Intro: What is handselling? How much do I sell a book for? Should I open a brick-and-mortar, a bookmobile, or a pop-up shop? How do I host author events? And most importantly, how can I turn my passion for books and reading into a profitable and sustainable, independently-owned, small business?

Welcome to The Business of Bookselling, a live-workshop and interview-style podcast about business and book culture. This podcast uses a diversity, equity, and inclusion lens, combined with triple-bottom line sustainability business principles, to offer actionable advice, bookselling basics, and deep dives into the book ecosystem.

Learn from bookstore, business, and book industry experts about how to turn your book-loving dreams into a profitable and sustainable book-selling business.

Transcript:

Once upon a time, someone had the brilliant idea to open a bookstore. For the purposes of this podcast episode, it’s not really all that important when and why and where someone else did that. The important part is when and why and where YOU want to open an independent bookstore.

There is no one right answer, but I highly recommend having a think on it and writing it down for future reference. You want to know what the wrong answer is? “To make money.” This is probably the biggest, not very well kept, secret of independent bookselling: it’s a terrible, horrible, no-good, very bad way to make a living. (If you get that book reference, give yourself some bookseller bonus points.) Making money as an independent bookstore is not strictly impossible. Just highly improbable. Quite unlikely. The odds are stacked against you. You’re probably getting the point. There are many legitimate financial, circumstantial, and industry-specific reasons why that is the reality, which I will go into in a later episode, I’m sure, but for now, let’s proceed as if you’ve taken me at my word – no one opens an independent bookstore solely for the money. So, back to the original question: why do you want to? 

If you can’t answer that question immediately, that’s okay! This podcast episode is here to help. Here are some questions for you to consider when wanting to open your own independent bookstore:

I’m going to repeat that big one – WHY do you want to open an independent bookstore? – and – What type of store were you thinking of opening?

When I say type of store, if you’re thinking, “Bookstore. Duh.” that’s not quite what I mean. I mean get more specific! Spe-ci-fi-ca-ly, what type of store?

If you’re not quite sure or if you already feel overwhelmed making that decision, would you consider purchasing an existing bookstore for a more turnkey operation where not every single decision has to be brand new and on your shoulders?

Here’s something else to consider – WHERE do you want to open your bookstore? If there isn’t one already in that specific location, why not? If there IS one there already, will the consumer market support more than one? Some markets can absolutely support more than one independent bookstore, so simply because the answer is yes, doesn’t mean you’re out of luck. Instead, consider, if there’s already one or more than one bookstore in the area already, what are the others carrying and how will you set yourself apart (used vs new, adult vs kids, genre vs general, etc.)?

Speaking of which, what ARE you planning on carrying in your bookstore? Again, books, duh, but are those new books, used books, remainders? Are you going to carry sidelines, also known as gifts, stuffed animals, toys, greeting cards, art supplies, t-shirts, tote bags, etc., puppies? (Don’t carry puppy mill puppies, please, but do consider holding pet adoption events.)

Here’s a fun question for ya – How do you plan on funding the opening of your independent bookstore? Do you need to start drawing a salary from day 1 or can you wait 2-5 years before paying yourself a living wage?

And finally, do you enjoy spending time with your family and friends, or are you okay with the concept of never having a day off again as long as you live?

If you don’t know the answers to some (or even all) of these questions, or you now find yourself overwhelmed by the entire concept and don’t really want to continue listening – good! That’s literally the whole point of this podcast. I want to help you be as prepared as you can be prior to opening your independent bookstore so that you have a greater chance of actually making enough money to succeed (and by succeed, I mean you can afford to stay open and in business), so put on those big girl/boy/trans/nonbinary/genderqueer panties/pantaloons/boxers/briefs/thongs/underpants/undies/unmentionables/intimates absolutely no judgement whatever you want to call them or wear – or not – these can be metaphorical if that’s your thing, but either way, gird those loins, keep listening, and don’t panic (more bookseller bonus points for you if you get that reference, too). 

In the many many conversations I’ve had with new bookstore owners and bookstore owning dreamers, I hear time and time again that one of the scariest, most confusing parts of business is understanding the actual legal business pieces of it. We’re going to try to gently and in an overview fashion dive into some of those details, but first, a huge disclaimer that I am not a lawyer, business advisor, a registered accountant, a financial advisor, or in any other way officially qualified to give business or financial advice; I am simply presenting factual information and you will need to do your own research and/or work with a professional to make these decisions for yourself and your business.

Now, on to the business of bookselling!

 If I were to ask you – what type of legal structure is your business going to be – do you have a ready answer? 

On one hand, you may want to become a nonprofit to apply for grants or register as an LLC in order to protect your personal assets. But you must also consider how you plan to have your business pay taxes. That is because a legal business structure does not always mean that you pay your taxes using that same structure. Some business types allow you to pay taxes as if you’re a different type of business entity, and some states recognize certain types of business structures differently than other states, so what state your business is incorporated in matters just as much as what business structure you’ve chosen. As if that wasn’t confusing enough, some business structures require a separate registration at the federal level, in addition to registering the business at the state level.

Because this can all be really complicated, again, I cannot stress enough the importance of having a business lawyer, accountant, and/or business advisor to help you with this. Your nearest Small Business Development Center (SBDC) should have free appointments available with business advisors who can give you free advice (did I mention these are free??) and they can also recommend local lawyers/accountants who can provide paid services, and your local Chamber of Commerce should have people among their members who are lawyers/accountants who you can reach out to as well about their paid services. So you can always start with the free advice and then move on to more specific paid professionals if you need more assistance.

In a different episode, I’m going to go over the different types of bookstore businesses that I first asked you about, like pop-up, brick-and-mortar, bookstore/cafe/yarn shop, etc., but right now, I’m going to give you really basic information about legal business structures, and then you can find out more about them on your own by going to irs.gov, sba.gov, or that can be your first question that you ask your new business advisor when you make your free appointment at your nearest SBDC. Let’s begin!

If you are planning on going into business with anyone, please make sure your business partner(s) have the patience, understanding of your vision, and supportive nature of my parents encouraging their daughter’s origami stand instead of the more traditional American lemonade stand I opened as a 9-year-old (SO ahead of its time, I know. I’m sure people would flock to my origami stand today unlike how they did NOT in the early 90s…I digress). If they don’t have that, they better be bringing some other VERY good assets, connections, and knowledge to the table to make that risk worthwhile. Because while it might seem incredibly daunting to open a bookstore all on your own, it’s even worse trying to open a bookstore with the wrong business partner. And in this scenario, the wrong business partner includes predatory lending practices from banks and other financial institutions or potential funders.

There is absolutely no shame in starting off small, doing pop-up events, renting a micro space (300 square feet or less, roughly), or coming up with a different creative way to dip your toe into independent bookselling. Other options for avoiding partnership structures include being rich, romantically partnering with/marrying a rich person and gaining access to their money to start your business, winning the lottery, drawing up individual contracts for personal loans from friends and family members (sort of like unofficial crowdfunding), actual crowdfunding through websites like Kickstarter, GoFundMe, Kiva, and IFundWomen, and applying for grants if your store is a nonprofit or if you find a grant applicable to your business structure. We can also sneak in buying an existing store in an owner-financed circumstance, where the original owner essentially turns over the keys to you for the running of the business as the new owner and then the original owner takes a salary or percentage of profits from the store until receiving the agreed-upon amount to cover the purchase/sale of the store by you. (While there are many ways that scenario can be constructed, in this case, the original owner would not be a partner in the running of the business, but would simply receive payments. There are, of course, ways to construct this type of business sale where the original owner is still involved in the running of the business with the new owner, and this type of long term handover can occasionally prove to be very beneficial for new-to-independent bookselling bookstore owners.)

Don’t get me wrong – business partnerships can be lucrative, supportive, energizing, and affirming. Owning a bookstore can be a multigenerational family enterprise like Oblong Books in upstate New York, or can bring a couple closer together like Cavalier House Books in Louisiana. It can be a cooperative structure with many partners (like Raven Bookstore in Kansas) or a friendly financial and legal arrangement between friends/co-workers/colleagues, like Loyalty Bookstores in Washington DC and Maryland). Nonprofit bookstores have entire communities as partners (Bookmarks in North Carolina or R.E.A.D. in Virginia). Some bookstores have silently lurking partners, occasionally in the form of a single person or group of private investors – I would name some but that would give away the whole silent, which often means secret, investor part. Some bookstores are set up within other existing spaces, and the partnership structure looks even more different there, with rent and profit sharing coming into the mix (La Revo Books in Wisconsin has boutique locations within another business and they share spaces with other businesses, in addition to doing pop-ups). And then, of course, many many bookstores have financial partners in the form of traditional or specialty bank loans; those lending institutions are partners in the business, too. But those last two examples (setting up shop within an existing business and bank loans) don’t really impact the legal business structure of your bookstore, and that’s really the first thing you need to decide, so let’s dive back into that: 

Now, let’s move on to corporation structures. A corporation, in general, offers stronger protection for the owners from personal liability, BUT it costs more to form one and is slightly more complicated to maintain. There are also different tax implications for making a profit as a corporation than as an LLC; basically corporations pay income tax and sometimes the profits are even taxed twice – once when the profit is made (called an entity tax) and once when profits are paid to shareholders (so this would be on their personal taxes, so called owner tax). That said, a corporation is the best business structure when trying to raise capital for a business, as it also allows for different classifications of stock amongst shareholders, Board of Directors, officers, etc. Also, there are legal ways around double taxation if you work with a good accountant. Here are those corporation types:

If your head isn’t already spinning, here’s some more information that may make it start: the C Corp, S Corp, and nonprofit legal business structures can also be tax structures, separately from the business structure. So an LLC can file taxes as someone self-employed OR as an S Corp, if the business is arranged to do so. See what I mean about talking to a professional to get some advice on what would work best for you?

Take a deep breath in. Let it out. Do it again a few times. 

Now here’s the shortcut (and again, I’m not telling you to do this because I’m not a licensed business or financial person, I’m just sharing common practices): most independent bookstores start out as LLCs and pay their federal business taxes through a Schedule C form when they file their personal taxes around April 15 (or before, if you’re an early bird, or after, if you’ve gotten an extension, but really, the first three months of the year are usually the slowest in indie bookselling, so I’d recommend doing it when you’re supposed to, if you’re at all able). Though it can get a little messy, if you decide to change your business structure later, you can do so. You can turn your for profit business into a non-profit business, for instance. You can also run multiple businesses under one public-facing heading – for instance, Bethany Beach Books in Delaware runs a bookstore under that name and also a very successful subscription box service under the name The Book Drop (that’s a separate business, but is publicly linked to Bethany Beach Books), and many bookstores have both a for profit side and a non-profit side for events and programs, such as Dragonfly Books in Iowa. I cannot stress this enough – getting some professional business advice for how to make that work is most definitely advised!

BUT if all you want to do is start selling books tomorrow and the rest will figure itself out, save up about $300 for various filing fees, and here are the first five steps you need to take:

Quick note here: this does mean you have to decide on a name for your business…

While we all want to choose the most perfect name on the face of the planet for our very special and unique bookselling business, there’s something very important you need to know: if you do, for whatever reason, decide to change your mind about the business name, you can do so without registering as a new business entirely. This phenomenon is called a DBA or doing business as. It’s also known as a fictitious business name, an assumed name, or a trade name. So legally your business would be called one thing, while publicly, you would be doing business as a different entity name. What this looks like in practice is that you can register your business as Aunt Mary’s Curiosity Shoppe LLC, and years later decide to call it Uncle Jim’s Book Barn, and all you need to do is file the DBA update with your state (sometimes also with your county; AGAIN, check with your SBDC or your favorite search engine for the specifics required for where your business is registered). All of this is to say that if you haven’t come up with the most perfect special name for your bookstore business but you still want to get started, it’s okay! Pick one, register it, and you can always do a DBA later.

(Also again, I’m not a business lawyer, but common practice does have people dropping parts of their legal name, such as the LLC after the business name, on websites, business cards, social media, etc., and a DBA generally isn’t filed for that. For instance, a bookstore might be called The Book Shoppe LLC on legal paperwork, but go by simply The Book Shoppe publicly, without the LLC part.)

So what do you want to call your store? It can be traditional, like Your Name Booksellers. It can be place-based, such as any number of Main Street Books locations or Montana Book Co. in, of all places, Montana. It can be whimsical, such as The Wandering Jellyfish Bookshop in Colorado, or it can mean something special to you, such as Green Feather Book Company in Oklahoma.

In this age of social media, however, one big thing to consider is whether your social media handles are available. But even this isn’t a deal breaker – if your chosen name is taken on social media, try adding location initials or something else to stand out; for instance The Haunted Bookshop in Mobile, AL and in Iowa City, IA both include their city names in their Instagram handles for ease of recognition. Whatever you choose, I always recommend trying to get the same handle across all social media channels, even if you don’t plan on using all the social media channels, for ease of customer recognition and future tagging purposes.

Okay, back to what’s now no longer the super quick version of how to open an independent bookstore.

The third thing to do is to apply for your federal and state tax ID numbers.

Your federal tax ID number is also called your Employer Identification Number (aka EIN or FEIN) and you will be asked for this number roughly seven trillion times over the course of your business lifetime, so I highly recommend when you get this number that you have at least a PDF copy of the paperwork saved on your computer and a printed copy of it in an easily-accessible file somewhere near your desk.

For your federal tax ID number, IRS.gov has an EIN assistance tool for applying for this number AND a helpful phone number to call if assistance is needed.

For your state tax ID number, again use your favorite search engine to look up “How to get a state tax ID number in [state]” or read through the website you’ve already found for what your state requires in this department when you registered your LLC. Keep in mind that each state is different! In the state of Wisconsin, I had to complete a Business Tax Registration with the Department of Revenue AND I had to register with the Wisconsin Department of Financial Institutions; I pay taxes to the Department of Revenue on a quarterly basis AND I have to file an annual report with the Department of Financial Institutions every year to let them know my business is still operating. That’s all in addition to filing my personal and business federal tax returns.

#4 – Apply for any state licensing and permits that you need.

Because bookselling is a retail business, many states have some kind of seller’s permit that’s required. Again, search “seller’s permit, your state” in a search engine for how to get this for your state.

When opening accounts with publishers (and other vendors), you’ll also be required to submit a Sales and Use Tax Exemption Certificate (sometimes called a Resale & Tax Exempt Certificate, or something similar), which allows you, a retailer, to purchase from the publisher at a wholesale cost without paying tax on the original items (so you are technically in this scenario only tax exempt as a for-profit business – most nonprofits are tax exempt as well) so that you can resell them in your shop and collect sales tax from your customers at that time. Again, the search engine is your friend; if you haven’t already been pointed to this by whatever websites you’ve already been on, type in “Sales and Use Tax Exemption Certificate [your state]” and one will come up; you’ll want to fill out the “Purchaser” part of the document, and send that in to every publisher for them to fill out the “Seller” part of the document and keep it on file for you when you open your publisher account.

If you plan to have a bookstore/cafe or other type of hybrid business, other local, state, and federal permits may be required. Also, even if you don’t offer regular food or beverage, you can also get one-off permits for serving drinks at a special event. Some municipalities may also require permits for large events, say if you’re having an outdoor courtyard event with a local author reading and live music. At some point, it would probably behoove you to explore the wild and wonderful world of municipal permitting for your area to make sure you’re in compliance with everything. But you can do that later.

Lastly, open a business bank account

I recommend banking locally, if at all possible – what a shock, I know, to recommend local – but the most important thing is to avoid fees. When looking for a business bank account, I double-check if there’s a minimum balance I need to keep in the account without a fee, if there’s a deposit limit (either daily or monthly dollar amount, and also how many total deposits can be made in a month), if there are any transaction fees, and if there are any fees for using the debit card at a non-local bank ATM location (in case I travel for bookselling work), AND if there’s a no-fee credit card I’m able to apply for via the bank that can help me with my business (for instance, earning cash back or airline miles that can be spent on work travel to conferences, etc. – make that system work for you, my friends!). Opening a business bank account is the single most important thing you can do to avoid co-mingling your personal and business assets and causing yourself ALL KINDS OF HEADACHES when doing taxes or, heaven forbid, if you’re ever audited.

Now you’ve decided on your legal entity type, registered your business (and in doing so, chose a name, which is kind of a sneaky extra thing I slid in there), applied for federal and state tax ID numbers and any state licensing and permits you needed, and finally, opened a new business bank account –

Congratulations! You’re now in the bookselling business!

Website: https://businessofbookselling.com/
Instagram: https://www.instagram.com/bizofbkselling

Links + resources mentioned in the episode: