Should I just share half my profit with my co-author?

December 11th, 2018 → 2:42 pm @

sales_transaction_400_clr_5514

Hi Carol,

I will soon be self-publishing a book and I’m working on book number two. The editor from my first book will be the co-author for the second book.

Instead of paying her a predetermined fee (as I did when she was editor), we would simply split the profits. I’m responsible for any expenses for publishing and promoting the book.

When I first talked with the editor about about being a co-author and offering her half the profits, it seemed like such a simple solution.

I’ wondering of this business arrangement is referenced in your book? If it is not, is it possible to engage your services for advice?

Neither one of us have an affinity for accounting and/or taxes.

Thanks,

Diane

 

 

Diane,

Congratulations on publishing your second book!

I mention a co-authoring in my book Business Tips and Taxes for Writers. I caution authors that they should not form a legal partnership, but set it up like you are going to do: One of you gets paid all the proceeds and then pays the other person.

Here’s the tough part: define profit.

It seems easy to define profit as income less expenses, but what if one of you spends a lot on promotion and advertising. This increases expenses, which decreases profit. Or the promotion could increase sales which increases profit.

So why should the co-author benefit if you did all the work and paid for all the promotion?

What if one of you works more than the other, should the profits still be split 50/50? Or is 50/50 even a good split? It could be 70/30 or 90/10?

I guess that’s why some co-author arrangements are set up as royalties: a fixed payment per book sold.

So perhaps you could offer your co-author a payment of $1.00 or $2.00 per book sold.

That’s a lot easier to calculate than profit.

You’ll have to determine if you can afford the $1 or $2 per book especially if the margins are small.

And put the agreement in writing signed by both of you.

I would be happy to arrange a phone consultation with you if you wish. Contact me for a convenient time and date.
I hope that helps.

Carol Topp, CPA
Accountant and author of Business Tips and Taxes for Writers
TaxesForWriters.com


Tags: , , , ,

Comments are closed.