvantages of a textbook author setting up an incorporation rather than operating as a ‘sole proprietor’?”

A: Stan Gibilisco, author of several textbooks including Geometry Demystified:

“I tried this when I lived in Hawaii and discovered, to my horror, that my royalty income was subject not only to their income tax, but to their ‘sales’ tax as well (they call it a general excise tax). I figured that if I formed a Nevada corporation and had all my income channeled into it, and then became an employee of that corporation, the royalty income would not be subject to that onerous tax. It was a beautiful theory, but, like so many theories, did not work. The legislators in Hawaii had thought of that before I did and the law was airtight. Love it or leave it. I left.

6 Tips for marketing your textbook

Q: “I have been writing a textbook but so far have been unable to interest a major publisher. I may publish it with a small publisher without a sales force. That leaves me to market the textbook. Can you share some advice for what I should do in this situation?”

A: Robert Christopherson, professor emeritus of geography at American River College and author of the leading physical geography textbooks in the U.S. and Canada:

  1. Examine similar textbooks in the field you are writing in over the past 10 years. Record publisher names, editors listed on the copyright page, and begin a list of any reviewers listed in the Preface. This process will give you an idea of publishers active in the discipline and some you might want to contact with your proposal.

Q&A: What happens to textbooks when a publisher sells lists to other publishers?

Q: “What happens to textbooks in inventory or those under contract when publishers sell lists to other publishers? How can we find out whether books have been stolen or put into the hands of resellers?”

A: Stephen E. Gillen, Attorney, Wood Herron & Evans:

“It depends upon the deal between the two publishers. Typically, the acquiring publisher buys the inventory along with the contracts. Then they sell it out or destroy it so they can produce a new printing under their imprint. It’s also possible that the acquiring publisher would have no interest in the existing inventory under the old imprint and would require, as a condition of sale, that the selling publisher destroy the inventory. Regardless of who sells the books, the author should get a royalty in accord with the terms of the publishing contract (of course, if the books are remaindered that royalty may be small or nonexistent depending upon the terms in the publishing contract). In any event, any sales should be reflected in the next royalty statement. If there is a question, ask the new and old publishers to provide an inventory reconciliation.”

Q&A: Images are an integral part of your book, but how do you find an artist for creating them?

Q: “How do you find an artist for images in a text or trade book? Who pays? At what point is the art done? If the images are an integral part of the book, how does all of this work?”

A: Elsa Peterson, Freelance Editor, Norwalk, CT:

“Most of my experience is in college-level textbooks. In that industry, it is typically the publisher who hires the artist to render the images. The cost may come out of the author’s royalties or it may be part of the publisher’s investment, or some of both, depending on the terms of the author’s contract. Naturally the author is asked to submit ‘scrap’ (rough sketches, diagrams, and/or copies of similar images to what is desired) for the artist to work from. The author also typically gets to approve/suggest modifications to the renderings before they are final.

Q&A: How to go about getting a contract to publish an academic book

Q: “How do you go about getting a contract to publish an academic book? How is the process different from getting a contract for a college-level or K-12 textbook?”

A: Stephen E. Gillen, Attorney, Wood Herron & Evans:

“Textbook contracts vary significantly based on curricular level. The K-12 market works with much higher volumes but is price sensitive (because schools adopt and purchase the books). The college market works on lower volumes but is less price sensitive (because professors adopt but students purchase).

Q&A: What to do when a coauthor transitions toward retirement

Q: “My coauthor on several different titles is transitioning toward retirement. I will soon be starting a revision without his active participation. We have a succession agreement on the royalty split in future editions, so that’s (hopefully) not an issue. However two questions have risen to top of the swirl of concerns that I have as I face this transition: 1) Is this a good opportunity to renegotiate my authoring contract? I suspect that my publisher will want to simply change the authoring designations as an addendum to the current contract. Should I insist on a new contract? Should I avoid that if they insist on a new contract?; 2) Assuming that I should renegotiate, how likely is it that I’ll be able to break them out of their boilerplate?”

A: Stephen E. Gillen, Attorney, Wood Herron & Evans:

“Taking on 100 percent of the writing responsibility is essentially a new deal necessitating some change in the terms of the relationship (royalty share, to name but one important term). There is no magic to how this change in the relationship is memorialized. It can be by amendment or addendum or by substituting a new contract. What is important is that, however it is memorialized, you capture all of the relevant changes.