So you started your YouTube channel with passion and high hopes and now your YouTube channel is running successfully.
You may have wondered about forming an LLC as your YouTube channel is generating healthy income but you are confused about forming an LLC. LLC has been the finest solution for new business owners and has provided them with a lot of benefits.
Start an LLC for Your YouTube Channel Today!
Should You Treat Your YouTube Channel as a Business?
If you wanted to make a career out of creating videos, probably. If you think it’s cool and fun, forget about it – at least until it’s a job.
Just like any form of entertainment, the market is flooded with people trying their hand at making these videos. It’s no secret that the internet is a fickle place, where there’s always room for more and where you can easily be replaced. The market doesn’t support everyone, and only a few get to rise to the top. In order to take advantage of this form of media, you have to treat it seriously.
If You’re Not Serious About it, Don’t do it!
YouTube is a form of entertainment on its own, but unlike other forms, it’s also a form of business.
Before you start making videos, you have to ask yourself if this is what you want to do with your life. If it’s not, don’t waste your time playing around on the internet – perhaps start something more serious, which you might actually want to turn into a job.
There are many benefits to making this form of medium into a form of business. Instead of being known as an individual trying to make it in the form of online entertainment, you can form an LLC and be known as a company.
You are probably wondering what an LLC is? Thinking how will it benefit your YouTube career? Don’t worry; in this guide you will get all your answers.
So, what is an LLC?
LLC stands for Limited Liability Company. This US business structure protects the personal assets of an owner from lawsuits and debts of its company. This means that if your business is sued or has to pay debts, your own personal assets won’t be harmed.
In an LLC there can be one or multiple owners of the company and these owners are referred as LLC members. There are many other business structures but LLC might be the best for Youtubers as it is much cheaper and is quite easily formed.
You can also read our full comprehensive guide about LLC.
You can’t ignore the potential of YouTube. After all, it is a video-sharing website with over 100 million active users and counting! If your day job involves managing this channel or even just want one in order to promote yourself as an artist/company etc., then there are some things that need attention before going live:
Hiring professionals for forming LLCs will save you time on paperwork – not only does hiring them ensure everything gets done correctly but they also have experience which helps avoid mistakes other folks might make during their first go round at creating an LLC “friendly” environment.
And the good news is, that we have reviewed some of top rated services on our site for your assistance!
Significance of an LLC for a YouTuber
Now you have got the general idea of an LLC so we will move onto the next question. Why you need an LLC for a YouTube channel?
LLC has provided its benefits to every new business owner and choosing an LLC for your channel is the right decision.
The reason why I say that is because you can protect your own assets by forming an LLC. This applies for every YouTuber, whether him or her is creating a lot of content or just posting videos occasionally.
Another big advantage is that you get more tax options. You do not get these advantages in sole proprietorships or corporation. By default your LLC structure is like a sole proprietorship where your profits and losses are not filed with your business but are taxed through your personal assets.
Sole proprietorship does not provide limited liability protection which is the reason why LLC is better than corporation and sole proprietorship. Another great benefit you get by creating an LLC for your YouTube channel is that you increase your business’s credibility.
LLC is a renowned business structure and by adding LLC to your YouTube channel, you create a solid impact on your customer’s mind.
You also get rights to your channel’s name which means that any YouTuber cannot have your name otherwise he will be charged with copyright laws. You create a great impact on sponsors by adding LLCs in your business, your business gets more professional in the eyes of customers.
Major Benefits of Your YouTube Business as an LLC
By starting an Limited Liability Company for your YouTube business, you can:
- Protect your personal assets and savings with limited liability protection
- Protect your personal privacy like in anonymous LLC
- Have more tax benefits in different business structurs such as LLC, S-Corp, C-corp and Sole proprietorship
- Growth potential for Youtubers’ business
- Brand your business’s credibility & name
Let us discuss all these importance benefits to start an LLC for your Youtube channel as a business.
Personal Asset Protection
There are many reasons why YouTubers should form an LLC to protect their personal assets. Whether you have a simple channel where occasional videos are posted or if your
YouTube presence includes developing an eCommerce website with it, then limited liability protection will be important for ensuring that any lawsuits filed against the company won’t affect those who own shares in it personally – which could lead them losing everything!
Protect Personal Privacy
If you broadcast your thoughts and opinions in a YouTube channel, then you might be facing some problems when someone wants to file a lawsuit against you, and we all know that lawsuits can happen anywhere and with anyone.
During such circumstances, if users do not form an LLC for their YouTube channel, they are at the highest risk of losing all their assets. So yes, forming an LLC is one of the best options for protecting your assets, whether you have a simple YouTube channel or an eCommerce website.
As for privacy, only the business owners are liable for any tax filings. The law prevents people from sharing information about others who are members in the LLC. If you do not want to show your face on your videos then you can also form an LLC to protect yourself from copyright laws.
LLC Taxation Benefits
There are many options for taxation with the LLC. This means that it’s not just an advantage over informal businesses or corporations, but also in comparison to other business types you’ll find out there!
In general, as a business owner, if you don’t opt for any taxation options and just receive money through your LLC and pay your taxes at the end of the year, you will face a similar tax to other small business types.
But if you do decide to take advantage of any available taxation options for your business, you can save a lot on taxes!
Other Business Structures
Sole Proprietorship or General Partnership
You can register your YouTube channel as a sole proprietorship and your channel’s LLC can be taxed as a sole proprietorship. This taxation option is the default option for your business. It’s great for those who do not expect to make much money through their business and has no intentions to take advantage of any taxation options.
Sole Proprietorship is a simple business type where the business owner is the one and only representative of their business. It’s great for small businesses that do not expect to make much money or just want to test if their business idea is worth building. You can become a sole proprietor for your Youtube channel by following our simple guidelines.
C Corporation Benefits
You can register your YouTube channel as a C Corporation. A C Corporation is a great business type if you plan on making a lot of money through your business, but you are also prepared to put in the effort – as C Corporations are taxed according to how much profits you make.
S Corporation Importance
The S corporation taxation option is great for those who plan to make a lot of money through their business, but are not prepared to put in the effort.
However, with some limitations, US-based YouTube stars can easily meet these requirements to be taxed as an S corporation – your business cannot have more than 100 owners and all of them must either reside or citizenship in America too! Compared to C-Corp, an S-Corp doesn’t have to pay taxes on their company shares, so everything is passed through to the business owners.
Branding of your Channel
Your YouTube channel’s branding is one of the most important things to consider, especially if you plan on growing your business.
Adding LLC to your channel helps you improve your channel’s name’s impact. This means that any YouTuber can’t use your company’s name otherwise he will be charged with the copyright laws.
LLC also adds a professional impact on your customers and helps you get sponsors by making your company more reliable in their eyes.
If you are thinking about growing your business, then LLC is the best option for you! It’s a great step to take as it clearly shows your growth potential to your audience and future investors.
Downsides of Starting an LLC for a YouTube Channel
LLC is not for everyone, especially if you don’t plan on making much money or just want to run a simple YouTube channel. The reason behind this is the complicated tax system for LLCs. However, there are a few specific situations where vloggers decide to stay away from forming an LLC for their YouTube channel.
- Not Enough Money Making
- The Business Size not That Big
- Sole Proprietorship is Cheaper
For example, if you’re running a small business with an income of less than $50k that only takes advantage of the sole proprietorship taxation option, then there might not be any need for you to form an LLC.
Also, if you have a business that doesn’t make a whole lot of money, then paying LLC fees will probably not be worth it. LLC filing fees can cost you a lot in the long run and if your business isn’t making that much money, then you might have problems paying for the filing fees every year.
And if your YouTube channel is large enough, then it might make a lot of sense for you to form an LLC. A YouTube channel with over 50 Million subscribers is a large enough business to have a good shot at being successful with an LLC.
There are some cheaper options for a small size YouTube business company like Sole Proprietorship. So here you do not need to start an LLC of your YouTube channel.
How YouTubers Are Taxed?
As a YouTuber, you only get taxed when your channel starts making income. The IRS classifies YouTube users as sole proprietorship and general partnership, but there are certainly other options too.
As an example, if you make money through ads, then the IRS sees it as earned income. Of course, how much taxes you have to pay depend on how much your business makes. If you’re interested in learning more, you can read our article on how LLCs are taxed.
How to form an LLC for YouTube?
Now you know why LLC is significant for YouTubers and all its benefits. Let’s move forward to the process of forming an LLC. First of all remember that every state has its own laws in forming an LLC so you need to check your state’s laws.
I’ll be listing down some major steps to start your LLC but if you want the detailed guideline on LLC, you can click here.
- Select your state
- Pick a name for your LLC
- Hire an LLC Registered Agent
- Create an LLC Operating Agreement
- File your Article of Organization
- Get an EIN
#1: Select your state
Choose in which state you want to start your LLC. It is wise to start your LLC where you live and will carry out your business.
#2: Pick a Name for Your LLC
You need to choose your LLC name carefully. Your business name should be attractive to your customers as it will be the first thing any customer will look up to.
Check if your name is available. After picking your name you also need to check its availability in your state and if your name is not available then you need to pick another. You can check your name’s availability at many different websites.
After checking your name’s availability, you need to secure it as well. It usually takes two months to start your LLC and you do not want anyone else grabbing your name in that period.
#3: Hire an LLC Registered Agent
Every state demands you to have a registered agent. Your agent will deal with all your legal matters so you do not miss out anything. He will be a vital factor to your company’s success.
You can also look up to your town’s top registered agent service provider if hiring an agent seems complicated to you.
#4: Create an LLC Operating Agreement
An operating agreement will highlight your company’s standard and rules. If your business includes more than one member than creating an LLC operating agreement is vital.
It showcases the responsibilities, rights, voting power of every member. It also tells how your business’s revenue will be distributed among members which avoid any conflict regarding money.
Many states do not demand you to create an operating agreement but by creating an agreement you can avoid any future conflicts between your company’s members. You can also use an operating agreement tool to create a document for free.
#5: File your Articles of Organization
The Article of Organization or Certificate of Formation is a simple document which gives you access to officially enter LLC. This document must be filed with proper consultation and must be filed correctly.
Many others online platforms like Legalzoom offers methods to solve this process quickly.
#6: Get an EIN
EIN stands for Employer Identification Number. It is like a social security number required by your LLC for many purposes like opening a bank account, filing company taxes etc. This number allows the IRS to identify and tax businesses.
Even if you have a YouTube channel, an EIN will help you keep your personal finance away from your professional finances You can get an EIN for free if you will directly apply to the IRS.
LLC Service Providers for YouTube
Now you have learned about the steps needed to form an LLC but if formation of your LLC seems to you as a hectic job then you should consider hiring LLC service providers.
There are many great companies that offer LLC services but I’ll be discussing a few of them. If you want to know about all the best service providers like ZenBusiness then you can read our detailed guide.
If you are looking for the complete package then ZenBusiness is the best choice. They have got everything; at just $49 their starter pack includes LLC formation, free registered agent for one year, operating agreement template and much more.
They have 4500+ reviews and mostly all of them are positive. It also offers a pro-package that has a worry-free guarantee feature. This feature provides good care to the customer’s annual report filing.
If you want to read the full review of ZenBusiness then click here.
If you are looking for a more experienced company then Northwest is a definite choice. They have been providing LLC services form 1998 and has established themselves as the best LLC service provider
Northwest has got the best customer support as their team is filled with highly professional staff. They also provide LLC registered agents free for one year.
One major downside of Northwest would be its pricing. Northwest is quite expensive as compared to others and mainly that is because of its experience in providing LLC service.
You can also read the full review of Northwest for complete guidance.
If you are looking for a service provider in which you don’t have to spend a penny, then Incfile is the best choice.
Incfile is the most affordable LLC service provider; they literally charge you $0 for their services. They have a lot of experience as well; they have started 250,000 businesses in just 16 years.
They have excellent customer feedback and have 15,000 positive reviews. Their customer service is also considered to be the best; customers receive unlimited support on email and phone calls.
If you want to read the complete guide of Incfile, then click here.
Compare the Services
It’s getting tough to decide between these three LLC services? Don’t worry, we’ve compared these three most popular services: ZenBusiness, Northwest Registered Agent and Incfile, so you can read about their features and make your choice easy!
As you can tell, that LLC for YouTube business is quite vital. You get the benefit of having a legitimate business name that no one can take and you keep your personal assets separate from your business revenue. Having an LLC is highly recommended for Youtubers.
Frequently Asked Questions (FAQs)
Do YouTubers Vloggers are required to have an LLC?
No, YouTubers and vloggers are not required to form an LLC for their YouTube channel. YouTubers can choose to start an LLC for their YouTube channel or they can choose to run their business in a different way.
However, starting and LLC for a Youtube channel has many advantages. LLC adds a professional touch to your YouTube channel and makes you more reliable in the eyes of your customers. It also allows you to grow as a business owner by getting you sponsors.
Moreover, limited liability companies help you grow your YouTube channel and make a profit.
What is limited liability Protection?
It’s a basic concept where you can enjoy the benefits of a corporation without having to pay corporate taxes. Corporations have “limited liability” which means that if the company is sued for any reason, then the individuals behind that company will not have to pay with their own money.
However, it is possible for LLC owners to lose their personal liability protections if they do not adhere to the law. To enjoy complete protection, you should consult with a business attorney.
Do YouTubers have to pay taxes?
There are two options for filing taxes you might choose from: Sole Proprietorship and LLC.
If you decide to file taxes as a sole proprietor, then you will pay your taxes as a self-employed person. This means that you will only pay the taxes if and when your business makes money.
If you decide to file taxes as an LLC, then you will pay your taxes as a normal company. This means that you have to pay the taxes every year, regardless of your business income.
Are LLC Taxes Stricter than Sole Proprietorship Taxes?
The reason why YouTube users generally choose to file taxes as a sole proprietorship is because an LLC entails stricter tax rules.
If you choose to file taxes as an LLC, then your company will need to pay their own taxes. You cannot pay them for the business.
Is a single-member LLC the same as a sole proprietorship?
That’s a good question. A single-member LLC is not the same as a sole proprietorship, and choosing one over the other will have different tax consequences. Choosing to file taxes as a single-member LLC will allow you to enjoy protection against personal liability, but it will also mean that you will be taxed as a self-employed person.
What is a Corporate Veil?
A corporate veil is a term used for people who own their business as an individual. This means that the owner and the company are not treated as separate entities.
However, if you opt to file taxes as an LLC, then the corporate veil might get weaker. It will also depend on how well you manage your business.
Which is better for YouTube Business – LLC or Sole Proprietorship?
In the case of a YouTube business, you can file taxes in two different ways:
- as a sole proprietorship
- as a single-member LLC
Generally speaking, if the sole proprietor of a YouTube channel wants to take on more risk and gain more control over their business, then they will be better off with an LLC.
If you want to take on less risk and enjoy more stability, then file your taxes as a sole proprietorship.
How much does an LLC for Youtube Channel Cost?
The cost of forming an LLC for a YouTube channel will depend on the state you’re living in. In most cases, it should cost around $100-$500 depending on the state and payment methods.
What is an LLC Operating Agreement?
An operating agreement is a written document that describes the features and restrictions of your LLC. This includes the voting policies, ownership percentages, authority for entering contracts and any other relevant information.
It is a good idea to create an operating agreement for your YouTube LLC. However, the rules and requirements will depend on the state you’re filing in.
Can You transfer Your DBA name to an LLC?
If you’ve already registered your business as a DBA, then it is possible to transfer that name to your LLC. However, this will depend on the state you’re filing in.
You will need to check your state’s business entity search for any restrictions on transferring DBAs to LLCs.
How do I transfer my existing LLC into a Corporation?
If you’ve already formed an LLC for your youtube channel, then it is possible to transform that business into a corporation. This change will involve amending you LLC agreement and filing the paperwork with the Secretary of State.
How to open a business bank account for an LLC?
The process of opening a business bank account for an LLC youtube channel is similar to opening one for whoever owns the business. There are still some extra steps you will need to take, but this largely depends on the banks you’re applying at.
How do I pay myself from my LLC?
Paying yourself from your LLC is very simple. You will need to fill out this form and turn it in with the necessary income tax information.
It is possible to pay yourself by check or through direct deposit. You can also arrange to submit payment via credit card, wire transfer, etc.
What type of insurance does a YouTube business need?
As a YouTube business owner, you might need to get your own liability insurance. This will protect your assets in the case of an accident, and it is a recommended perk for most businesses.
Where to find LLC perks?
In most cases, the perks of filing taxes as an LLC will not differ from the experience of a sole proprietorship. However, some states offer their own benefits to LLCs.
If you want further information about the perks of an LLC, then you should visit your state’s Secretary of State website.
How does a YouTube channel make money?
A YouTube channel makes money through ad revenue, sponsorships, merchandise sales and other methods.
How to start a business youtube channel?
To start a business youtube channel, you will need to brainstorm ideas and review current trends. Identify your target audience and create a video that provides useful information. Then, market your videos to build up a loyal following.
How to cancel or dissolve and LLC for a Youtube channel?
If you want to cancel or dissolve your LLC for a Youtube Channel, you must file the necessary paperwork with the Secretary of State. If your business violates your state’s LLC laws, then you might be able to dissolve it. For more guideline, you can go through our article on how to dissolve an LLC in your state?
Aisha Noreen is an owner of a small business with more than 9 years of experience in the marketing industry. With the wisdom of an old soul, she always seeks innovation and mind-blowing ROI techniques. Her unique approach helped many small businesses thrive and she can surprise you in many ways as well. Believe it or not, her energy, passion, and creativity are contagious enough to transform your business and take it to another level.