Challenge,  publishing

Licenses Are Not The Ends of Roads

Today I Got a Lot of Questions…

After yesterday’s post, a number of the questions I got privately had the subtext that a license has a one-time-and-out thinking.

Nope.

— You license your novel to your own corporation. It is your corporation so you license everything inside that copyright to the corporation. It must be in a contract, so you make sure the contract can be cancelled if you want at any point, but you license the novel to your corporation.

— Your corporation then licenses out things like electronic books to all the places, paper books, audio books, translations, and so on. Money flows into your corporation.

— Say on one of your series a company wants to license clothing. Your company licenses that right to a company.

— That company than turns around and licenses the t-shirt part of the license to a t-shirt company.

— That t-shirt company then sets up a license with a distributor and another with a production company.

Money flows back up the chain, depending on the contracts, to your company.

You get the idea? Magic pie, magic bakery.

A license can be continued to be extended license after license inside the terms of each contract. Not at all sure why so many people thought that if you licensed your novel to your company, you would have to hold back movie and other rights to do those. Nope, you want all the money going into the corporation.

Someone at dinner tonight suggested this thinking comes from licensing your novel to a traditional publisher. They do take it all and you have no control. So this kind of thinking would be a hold-over from those days.

But if you license to your own corporation, you control that and get all the money into your company as well.

 A STUPIDITY…

Tonight on Facebook one of those ads came up that said, “We can help you get a copyright on your work.”

Wow, what a scam. I hope everyone reading this knows that the moment you write something, like this blog, it is automatically protected under copyright law and you own the rights for your lifetime, plus 70 years. Automatically.

Sigh… You never go get a copyright.

But at the same time that scam exists because writers never go learn copyright.

NOT UNDERSTANDING CORPORATIONS…

My little post last night about more advanced stuff got me a bunch of questions about how to take money out of a corporation without getting hit with taxes. This question shows a pretty solid lack of understanding of the basics of corporation structure.

Fringe benefits that are not taxable to the corporation officer are very extensive. You would need accounting help to make sure something is not taxable, but with a full C corporation, it is stunning what is allowed if deemed in the best interest of the corporation to give as a non-taxable benefit to the officer of the company.

Full medical, new car, and so on. Your company can buy your home and do all upkeep. (There are rules, so make sure you have a really good accountant or not be afraid to set up multiple corporations.)

Food in certain circumstances, done correctly with meetings or other reasons, can also be paid for pre-tax by the corporation.

In other words, if you have the right accountant, and you understand what is allowed under full C-Corp rules of benefits, you will need to take very little from the company in wages or salary, if any.

WHEN YOU GET BETTER AT CORPORATIONS…

You can do all sorts of things. We have a corporation that is set up to own all business furniture, office equipment, and so on, and lease it to our main corporation.

Yes, Kris and I have a full C-Corporation that has the only purpose to buy and lease furniture to other corporations. That was in its charter and what it has existed for.

I am saying this only as a teaser because if you do not understand how that could help me and Kris take money without taxes out of our publishing company, that means you need to get better understanding how corporation structures work.

Don’t ask me how to do it.

Lots of books and great articles on this sort of thing to study. Have fun.

 

8 Comments

  • Mike

    Thanks, Dean. This coupled with responses from yesterday (especially our reply to J.A. Marlow at the bottom of yesterday’s post) clarified this all a bit more.

    I would suggest people look to your lectures for a good start. Or better yet, to supplement a foundational knowledge built from books and articles so that you can see general business principles applied to a publishing business specifically.

    Magic Bakery, Think Like a Publisher, and Writing as an Investment are three I’ve taken that helped open my eyes to some of these possibilities, if anybody is looking.

    Now I need to go back, re-watch them, and review my notes 🙂

  • Kristi N.

    Dean, I have to thank you for all the times you’ve recommended Lynda.com for learning. It’s now LinkedIn Learning, but for a pittance (>$40/month) I have access to videos about business, entrepreneurship, marketing, SEO, analytics and more. Some of those qualify as professional development units for people working a day job, and most are very well done. Thank you!

    • Nathan Haines

      I would be remiss if I didn’t mention that not only is Lynda.com a comprehensive resource for all kinds of learning, but many public libraries also offer free access to all of Lynda.com with nothing more than your library card. On top of tons of other ebook libraries, research databases, often music and film streaming. Most of which you can access from your home computer or your phone/tablet.

      If your local library offers these benefits, then you’re already paying for them through taxes. Anyone reading may as well take a peek at what their local library system offers, because as libraries try to adapt what it means to offer knowledge and learning to the public in the digital age, many of them have done so in fantastically inventive and convenient ways!

    • Bill Peschel

      My library offers free access to Gale Courses, which offers classes on writing (including some by Steve Alcorn that I found enlightening), managing a small business, marketing online, and building your website. Great value for money.

  • Bill Peschel

    Part of the reason writers think that licenses don’t have an end date is because that’s how rights contracts were structured.

    For example, if a company buys the movie rights to your book, they would keep those rights even if the movie was never made. They could resell the rights, too. That’s what happened with the Tolkien estate and the rights to Lord of the Rings. I came across another example last night about a book called “The Front Runner.”

    If the contract had come with an expiration date, the author could have gotten the rights back and shopped it herself, and probably found a company willing to do it.

    “it is stunning what is allowed if deemed in the best interest of the corporation to give as a non-taxable benefit to the officer of the company.”

    • dwsmith

      Bill, if the author had a “snap-back provision in the contract, where the rights automatically returned at a certain point, none of that ever happens. So you see something like what you suggested, it is always the author signing a bad contract.

      And the link you put up to that author I deleted because that was the laughing-stock of anyone who understands taxes. The author tried to do what the author could legally do with a corporation as a regular person under the author’s own taxes, which is never allowed. The author lost that on stupidity alone. And the accountant, a family friend, should have been run out of town on a rail for being that stupid. So I deleted that because it is such a bad example. Or a great example of a writer being dumber than a post.