Registering your business:
Most areas require that a business owner register their business with the city and state. According to the Texas State Attorney General, businesses in Texas are required to register with the Secretary of State at www.sos.state.tx.us. However, there might be areas where that step is not required as long as the business is a sole proprietorship that has no employees.
Doing busines as:
Even if a person lives in an area where it’s not necessary to register a sole proprietorship with the county, city or state, an assumed name certificate, or d.b.a (doing business as) for each name (or deviation of that name) the business will use must be on file with the country clerk in each county where a business premise will be maintained. Has Tabetha Jones has done that? To find out for yourself, contact the Greater Waco chamber of commerce. They’ve got records of every legitimate business operating in the area. Find out for yourself if they have ever heard of Mystic Press, Phoenix Fire Publishing, or Tabetha Jones.
Here’s where it gets tricky.
A sole proprietor who has no employees is allowed to file taxes using their social security number as their tax ID. No sweat.
If a business has employees, it is necessary for the business to acquire a tax IED and file tax paperwork for each and every employee so that all taxes can be withheld from the employee and those taxes can be paid to the government, and so that a W2 can be issued to each employee so that he or she can then file an income tax return. Taxes are Federal. It doesn’t matter what the city or state requires. There’s no getting around tax law.
And, if there is more than one person that owns any part of the company, it is no longer a sole proprietorship. It doesn’t matter if it’s an unrelated business partner or members of an owner’s family. It is a partnership and must be registered with the city, state and IRS. It must also have a Federal tax IED. If not, it doesn’t exist as a legal entity.
Phoenix Fire Publishing has half a dozen imprints for publishing different genres. That’s well and good, as long as each imprint exists as a separate entity and is registered as “Doing business as” for identification purposes.
Anybody that’s been around for any length of time knows that Tabetha Jones took over Mystic Press, then closed it down and subsequently opened Phoenix Fire Publishing. She changed all the accounts, she insists.
Here’s a checklist from the IRS of what the owner of a company must do when he or she closes down. Feel free to ask yourself if Tabetha Jones did a single one of them. For that matter, if you’re a former Mysitc Press or current Phoenix Fire author, feel free to ask her. If you are or were signed with her, it’s not just her business we’re talking about. It’s yours, too. Don’t be shy. Ask questions. A professional will be happy to answer all your questions and provide you with any information you ask for.
As a sole proprietor, she was not required to apply for a new tax ID when she either changed or dissolved her company, but as a partner with her ex, and/or as a company with employees, she was.
Tabetha might think she’s clever by not really employing these people she calls staff, rather paying them as independent contractors to try and get around that pesky tax law. But there is a very specific set of rules set forth by the IRS to determine the relationship between an employer and an independent contractor.
For starters, if a boss has any approval in the final result of the job performed, he or she is an employer, no matter what they call it. If a boss relays any specifications about what job will be done or how that job will be done, he or she is an employer. If Tabetha is in a position to approve or disapprove of the work done by an artist or editor for a book published by her company, she is an employer. As a publisher, how can she not have final approval? She can’t. It’s pretty simple.
Either way, Tabetha Jones either employs the people that do editing or artwork for Phoenix Fire publishing, or she uses work that she neither reviews nor approves of. She can’t legally have it both ways.
Also, for someone to legally be considered an independent contractor, he or she must legally self-employed. There’s a set of rules for that, too, including the requirement that that he or she pay specific self-employed taxes. If that doesn’t happen, they are not self-employed, and they are not legally defined as independent contractors. They are an employee and legally required to fill out tax form Form I-9 and Form W-4 in order to be legally employed for tax purposes. Taxes must be withheld from them to be paid to the government, and they must pay taxes too.
Even if a person does qualify as a self-employed independent contractor, they are still considered a statutory employee of the company if they work at home on material supplied to them (like a manuscript or artwork) that must be returned to the employer (like a publishing company) or a specific person (like an author) named by the employer, or if services are performed on a continuing basis for the same payer. They must be legally registered with the company and the IRS as an employee for tax purposes. And the company must be registered with the city, state and IRS, and must have a tax IED.
And there’s that matter of sole proprietorship. Now that she’s broken up with her ex, she’s well within her legal rights to operate her business as a sole proprietor. But while she was with him, claiming him as co-owner of first Mystic Press then Phoenix Fire publishing, the company was a partnership and not a sole proprietorship. That meant that she was required to license the business with the city, state and IRS as a partnership. Did she? I think we all know the answer to that.
So if you signed a contract with Phoenix Fire during the time that Eric was represented as a co-owner, at any time that the company was represented as having staff without being legally registered with the city, state or IRS, or during a time when the company is or was represented as having imprints without being properly registered with the city, state and IRS, your contract is null and void. It never existed, because the company never legally existed. You can rip it up and walk away, taking your rights with you, without any legal ramifications against you, and without paying any separation fee to have your rights returned to you. If the company never existed legally, your contract never existed legally either. They never held your rights..
You might even consider suing her for fraud and/or illegally misrepresenting her company to the public and to you as a client. And by all means if you’ve been defrauded, file a complaint with the Texas Attorney General for deceptive business practices, pursuant to Texas Penal Code, Section 32.42 – Deceptive Business Practices,
(12) making a materially false or misleading statement:
(A) in an advertisement for the purchase or sale of property or service; or
(B) otherwise in connection with the purchase or sale of property or service. This is a Class A misdemeanor if the actor commits an offense intentionally, knowingly or recklessly. Sound like anybody we know?
Most importantly, if you’re a current or former author of Tabetha Jones and/or Phoenix Fire Publishing, you might want to demand an audit. It’s your money. You earned it.
If there’s any mishandling of money, the crimes she’s guilty of are exponentially different, both for you as a client and with the Internal Revenue Service. Make no mistake, it’s theft. If you find out that you’ve been stolen from, call the police.
These are just a few things for former and current clients or employees of Tabetha Jones and Phoenix Fire to consider.
If you’re an author looking to do business with a publisher, this should be all the reason you need to keep looking.