It’s not an uncommon question: is an author legally required to form a business entity (like an LLC) in order to sell books directly to their readers?

The short answer is no—most authors would not be required to create and operate under such an entity before deciding to set up a direct sales store. That said, forming an LLC can offer certain benefits to your publishing operations depending on your goals, risk tolerance, and long-term plans.

Please Note: This article is meant to provide general information and help you understand the considerations involved in running an author business, but it shouldn’t be relied on as professional legal or tax advice. If you’re deciding whether to form an LLC or have questions about taxes, compliance, or liability, it’s always a good idea to consult a qualified professional who can advise you based on your specific situation or location.

You Can Sell Books as a Sole Proprietor

In most places, the moment you begin earning money from your writing—whether you’re selling through your own website or through a retailer platform like Amazon—you’re effectively operating as a sole proprietor. This is one of the simplest business structures available to not just authors, but any type of entrepreneur.

As a sole proprietor:

• You personally own the business
• Business income is reported on your personal tax return
• There is generally little to no administrative setup required
• You maintain complete control over your author business

Many independent authors operate this way for years, especially when their business remains relatively small and grows gradually. So whether you’re selling eBooks, print books, audiobooks, merchandise, subscriptions, services, or anything else directly from your website, you typically don’t need to form a formal LLC to start making those sales if you don’t want to.

Changes to Consider When Selling Direct

Selling direct means you’re acting as the official retailer for your products rather than relying entirely on marketplaces like Amazon, Kobo, Google Play, or other online stores.

As such, you may take on responsibilities like:

• Processing customer orders
• Handling customer service
• Managing refunds
• Shipping physical products
• Managing applicable sales tax

While none of these responsibilities automatically require an LLC, they do mean you’re operating more like a “traditional” business than an author who only distributes through third-party retailers. This is why moving into direct sales often becomes a point when indie authors consider whether they want additional legal or financial separation between themselves and their business.

What is an LLC?

An LLC (Limited Liability Company) is a legal business entity designed to separate business assets and liabilities from the business owner’s personal assets. They’re commonly used by small businesses because they offer helpful protection while still remaining relatively simple to manage (as opposed to some other types of business structures).

Many authors eventually do create an LLC once their business becomes more established, especially if they are:

• Generating significant revenue
• Employing contractors or team members
• Running multiple high-volume pen names
• Selling merchandise alongside their books
• Hosting events or conferences
• Building a larger publishing operation

But there are also plenty of authors who are content to remain as sole proprietors rather than officially-formed entities. It really comes down to what your goals and preferences are.

Pros of Forming an LLC

The primary reason most business owners form LLCs is for the liability protection they come with. In general, an LLC can help to separate personal and business assets, meaning if any business-related legal issues arise (like lawsuits, for example), then the LLC helps to protect your personal finances from those issues.

Some authors also just generally enjoy the professionalism that comes with operating under an official, registered business name. Forming an LLC can often make it easier to:

• Open business bank accounts
• Sign vendor agreements
• Work with contractors or employees
• Establish business credit

These details often present a more formal business identity, which can become valuable as your author business grows. 

Creating an LLC also has the benefit of helping to keep business finances and personal finances separated. This can make it easier to keep more accurate records, simplify bookkeeping, and make tax preparation and general financial tracking and planning easier to manage.

And if you eventually plan to expand your business beyond writing and publishing books, an LLC can provide a foundation for that future growth. For example, you may eventually:

• Publish other authors
• Sell educational products
• Offer coaching or consulting
• Create subscription programs
• Operate multiple brands

An LLC can make these transitions easier as your business evolves and grows.

Cons of Forming an LLC

While there are some great benefits to forming an LLC, it’s not necessarily a no-brainer. For one, there are additional costs like setup fees, filing fees, and ongoing renewal payments for any official business entity you decide to form. Depending on where you live, these expenses can range from relatively minor to several hundred dollars every year.

Operating an LLC also comes with more administrative work to maintain it. Additional recordkeeping and paperwork can include things like:

• Annual tax reporting
• State filings
• Separate financial accounts
• Renewal documents

All of the above can often introduce complexity to the business before it has actual revenue—a common mistake new entrepreneurs tend to make. Building an elaborate business structure can be helpful in the long-term, but when just starting out, it can be unnecessarily complicated.

There’s also the common misconception that forming an LLC automatically creates major tax advantages; the reality is that when an LLC belongs to a single owner, income actually still flows through the owner’s personal tax return in much the same way it does under a sole proprietorship. So there aren’t usually additional tax breaks to take advantage of.

How a Merchant of Record May Affect Your Decision

Something that’s becoming increasingly relevant for authors who decide to sell direct is the use of a Merchant of Record (MoR) to do so. An MoR is a company that becomes the legal seller of record for a transaction and handles many of the compliance and payment-related responsibilities on your behalf.

Depending on the platform and service being used, an MoR may handle things like:

• Payment processing
• Sales tax collection and remittance
• VAT compliance
• Fraud prevention
• Regulatory requirements
• Customer disputes and support

Using an MoR like The Bookshelf for your direct sales store can significantly reduce the liability-related burden that many authors considering an LLC may be concerned about. This isn’t to say that if you use an MoR you don’t need an LLC—it just means that it can make some of the concerns of being a sole proprietor easier to manage.

But always remember that an MoR does not eliminate every business consideration. You’re still earning income, operating an author business, and selling products under your brand. So the decision to form an LLC should be based on your broader business goals rather than on how payments are processed or liability is handled.

Is Forming an LLC Right for You?

For many new authors, the answer here is most likely “not yet.” If you’re just beginning to sell books direct, or to sell books at all, operating as a sole proprietor is often the simplest and most cost-effective option to start. That way you can focus on growing your direct sales readership and truly learning how your business operates before adding layers of complexity to it.

On the other hand, if your business is generating substantial revenue, if you’re hiring help, or you’re expanding into some kind of larger publishing operation, an LLC may be worth considering.

In the end, the “right” time to form an LLC is different for every author (and may never be the best option for some). When it comes to direct sales specifically, the most important thing to understand is that forming one is not required, so use that knowledge to take a step back, assess your unique situation, and make the best decision for you and your goals.

Related Questions

Do authors need a business license to sell books online?

Not usually, but it does depend on where you live, where your business is registered, and how local laws apply to online sellers. Many authors can start selling books online as sole proprietors without obtaining a business license, while others may need certain permits or registrations. It’s best to check with your local government or a qualified business professional to determine what applies in your area.

How does sales tax work when you sell books direct?

As the legal selling entity of your books, you’ll be responsible for collecting and remitting sales tax in certain jurisdictions, specifically when you reach nexus in a certain jurisdiction. Sales tax compliance can become complicated, especially if you sell at a high volume and/or all over the world, which is why many authors choose to use platforms that act as a Merchant of Record, which will handle many of these requirements.

What are the most common legal issues authors businesses face?

For most authors, legal issues are relatively uncommon, but they do happen. Risks include copyright disputes, trademark conflicts, contract disagreements, customer complaints, or privacy and data handling issues. This is another reason using a Merchant of Record can be helpful, but in general, it’s wise to make sure you use clear contracts, proper business and compliance practices, and seek professional guidance when needed.