There’s a lot of confusion in the blog-o-sphere about whether or not to make your online blogging business an LLC. You know your blog is a business, but you’re not sure if you’re ready to transition from hobby blogging to a full-fledged business owner. This is a big step, and it’s not right for every blogger. First, you need to learn what an LLC actually means for your blog, and from there you can make the big decision for yourself.
Forming a business like an LLC brings its own set of tax and legal complications. As a blogger, you’re already considered self-employed for tax purposes. Anyone who pays quarterly taxes or who files independently knows the struggle of keeping up with these changing rules and regulations. Always consult a qualified accountant or business lawyer before making a significant decision like whether to form your own LLC.
The Basics of Business Structures
There are a few different types of business structures out there, but most don’t make sense for bloggers. There are sole proprietorships, general partnerships, corporations, and LLCs. Let’s break down what they all mean so you can make an educated decision.
Sole Proprietor
If you file independently for taxes without any formal paperwork declaring yourself a business, you’re a sole proprietor. This means you’re the only owner and employee of your company, and you’re responsible for its finances. While this means less work for you since you don’t need to file any formal paperwork or pay extra fees to the state, you’re also on the line for your business legally. If anything were to go wrong, you’d be personally responsible.
General Partnership
A general partnership means there are at least 2 people sharing ownership of a business. It’s similar to a sole proprietorship in that it’s easy to form this legal entity, and you don’t have to worry about excessive fees. You might still need to obtain a license depending on your state, and both you and your partners are liable equally for all your business assets.
Corporations
There are two types of corporations: C Corps and S Corps. A C Corp is owned by shareholders who are personally liable for the debts of the corporation. These need to be formed with the Secretary of State. An S Corp is similar to C Corps in that they’re owned by shareholders, but there are special tax rules. You can even have your LLC taxed as an S Corp.
LLC
LLC stands for Limited Liability Company. It offers a lot of the same protections of a corporation without needing to be as formal. It’s governed by all the members of the LLC, and these members aren’t financially liable for any legal action or debts. There are fees associated with forming an LLC, and different tax laws.
Which is Best for Your Blog?
Now that you understand the differences between the most common business structures, it’s time to decide if your business needs a legal structure. The most common reason for forming your blogging business into an LLC or corporation is to protect your personal assets.
Why choose an LLC rather than another type of formation? Mainly, it’s just the easiest one to register. The paperwork is straightforward. With online platforms, you can select your business type and complete the documents automatically.
When is it not a good idea to register your blogging business as an LLC? If you’re a new blogger, and you aren’t making a lot of money, it doesn’t make much sense to go through the trouble. There are expenses associated with filing, depending on your state, and these aren’t worth it if you aren’t already seeing financial growth in your blog.
Have you decided it’s time to make the switch? It can be a smart choice for bloggers who make a substantial income from their blog and need to protect themselves legally. Not only is a smart legal choice, but it will increase your credibility as a blogger in the digital world. To answer the big question, yes, many bloggers should form an LLC.