Using Pen Names in Contracts

Recently, a writer contacted me about signing a non-disclosure agreement using her pen name. I won’t rehash the basics on the pros and cons of using noms de plume, I’ve written a couple of blog posts on the subject already (see Author Pen Names — Are Noms De Plume Obsolete? and  Seven Legal Myths About Pen Names). But from a contract standpoint, here are a few tips when using a pseudonym.

Contract Basics

Contracts are an exchange of promises memorialized in writing (either on paper or a digital file) and signed by persons who have demonstrated unequivocal intent to be bound by the terms (either personally or for the business they represent). Using a fictitious name does not affect the validity of the contract. The act of signing, rather than what name was used to sign, is what determines a contract was formed. Using a fictitious name does not provide any special legal privileges, nor shield a writer from say, a breach of contract claim. An author is still bound by the contractual obligations, whether they signed using their legal name or pen name.

The bottom line — signing a contract using a pen name is possible. That said, most contracts involving a writer whose creative endeavors require a pen name are still signed using the writer’s legal name. This is mostly out of convenience. Typically payments and tax matters are managed in the legal name of the writer. However, full disclosure plays a part too. Often contract parties want to know with whom they are contracting.

Use Proper Identification in Your Contract

A writer using a nom de plume needs to decide how strict they want to be when disclosing the person behind the fictitious name, and how much hassle they want to endure to keep their legal name private. If a writer is comfortable revealing their legal name to a contract signatory (like a publisher or distributor or freelance client), then I would suggest two things to include in a contract.

1) In the preamble of the contract which introduces the parties, use “legal name, writing as, pen name” so it is clear the two names are connected.  For example, “Matt Knight, writing as, Feargal Begley.”

2) When signing the contract, sign with the legal name but underneath the signature line use “legal name, writing as, pen name.”

These additions properly identify the writer and the fictitious name as one in the same, and the legal name is used to sign the contract.

Distinguish How Legal and Pen Names Should be Used

Another point to consider, writers may want additional contract language explaining that the pen name be used for publications, but the legal name for payments. This distinction makes bank transactions and tax reporting easier, while maintaining the public persona of the pseudonym. Deposits with the bank will not be a headache if the legal name on the payment matches the account. Plus, if an employer, like a publisher or freelance client, is paying a writer for his work, they’ll need a tax ID number, which will be the writer’s social security number (unless the steps outlined below are taken) and tied to the writer’s legal name.  Linking payment with the social security number and the writer’s legal name means no confusion with the IRS.

Using a Fictitious Business Name

If a writer wants more anonymity, they can file for a fictitious business name (FBN, or “doing business as” or DBA), or even set up a Limited Liability Corporation (LLC) (see my earlier post about LLCs and incorporation). Lot more work, but the process does provide addition layers to help keep real names from public disclosure.

First, a writer will need to register for a fictions business name, i.e., the pen name, with the appropriate state and local/county agencies as required by state laws. Besides the filing fee, often there is a publication requirement of the fictitious business name in the local paper and an affidavit requirement with proof of the publication filed with the state/local agencies.  Once a writer has the FBN or DBA certificate, a checking account in the name of the fictitious business can be opened with the bank.  Check with the bank to see what their requirements are for setting up DBA accounts.  Usually, banks require the registration certificate, the tax ID number, which is typically a writer’s social security number, or if they want, an EIN (Employer Identification Number) that a writer obtains from the IRS.  An EIN makes it easier to keep business and personal dealings separate.  When applying for an EIN, a writer will use their social security number to fill out the IRS forms, and then the EIN can be used when contracting with others who will need it to pay the writer for her work.

Using a Limited Liability Corporation

Another option is to set up a Limited Liability Corporation in the name of the pseudonym, but that requires even more work than obtaining a fictitious business name. Some states allow single member LLCs to remain private, so there is no disclosure as to who owns the LLC. Check the state requirements for LLC filings.  Like with fictitious business names, writers can obtain an EIN for the LLC, then set up a bank account for the LLC.

With either a DBA or an LLC option, the contract can be signed using the pen name, checks or deposits can be written to the pen name, and the writer can easily manage payments and tax issues.  Be aware, however, there are tax implications with LLCs and DBAs, mostly how income is reported. Check with a competent accountant to understand what option is best for you.

One last point, and here comes the disclaimer (lawyers, we love our caveats), this is not legal advice and does not form an attorney-client relationship. Basically, I’m not your attorney, only a writer-attorney helping other writers to understand publishing law issues. If you feel you need legal advice, hire competent counsel in your jurisdiction before taking any action.

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