Lindsay - January 21, 2021Our guest for this week’s show is Joe Solari, an author, entrepreneur, and business consultant for authors. He’s written the books Should I Incorporate? Author Edition: How and when to set up your publishing company, Direct Sales Unleashed: Why your fans want to buy direct and how to do it, and ADVANTAGE: Harnessing Cumulative Advantage in the Winner Takes All Publishing Market.
The first half of the show will mostly be of interest to American listeners, as we discuss taxes and business formation and retirement accounts in the US. If you’re outside of the US, you may want to jump to the second half (about 35 minutes in) when we start discussing Joe’s thoughts on marketing and building a community of raving fans and “cumulative advantage,” topics from his latest book.
Here are some of the specific questions we asked:
- What’s your background, and why did you get involved in helping authors with the business side of things?
- What are the advantages from shifting from being a sole proprietor to starting an LLC, or whatever entity you recommend, and at what point should authors consider doing this?
- This is potentially a pretty basic question, but reasonably prolific authors can end up spending thousands of dollars on services provided by individuals, be they cover artists or editors. Under what circumstances should you be generating a 1099? And are rules different about paying people who work outside the United States? (Here’s the site Joe recommends for inexpensively distributing 1099s: https://www.tax1099.com/.)
- What sorts of things should authors be deducting, and are there things they might want to stay away from? Do these change according to how successful an author is, or will they always want to deduct/avoid deducting them?
- If someone was lucky enough to hit it big last year and make good money for the first time, are there any things now that they can do to save some on their taxes?
- When it comes to planning for retirement, the options in the US are basically a Roth IRA, a SEP IRA, a Solo 401K, and (if you’re a certain age and income level and want to sock away more) a defined benefit plan. Can you give us the lowdown on these options and what you usually recommend to clients?
- At what point should authors start investing for retirement, how much should they be doing, and does it depend on a significant other’s (or self’s) full-time job, if applicable?
- How important is it that you register a formal copyright, and if you have formed a corporation or such for your author business, should you own the copyright or assign it to the company?
- Can you sum up what you mean by cumulative advantage in the author business context?
- In the book, you talk a bit about the value of long-tail earnings. You actually suggest it might be valuable to experiment with pausing advertising in order to get a better understanding of your long tail. Can you talk a bit about this?
- Right off the bat in your book, you tell readers you’ll show them how to separate themselves from the pack of those seeking the next hack or marketing gimmick. Would you give one example of what listeners can do to separate themselves?
- You’ve mentioned the virtuous marketing cycle. Can you explain that?
- Anyone who has been advertising or promoting for more than a few years is familiar with the fact that nearly all promos have steadily diminishing returns as everyone adopts it and the market starts to adapt. In the book you suggest “cumulative advantage” is immune to this. How?
- In your book, Treat Your Writing Like a Business, you talk about exit strategy, which is basically leaving the day job. Would you tell us how an author can know they’re ready to quit, what they need to have in place, and how much money they should be making compared to their day job? Also, how much emphasis should be placed on diversifying income at that point?
You can find out more about Joe on his website (use this form to contact him if you want to talk directly) and through his books. If you’re a fan of audiobook versions, you can pick up his Advantage audiobook directly through his website: https://joesolari.com/directaudio/
You can also listen to Joe talk more on these topics on his Business for Writers YouTube channel.
You can find us at the Six Figure Authors Facebook group. Thanks for listening, and thanks to Joshua Pearson for producing the show.
Really interesting episode. Lots of food for thought about structuring my business and dealing with the financial side.
It also got me thinking about ways I can really do something different for my readers around launch time, other than saying, “Hey, here’s the next book.” I always get stuck on things like that, which is a shame because my readers are awesome people and I really want to include them in the process more (in a positive way), but I don’t know how. So. Lots of food for thought in this one. Thank you.
You’re welcome, CD. Glad the interview helped!