Blogger: Janet Kobobel Grant
Literary agencies handle authors’ advance payments and royalty payments one of two ways:
1. The money is split–generally 85% to you, 15% to your agent–at the publishing house.
2. One hundred percent of the money is sent to the agency, where it is split, and the author’s sum is sent to him or her.
From the outset of our agency’s existence, we selected option #2. If your agent isn’t doing this for you, he or she is taking the easy way out of providing you a service.
By having the money sent to the agency, that agency will:
- Know that the money was sent to you. If the agency receives only its portion, it doesn’t know if you got yours. Since the bulk of the funds are the author’s, a publisher that’s having trouble finding the funds to pay could easily send the 15% to the agent but not the 85% to the author. That agent would assume the rest had been sent to the author.
- Check that the amount sent was correct. Recently a client’s advance payment was sent to our office. But the publisher had failed to send the right amount. Instead, the publisher sent what they initially offered for the book not the increased amount I had negotiated. In all likelihood, someone in accounting looked at paperwork that indicated the initial amount offered but failed to check the contract, which stated the increased amount. If the author’s money hadn’t been sent to me, it would have taken me some time to figure out why the agency’s portion was incorrect. But with the entire sum presented in one check, the error was obvious and quickly spotted. And the author didn’t happily skip off to the bank to deposit an incorrect check.
- Double-check that royalty payments are correct. Reporting royalties and paying the correct amount is a complex business because the book is likely to be published in many formats, at varying discounts, with returns, reserves and licensed subsidiary rights added to the equation. I spend hours pouring over royalty statements to determine if the payment for a client is correct. Seeing the sum sent to a Books & Such client is very different from studying a report that only reflects what our agency earned. Spotting errors is hard work, but it’s made even harder if the reviewer isn’t looking at the total rather than a portion of the total.
- Make certain the check to the author is made out correctly. That might seem pretty straightforward, but an agency will be more sensitive to whether an author is incorporated and whether that payment is made out to the author or the author’s corporation. When it comes to reporting income to the government, you want the money to be in your corporation’s column, not your personal column.
- Send out 1099 forms to clients rather than having the publisher do so. Once again, this is a place for the agency to check that the figures on the form are accurate. If the numbers are reported through the publisher, it’s up to the author to make sure they’re right and to make sure the 1099 is made out to the author or to the corporation, depending on how the author’s finances are set up. (For the record, the publisher frequently makes out our agency’s 1099 forms incorrectly, applying them to my Social Security number rather than to the agency’s Federal ID number. It becomes our job to correct that with the publisher while we send out a correct 1099 to our client.)
Agencies that set up a system in which they receive payment directly from the publisher don’t have the same incentives to check that all is being handled appropriately for the author. And it’s much harder to spot the problems, even if the agency looks for them.
So, while on the surface it might seem better to have the money headed your way directly from the publisher, in actuality, you’re short-circuiting an important aspect of what your agency should be doing for you.