Coauthor Banking

[IsadoraSpiegel]

So, my writing partner and I self-published our book through CreateSpace and we need to find a banking solution by which we can split royalties. We have a contract and we know the royalty split is 50/50. What we need is a bank account/money account that we can both have access to.

Because I live in PA and she lives in TX. Neither of us really knows banks nor are we hip to the jive about online banking solutions. The book series we've published(are publishing) is erotic in nature, so, we assumed that discounted Paypal, correct? Since there's that whole controversy about them freezing the accounts of people who draw erotica for sale or people with even a hint of sex work in their background.

What is a solution for our cross the US banking needs? we'd like to avoid establishing a business or anything that needs a whole lot of paperwork because sending it back and forth and getting shit notarized is a pain in the ass. We'll do it if absolutely necessary(because looks like even getting a joint personal account will need that anyway) but we're really looking for easier solutions.

Does anybody know of available online services that are cheap and won't give us legal trouble because we wrote a dirty book series? I have no idea who to even ask these questions so even if you don't have the answers, do you know where I can look?

 

[SenorFuego]

Why doesn't your 'publisher' cut two equal amount checks to the pair of you (give or take a penny?)

 

[IsadoraSpiegel]

Why doesn't your 'publisher' cut two equal amount checks to the pair of you (give or take a penny?)

Because we published with CreateSpace. I'm the publisher.

Edit: wait... I get what you're saying. Is there no other way? I know the states and distance makes things difficult.

 

[cheekygirl75]

I don't see why you couldn't just open a joint checking account or business account. But if that won't work because you're in different states (I don't think it would matter for the business account, but there might be more fees with that), if your partner would be comfortable with the check being deposited to you and you sending half after each check, there are plenty of banks now that allow people to send money to another person's account, for free. Santander & Bank of America are two that I know of.

Edited to add: oops, just saw that you've thought of a joint account.

 

[IsadoraSpiegel]

I don't see why you couldn't just open a joint checking account or business account. But if that won't work because you're in different states (I don't think it would matter for the business account, but there might be more fees with that), if your partner would be comfortable with the check being deposited to you and you sending half after each check, there are plenty of banks now that allow people to send money to another person's account, for free. Santander & Bank of America are two that I know of.

Edited to add: oops, just saw that you've thought of a joint account.

Thank you for your suggestions. Yeah, because we're in different states, she'd need to send me(or I send her) paperwork to get it notarized and send it back and we kinda stopped at this step and asked, "is there something we haven't considered?" Not that its unbelievably hard but if there was an easier step like signing up for an online account, then I wanted to look into it, just to check.

But yeah, now that you and Senor both brought up just splitting the royalty checks when they come and sending her the money that way, I think that's what we'll end up doing.

 

[pplwatching]

But yeah, now that you and Senor both brought up just splitting the royalty checks when they come and sending her the money that way, I think that's what we'll end up doing.

Fools rush in where angels fear to tread. You are forgetting about the IRS. If you're expecting small change then that arrangement may work for you. If you are anticipating a meaningful amount of money then you should be talking to a CPA or tax attorney. The ideal situation is for your publisher to write two checks, based on your authorship. My guess is that unless you have an LLC, sole proprietorship, or some other business entity then your publisher reports the royalty payments to the IRS based on the name written on the check.

Are you each getting 1099s reflecting your 1/2 of the royalty? If you are simply depositing the payment into a personal account, then to the IRS the entire deposit looks like your personal income and you have to report all of it on your annual tax return. Make no mistake, in that case you are personally liable for tax on the entire amount. Your tax professional will tell you which types of business structure are appropriate for your situation. If you don't have a registered business entity then you may not be able to deduct the money that you send to your partner. Lets also not forget who gets sued if someone claims that the work is stolen and wants their share of your money.

Just my $.02. Talk to a tax professional. It's well worth the investment.

 

[pplwatching]

This is a little dated, but is an interesting read

http://aprillhamilton.blogspot.com/2009/12/death-and-taxes.html

 

[IsadoraSpiegel]

Fools rush in where angels fear to tread. You are forgetting about the IRS. If you're expecting small change then that arrangement may work for you. If you are anticipating a meaningful amount of money then you should be talking to a CPA or tax attorney. The ideal situation is for your publisher to write two checks, based on your authorship. My guess is that unless you have an LLC, sole proprietorship, or some other business entity then your publisher reports the royalty payments to the IRS based on the name written on the check.

Are you each getting 1099s reflecting your 1/2 of the royalty? If you are simply depositing the payment into a personal account, then to the IRS the entire deposit looks like your personal income and you have to report all of it on your annual tax return. Make no mistake, in that case you are personally liable for tax on the entire amount. Your tax professional will tell you which types of business structure are appropriate for your situation. If you don't have a registered business entity then you may not be able to deduct the money that you send to your partner. Lets also not forget who gets sued if someone claims that the work is stolen and wants their share of your money.

Just my $.02. Talk to a tax professional. It's well worth the investment.

Ok. Back to square one. Because as I told someone else, we self-published. I'm the one with CreateSpace account and I'm the one who uploaded the documents, so, I'm publisher. Thats why I'm looking for solutions for something other than my sole banking info in the form for what CreateSpace is supposed to do with the royalties.

I'll talk to a tax professional because I think that is good advice. We're planning on making more money(of course) but so far it looks like the train has yet to pick up momentum. That's a different problem for a different thread.

 

[wanderingwizard]

Reach out over PM. I have my book published on Amazon. You're making this sound way too complicated unless you intend to generate more than $10,000 in revenue.

 

[Zeb_Carter]

Smashwords uses Paypal without problem. I get my royalties every quarter via Paypal.

A Couple of ways to go. There are several banks that are kind of global...one was already mentioned...Bank of America, the other is Chase. You can open a business account which both of you can have access to. Better yet, have the business account make automatic transfers to two private account. 50% to yours and 50% to theirs.

Or use Paypal and transfer the amounts to your private accounts.

How is Paypal going to know what you publish, Createspace isn't going to tell them.

You might also, as suggested, have CreateSpace deposit the proper amounts into your personal account or just cut two checks.

 

[pplwatching]

You're making this sound way too complicated unless you intend to generate more than $10,000 in revenue.

How did you arrive at $10,000?

How is Paypal going to know what you publish, Createspace isn't going to tell them.

CreateSpace will send her a 1099 and report the full amount to the IRS. According to the CS web site they report all income (no matter how small). If the amount exceeds the IRS personal reporting threshold (which is much less than $10,000) then she owes taxes on all of it because her SSN is the one reported to the IRS. Isadora will be paying the taxes on the full amount out of her share. The partner should be paying their own taxes. But, that's just my opinion.

Isadora, the tax could be nothing or thousands depending on a combination of how much money your story earns and on your individual federal and state tax rates, which are based on all of your income. In your shoes I would talk to a tax pro, but I tend to be overly cautious when dealing with the IRS. They can tell you what your options are, including how your state laws apply to you and some will give you a free initial consultation.

It sounds like the two of you have a pretty informal agreement. Get whatever you agree to with your partner in writing. Money always complicates things.

 

[Zeb_Carter]

How did you arrive at $10,000?



CreateSpace will send her a 1099 and report the full amount to the IRS. According to the CS web site they report all income (no matter how small). If the amount exceeds the IRS personal reporting threshold (which is much less than $10,000) then she owes taxes on all of it because her SSN is the one reported to the IRS. Isadora will be paying the taxes on the full amount out of her share. The partner should be paying their own taxes. But, that's just my opinion.

Isadora, the tax could be nothing or thousands depending on a combination of how much money your story earns and on your individual federal and state tax rates, which are based on all of your income. In your shoes I would talk to a tax pro, but I tend to be overly cautious when dealing with the IRS. They can tell you what your options are, including how your state laws apply to you and some will give you a free initial consultation.

It sounds like the two of you have a pretty informal agreement. Get whatever you agree to with your partner in writing. Money always complicates things.

She said they have a contract. I would assume it's in writing, but it may just be a series of emails between the two agreeing to the terms.

Question: Approx. how much have you earned? Tens, hundreds, thousands, millions...?

You could also, and you can do this online fairly cheaply, create a Limited Liability Partnership. You would then have Createspace pay the partnership who would disburse the funds as royalties and issue individual 1099 R's. Of course you now have a business that will need to report income and expenses. But those should be a wash...you'll have to check with a tax person on this.

 

[IsadoraSpiegel]

Thank you, pplwatching for the points you've brought up. looks like I'm going to be sitting down with a tax professional before anything else.

She said they have a contract. I would assume it's in writing, but it may just be a series of emails between the two agreeing to the terms.

Question: Approx. how much have you earned? Tens, hundreds, thousands, millions...?

You could also, and you can do this online fairly cheaply, create a Limited Liability Partnership. You would then have Createspace pay the partnership who would disburse the funds as royalties and issue individual 1099 R's. Of course you now have a business that will need to report income and expenses. But those should be a wash...you'll have to check with a tax person on this.

And yes, that is correct, we have a written contract that we've sent both ways, so, original copies both have our signatures on them. We covered royalties and division of duties and mediation scenarios with plan A, B, and C in case we ever have any problems. We left the specifics about banking out of it because neither of us are too savvy about this sort of thing, which is why I'm asking for ideas. I've never done this so who would I go to in order to get a bit of hand holding about creating a business? We tentatively planned sequels but really it's just these three books in the series we wrote together and might be all there is. It felt a bit involved to create a business just for that but I don't want the IRS to come down on us.

I will look into a limited liability partnership because if that's something we can just make without too many moving parts, that would be great.