How to manage your royalty payments and bank accounts as a self-publishing author.

trindadeclaudia3
May 8
7 min read

Updated: May 9

As a self-publishing author, managing the financial side of your writing journey can be challenging. It's important to understand how you receive royalty payments, because it can influence your personal finances and overall business strategy.

Also, using a dedicated bank account and accounting software can help you keep track of all your publishing investments and income. In this post, I’ll explain how self-publishing authors receive their royalties, whether you need a separate bank account, and whether using accounting software, like QuickBooks or FreeAgent, is useful to self-publishing authors.

How many royalties will I receive?

Royalty payments depend on the publishing platform you choose. Typically, authors earn royalties through the following models:

Percentage of sales: For example, with Amazon Kindle Direct Publishing (KDP), you can earn anywhere from 35% to 70% on each book sale (after printing costs have been deducted), depending on factors like pricing and distribution choices. A public domain book I edited for a modern audience, which I published on KDP, is priced £9.50 for the paperback and £3.99 for the e-book. Because the original is in the public domain, the royalties on the e-book can only be 35%. So, if I sell one e-book, Amazon tells me I receive £1.40 in royalties. If I sell one paperback, I'll receive £1.96 in royalties (at 60%).
Advance Payments: If you sign with a traditional publisher, they may offer you an advance against future royalties. The advance is usually paid in instalments (on signing the contract, after submitting the final manuscript, and on publication).
Not all publishing houses offer advances, and if you're a new author who is lucky enough to receive a contract with an advance, the advance is likely small. The big numbers are typically only for established authors whom the publishing house knows will write bestsellers.

Every company pays royalties at different intervals. Kindle Direct Publishing, for example, transfers royalties to an author's bank accounts two months after the sale has been made. If you made sales in January, you will receive your royalties at the end of March.

Should I have a dedicated bank account for my royalties?

Many self-publishing authors often wonder if a dedicated bank account for royalties is necessary.

You do NOT NEED to have a business bank account if (UK):

A: "You're a sole trader or freelancer, or contracting (but not through a limited company) – for example, hairdresser, research interviewer, journalist, TV producer, gardener, designer, developer.

B: "You're doing gig work, like Uber, TaskRabbit or Deliveroo.

"You're not required to open a business account in these cases, as your business or your self-employment isn't legally separate from you. As a freelancer, sole trader or gig worker, you and your business are one and the same in the eyes of the law (and the tax office)." (Source: MoneySavingExpert)

I, however, prefer to have a different bank account, as it makes sense to separate business income from any other income you may be getting. It also makes doing your taxes easier because you have all your royalties and bookish expenses in one place (instead of having to go through all your bank statements and trying to separate book income/expenses from the rest).

If you're outside the UK, I recommend checking online to see what you must do as a small business by your government/tax system.

Please check with your bank before using your personal account to receive your royalties or take payments, as some banks may prohibit you from using your personal bank account for business transactions.

So, while you do not have to have a separate bank account, a separate account can provide several benefits, especially if you want to offset business expenses against your income.

Simplify your finances: By isolating your royalty income from personal finances, you can easily track income and manage writing- or publishing-related expenses. For example, if you earned £1,000 in royalties this month, you can pay yourself 80% as wages and allocate the remaining 20% for editing your next book, marketing, or creating an audiobook to generate more sales. These are business expenses and by tracking them in one place, you can show HMRC (or whichever tax office you have to report to) that they're tax deductible. Win-Win.
This takes me to my second benefit: Budgeting. A dedicated account helps allocate funds for book-related expenses, like marketing campaigns and ordering proofs, ARCs, or copies to sell on consignment. For instance, if I decide to invest $170 in a BargainBooksy promo, having a separate account (preferably with saving pots) simplifies tracking that expense.
Professionalism: A separate bank account signals to potential collaborators that you're serious about your writing. This can enhance credibility and attract more business opportunities. A lot of business bank accounts come with perks, such as generating invoices and quotes; things you may need for things like events.

Do you want to take payments easily at events? Consider creating a PayPal business account, SumUp account (with or without reader), or Square account (with or without reader). PayPal, for example, lets you create a QR code that allows customers to pay for a copy of your book simply by scanning it. With SumUp and Square, you can purchase a cheap card reader or generate a QR code payment link.

Free business bank accounts? Yes, they exist!

There are a lot of easy-to-set-up (and some free) business accounts out there for when you've hit the publish button, and you're ready to rake in those royalties. Every well-known bank and some smaller banks will have some sort of business account. Some come with fees (either monthly or per transaction), so make sure to do your research.

Here are some free business bank accounts I know of in the UK: (If I missed any or if you know some free ones in the US, please let me know so I can add them to the list.)

Mettle Bank (owned by NatWest): I like Mettle because it's easy to set up, and you get access to FreeAgent, a great accounting software, for free!! The first five people to use this code (3GPNF) when opening a Mettle account, will receive £50 into their new bank account once the referral is verified by Mettle. (Offer ends 30/06/2025) – as of 09/05/25 there are still five referrals up for grabs.
Monzo Bank: Easy to set up and you can link your Xero, FreeAgent, Sage, or QuickBooks account to make doing your taxes nearly painless.
SumUp: Even though SumUp isn't a bank, they offer a free business account. They state they don't charge monthly fees, but they may charge a small percentage for certain features.
Ulster Bank: Northern Ireland Bank. As of writing (May 2025) they offer the first two years free. After these two years, you pay £8 per quarter for your business bank account. You also get access to FreeAgent for free!!

Do you need to use accounting software?

No, you don't NEED to use accounting software if you don't want to. In my opinion, by using account software, you just make it so much easier to track your royalties and overall finances.

If you use accounting software, and you have expenses (think editing, cover design) that you're paying for out of pocket before publishing your book, the software will let you add these expenses and show you how much you've invested (how much you owe yourself, really). Once you've published your book, and you're receiving royalties, you can pay yourself back and claim it as an 'expense payment'.

Here’s a look at some popular options for authors (small businesses): QuickBooks, Xero, and FreeAgent.

QuickBooks

"Never feel out numbered with QuickBooks–the #1 recommended cloud accounting software. Our simple, smart accounting software for sole traders helps you save time and effort sending invoices, managing expenses and preparing VAT returns–all in one place." (QuickBooks)

Keep in mind, QuickBooks has monthly fees, which at the time of writing (May 2025), are £10/month after the discounted period.

FreeAgent

"Send invoices, track cashflow, manage expenses, file tax returns. And do it all on the go.

FreeAgent has everything you need to manage your business." (FreeAgent)

Because I use FreeAgent for my business, I can share a referral link, which will give you 10% off your subscription after your 30-day trial period.

(Don't forget if you open a business account through Mettle, NatWest, Royal Bank of Scotland, or Ulster Bank, you get FreeAgent for free.)

Link: http://fre.ag/4ha48xv7

Keep in mind, FreeAgent has monthly fees, which at the time of writing (May 2025), are £9.50 a month if billed annually (including VAT).

Xero

"Xero is powerful online accounting software for UK small businesses. Manage your cash flow, track expenses, accept payments online, and much more – all without leaving Xero." (Xero)

Keep in mind, Xero has monthly fees, which at the time of writing (May 2025), are £16 or £33 a month for the basic plans after the initial discounted period.

Choosing between these software options comes down to your small business needs, what works with your business bank account, and budget considerations.

The much-dreaded tax season

Keeping your finances organised is critical during tax season. Self-published authors should be aware of the following:

Income reporting: All royalties, regardless of the source, must be reported as income, to ensure you're compliant with tax laws. In the UK, you only have to report income from your small business when you've earned more than £1,000 that tax year.
I recommend researching your local tax rules on self-employed income – they change it all the time after all!
Deductions: Writing-related expenses, such as editing and design, may be deducted from your taxable income, which will help reduce the amount of tax you have to pay.
Quarterly payments: If your royalties become substantial (let's face it, we're all hoping for this!), it may be necessary to make estimated quarterly tax payments, depending on local tax regulations.

Accounting software makes it easy to keep track of income and expenses, so tax time feels a lot less stressful.

Final Thoughts

What do you think? Will you use your personal bank account or set up a business bank account? And what about using accounting software when you start making sales? Yay or Nay? Let me know in the comments or through the poll below.

Which ones do you think you'll go for?

0%Personal Account
0%Accounting Software
0%Business Account
0%No Accounting Software

You can vote for more than one answer.

I provide beta reading, copyediting, proofreading, and formatting services to help authors of all levels perfect their work. Whether you’re seeking early feedback or professional editing, I'm here to assist you at every stage of your writing journey.