This section is not intended as an exhaustive discussion on all legalities and tax ramifications involved in publishing and selling books. It is meant to advise you to explore state and federal requirements that may pertain to these activities. For instance, if you are a New York State resident and wish to sell books, you will need to file a DBA (Doing Business As) form with your county clerk’s office and obtain a Sales Tax Vendor ID from the state. Once registered as a sales tax vendor, you will need to file periodic sales tax returns disclosing all sales, even those that are wholesale, tax exempt, or out-of-state.
You will also be required to claim your sales income on your state and federal income tax returns. To avoid penalties, you may need to pay quarterly estimated state and federal income taxes. On the upside, you will likely be able to claim your business expenses (e.g., publishing costs, business mileage) as deductions. We recommend visiting the IRS website, your state’s taxation department website (www.tax.ny.gov for New York State), or a knowledgeable business accountant for business tax information.
If you are self-publishing, the self-publishing company may require that you have some sort of business tax identification number (e.g., the aforementioned NYS Sales Tax Vendor ID) in order to provide you with materials and services on a tax-free basis. In other words, if you do not have a tax ID, the company may charge sales tax on goods and services. Furthermore, do not take a company’s failure to request your tax ID as confirmation that you are not required to have one. State and federal tax agencies do not deem ignorance as an excuse for not following rules and policies; you may face penalties and fines if you do not properly register and disclose your business activities and sales.
If you are a New York State resident, we recommend that you visit the New York State Small Business Development Center website for information on starting a business. There are local and regional branches around the state where you can seek free help and advice on all sorts of business-related topics. Other states likely have similar agencies, and there is also a federal agency for small business information: the US Small Business Administration.