With advancing technology comes new techniques for marketing and connecting with target audiences – hence the growth of influencer marketing and content creators. While influencers and content creators earn a living by marketing products and services of other companies in the form of paid advertisements, ad placements, and affiliate marketing, it’s been a long debate on what form this “business” would benefit from when it comes to accounting and bookkeeping. Mostly, it’s the question of if influencers need an LLC.
Currently, many smaller influencers and content creators do not report their income or file as a sole proprietorship. When this type of business initially became popular, filing as a sole proprietorship was nothing to worry about. Now, with the Federal Trade Commission (FTC) and other government agencies cracking down on how these types of businesses function, an LLC can be the preemptive measure you need before stumbling upon trouble with your finances.
An LLC is a Limited Liability Company, a business structure. Each state has its own regulations regarding how an LLC must operate, so it’s important to check with your state about requirements for filing.
Owners of an LLC are referred to as “members” – most states don’t restrict ownership so members could include multiple individuals, corporations, or even other LLCs. But, for the purpose of establishing an LLC for an influencer or content creator, the only member is the influencer themselves.
Getting paid is a bit different, as you’ll technically be paying yourself as a member of your LLC instead of simply spending from your personal or business bank account. Although, you will want to look into getting an EIN in addition to filing as an LLC.
Not every business can be an LLC though. Banks and insurances companies are just two of the types that don’t qualify.
If you’re debating whether to move away from being a sole proprietor and filing as an LLC for your influencer business, here are four ways you, as an influencer, can benefit from being and owning an LLC:
Larger companies like to use LLCs and share ownership with stakeholders, but LLCs can be in any size – including just you. Plus, with less members, you’re free to function as you like with flexibility in your business decisions.
When you’re an official business in the form of an LLC, tax season is a lot easier. LLCs are pass-through entities, meaning that they are waived from paying corporate income tax and instead are only responsible for your individual tax returns.
If you file correctly, there’s a good chance you’ll end up saving more during tax time than you did originally. If you’re looking to prepare for tax time, check out our Ultimate Guide to Preparing for Tax Time as an Influencer.
Like in the name, LLCs are useful for providing “limited liability” for your business. This essentially mean that because you’re operating as an LLC, your personal assents are off-limits if legal action is taken.
In a world where fraud and scams are ravaging through the online world, large brands are looking for influencers that have taken the extra step to become “official” in the legal sense with an LLC.
If you’re ready to establish your influencer business online, join our Business Savvy Influencer Course today.