Do I need an LLC for my blog? Blog LLC FAQ
Many moms see blogging as a way to make some money while staying home with their families. That can be an awesome plan. And if you want to be a serious money making blogger you need to treat your blog like a business.
So that means you need to treat every aspect of your blog as a business and form an LLC, right?
Maybe, maybe not. Before you dive headfirst into forming an LLC take the time to learn a bit more about what they do and do not cover. Here are some of the basics on blog LLCs.
Blog LLC FAQ
This is just the most basic information on forming LLCs. The purpose of this post is to help those just starting out on their business journey. Everyone’s blogging and small business path and goals are different, so there is no one right way to run your blog.
This is for informational purposes only and should not be taken as tax or legal advice. Please speak to your business and financial professionals first about the path you should take with your blog before you make a decision.
LLC Definition
LLC stands for limited liability company. It is a legal entity designed to protect you from liability. This liability protection keeps your personal assets safe if you are sued for some reason.
Why Would You Need LLC Protection
Most mom bloggers are lifestyle bloggers so you would think that there isn’t much that you could be sued for. If you mainly write about yourself and your family you are probably right.
But if you sell products, courses, or provide other advice there is a chance someone could decide to take legal action against you. Blogs can also be sued for copyright infringement regardless of what they blog about.
I’m not trying to scare you. But it is a good idea to be realistic about what could happen when you write a blog.
What Does an LLC Protect?
An LLC protects your personal assets by setting up a business entity. This includes things like your personal bank accounts, your home, and any other assets you may hold. You are not personally liable for legal issues, your business is.
By having business structures in place you can also protect your spouse’s assets. (This is another time to talk to your financial professional.)
Basically, an LLC separates the business money from the family money. If you are sued you don’t have to pay the debt from your personal assets. The business money is at play, not your personal money.
What Are the Tax Implications of an LLC?
You may have heard that you need to set up an LLC for tax purposes. You’ll pay less in taxes that way.
I hate to break it to you, but if you are the only person in the business (or you and your spouse), there really isn’t any difference in filing taxes as an LLC or as a sole proprietorship. (We’ll talk about multi-member LLCs further down.)
Limited liability corporations are pass-through entities. You report the income and losses on your personal return just as you would if you were not an LLC.
But Aren’t I Taxed Less as an LLC?
I think there is some confusion between filing as an LLC and filing as an S-Corporation.
S-Corporations allow you to take a reasonable salary from your business, meaning you aren’t taxed on the full amount your business makes, you’re taxed on your salary. The business is taxed on the business income.
LLCs pass the income on to you and you are taxed at your bracket on your personal return.
It is an option to become an S-Corp and one you can look at as your business grows. But do not fall into the trap of thinking an LLC will take your tax bill to nothing.
(Note: There is a way for an LLC to be taxed as an S-Corp. However, this is something to consider when you are making considerable income from your blog. Worry about this later, not when you are just starting out.)
Do I Need to be an LLC to be Considered a Business?
Short answer here. No. You do not need to be an LLC to be considered a business and file taxes as such.
Whether or not you are a business or just a hobby has nothing to do with your business registration. If you are not an LLC or other corporation you are considered a sole proprietor. That just means you are a business as yourself.
To learn how to decide if you qualify as a business check out this post: Is My Blog a Business or a Hobby?
Single Member vs Multi-Member LLCs
If you are blogging on your own and form an LLC you are single member LLC. That is everything we have already talked about.
But sometimes it’s more fun to do things with a friend, and that includes blogging. If you are running a blog with a friend and want to form an LLC you will be forming what is known as a Multi-Member LLC.
In this case, you are still a pass-through entity, the income and losses are reported on your personal tax return. But when you have more than one person (not spouses) each member is taxed on their portion of the income and losses, as is reported by the Schedule K-1. (This is determined by your operating agreement you put together when you form your LLC.)
Your business will be treated as a partnership unless you opt to be treated as a corporation. This post has helpful tips and the forms needed to file this way.
How Do I Form an LLC?
Every state has its own forms and ways of registering as an LLC. So honestly the best way to find out how to form one in your state is to google How To Form an LLC in (state).
The basic steps are:
- Choose a name for your LLC. (It does not need to match your blog name.)
- File your Article of Organization
- Pay Your Filing Fees
- Create an Operating Agreement
- Get any additional licenses needed to do business in your state
As I said, every state is a little different and has its own forms. This will help: How To Form an LLC
In terms of just filing the paperwork, most people find it relatively easy to do it on their own.
Extra Steps
If you are operating as an LLC you will need to open business accounts for this. That means you need a business bank account and business credit cards all in the name of your LLC. You are conducting financial transactions through this name, your accounts need to have the same.
A part of being an LLC can mean having an EIN as well. This is an Employer Identification Number. Think of it as the social security number for a business. It can be needed for creating new business accounts.
Not every LLC needs one, and if you are a single member LLC you might not. Check your state’s regulations to determine what you need to do.
Short Answers
Alright, time for the too long, didn’t read answers.
What is an LLC?
A limited liability corporation.
What does it do?
An LLC is legal protection. It keeps your personal assets safe if your business faces legal action.
Do I need to have an LLC to be considered a business?
No. You can be a business without one as a sole proprietor.
Does an LLC save money on taxes?
No. Your income and losses are passed through to your personal return.
How do I form an LLC in my state?
Google How to form an LLC in (your state). Seriously, that’s the best way to learn.
Should I form an LLC for my blog?
Talk to your financial professional to decide.
Talk To Your Tax Professional
I really can’t emphasize this enough, but you need to talk to your tax professional when it comes to this sort of business decision.
Every tax and business situation is unique. You can form an LLC on your own, the forms are available from your state. But not every blogger needs to be an LLC.
This post is purely informational. Please talk to your financial professional to determine what the best course of action for your blog is.
Additional Resources:
IRS Single Member Limited Liability Corporations Information
6 Things You Need To Know About Your Tax Responsibilities as an LLC
What Should Your LLC’s Operating Agreement Include?
Self Employment Taxes for Bloggers
This is awesome! I learn something new about blogging everyday.
Such great advice, Kim! Thank you for laying it all out. Do you have tips on hiring out your kids through an LLC as a way to funnel business money to savings account for them?