Several people asked how do you go about using a pseudonym. Well, I'm no lawyer, so take anything official-sounding here with a grain of salt.
I can say this: I have never written a book under my official, real, passport name. If you look at my books, on the first page where all the printing details are you will see the copyright is assigned to the name on the cover of the book - my pseudonym. The publisher does that as a matter of course. In other words, the copyright is asserted by me using my pseudonym! Legally, it is apparently enough for the copyrighted individual to be pseudonymous.*
I imagine it would be awkward if you wrote under a pseudonym and didn't tell your publisher it was a pseudonym. They do have to send out cheques and taxation notices and so on, all normally done under your real name. You sign your contracts using your real name. So unless you are an escaped train robber or Osama bin Laden, it's not a route I would recommend.
One of the first things you should do, if you decide on a pseudonym, is to give that name a public presence, and decide how much you will link it to your real name, if at all. You need a website, and possibly a blog, a facebook, a twitter name all quite distinct from your real name, or at the very least something that people can easily find. I actually use Glenda Larke Noramly as my facebook name and no one seems to have any trouble finding me there.
... would be this: if you are keeping your pseudonym and your real name closely linked, you have to be careful just how much personal info goes up on your real name sites. If you hit the big time, an awful lot of complete strangers will know an awful lot of personal stuff about you, your spouse/partner and your kids, simply by linking back to your real-life site. Be careful.
Once you have chosen a name, but before you actually do anything with it, the most important thing to do is Google it and see what comes up. If it is the real name of someone on America's Most Wanted, or the name of an up-and-coming vocalist on Australian Idol, or the brand name of the very latest line in African jewellery, or the scientific name of a Namibian kingfisher, you might like to think again. You want something that is going to pop up easily, not get lost in all the other hits.
Personally, I think fairly common names such as Ann Miller or Robert Anderson is a lot harder to remember than Ursula le Guin. Choose something that you won't mind when it is used to address you. I once asked Robin Hobb what name she would prefer to be called by (she has two pseudonyms and a real name that is different again, and she said she answered happily to all three!)
Let's say Sally Sullimunder submits her MS titled "Midnight Star" to a publisher under the pseudonym Xerxes Zatopek. She should write"Midnight Star", and underneath "by Xerxes Zatopek". Then, where she writes her address in the bottom corner, she puts something like this:
Ms Sally Sullimunder
(aka Xerxes Zatopek)
6 Mishmash Crescent
Ulan Bator...etc etc
She should use the name Zatopek/Midnight Star on the header (or footer) of each page.
To everyone who commented on this series of posts!
*When you are published, you do not hand over your copyright to the publisher. You hand over the rights to be published in certain formats for a certain length of time under certain conditions. If your book goes out of print, you claim back those rights (in the form of a letter. One of the things your agent will do for you). I not only have the copyright of Havenstar, but I now also have the rights. Rights to my other works are now with a variety of different publishers because they are all still in print.
BTW, no one, except my print publishers, has the right to publish my works as ebooks or pdfs or whatever, so if you download them from some iffy download site, you are receiving stolen goods and I would really rather you didn't.