One of the less glamorous aspects of social media influencing is the legal side of things. If you enjoy legal jargon and caveats, maybe you find it exciting, but most people don't.
With that being said, making sure you are operating in a smart and legal way is one of the most important things you can do. You are, as an influencer, an entrepreneur. Your brand is your business and needs to be treated as such!
The topic we are going to cover today is how to know if it's time to open an LLC as a creator. We know deciding to open an LLC can be difficult. You want to make sure that it’s the right decision for your brand and that you’re doing everything possible to ensure it succeeds.
In this post, we’ll give you a few tips on determining whether opening an LLC is the right choice for you. So read on and see if now is the time to take the next step!
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Why an LLC?
LLC stands for Limited Liability Company. Without an LLC, you are operating as a Sole Proprietorship, which can pose some issues long-term. As an influencer, you are basically a free agent (unless you are signed), which means you are not protected if anything goes wrong. This is why an LLC may be your solution.
Opening an LLC benefits you in many ways, but we chose four to highlight today.
- Your Assets Are Protected if You Are Sued- Say you have a brand deal with very specific terms in the contract. You create content the brand is not happy with, and they sue you for breaching the contract. If you have an LLC in place, things like your home, car, and savings are protected. An LLC just removes you (as a person) legally from the entity of your business. Nothing outside of the business is “up for grabs,” so to speak.
- Tax Flexibility - By creating an LLC, you can write business purchases off as tax deductible. Influencers often spend absurd amounts of money on items for content. Whether it be new clothes, flights, or products, if you have an LLC, you can deduct all of those purchases during tax season.
- Business Account/Loans - By opening an LLC, you will be able to open up business banking, which will also give you access to business loans and credit. Obviously, loans will have to be paid back, but they give you even more flexibility finance-wise.
- Credibility - Influencing is definitely becoming more and more normalized, but it doesn’t hurt to make yourself as credible as possible. Having an LLC gives you a level of professionalism that you may not have had before. When working with brands, they will easily be able to see that you take your job seriously.
Should You Open an LLC?
You may still be asking yourself if YOU should create an LLC. Obviously, no one can answer that for you, but we would say this; if you plan on continuing your content creation career, and would like to grow even more, it is worth investing in an LLC.
If you post on social media as a hobby, the odds of you having any legal issues are very slim, but if you are actively seeking out brand deals with huge legal departments that will take you down if anything goes wrong, it is absolutely worth peace of mind to have that protection on your side.
How to Open an LLC
Setting up your LLC is going to look slightly different in each state. That being said, Forbes Advisor did an amazing job at breaking down the seven steps you will need to take regardless of where you live.
To summarize:
- Decide on a Business Name - You will want a business name that goes with your brand, but there are also state laws you need to follow. Each state is slightly different, but in general, they won’t let you use a name that is already in use, and you will likely have to include "LLC" or "Limited Liability Company" at the end. Check your state's requirements before finalizing.
- Designate a Registered Agent- This is someone who is able to receive official or legal documents on behalf of the LLC. It can be anyone in the LLC that is 18 and up, or you can use a company. If you would like to be the registered agent, you will have to be available at a chosen address within your state during normal business hours.
- Get a Copy of Your State’s LLC Article of Organization Form - To make your LLC a legal entity, you will have to file a document with the state agency that handles business filings. In most states, this document is called the articles of organization, but some states use different names. You will have to confirm your unique state laws.
- Prepare the LLC Article of Organization Form - Each state will have specific requirements and procedures for those forming an LLC. The most basic information you will need includes the following;
- Business name
- The address of your principal place of business
- The purpose of the business
- The way your LLC will be managed
- Contact information for the registered agent
- The duration of the LLC
- File the Articles of Organization - Check your articles of organization and make sure everything is in order. When you send them in, you will have to pay a filing fee, which also varies by state. When your documents are approved, the state will issue a certificate to show your LLC is formally registered. You will use this for things like getting a bank account and getting a tax ID number.
- Create an Operating Agreement - This agreement outlines how financial, legal, and management of rights issues will be handled for all the members of the LLC. This will control how profit is distributed, how people can leave the LLC, and who contributes capital to the business.
- Keep Your LLC Active - Once you have formed your LLC, you will want to ensure it is in good standing with your state's requirements. Make sure you refer to your state’s business filing website for this. Keep everything up to date, and you should be good!
Closing Thoughts
So, what do you think? Are you ready to take your influencing career to the next level and form an LLC?
All things considered, the process is pretty straightforward, and it has so many benefits. Your influencer career will be protected, you will be protected, and at the end of the day, your brand will look more legit.
If you are taking your influencing career seriously, we do recommend you strongly consider opening an LLC. Legality is important, and honestly, it's better to have protection and not need it than want it and not have it.
