Youtube LLC In 2024: How To Start & What Are The Benefits?
Reviewed by Jazmin Castello - MBA
The article is checked by our editorial team, Which includes entrepreneurs who are painfully aware of how overwhelming and challenging it is to start a business for the first time.
Content marketing through YouTube remains one of the keys to maintaining engagement and attracting clients to your business. Whether you’re operating a small-sized business entity aimed at attracting customers to how-tos and tutorials, a YouTube channel has you covered? Currently, YouTube records over one billion users per month worldwide — one-third of the total number of global internet users. It is now among the most popular content marketing platforms, with an unmatched impact on creating brand awareness and driving purchase intention in millennials.
Starting a YouTube account will automatically qualify you as a sole proprietor. This means you’re eligible to pay taxes like all other sole proprietorship businesses. While this may not make sense when starting with your YouTube business, how you get taxed as a YouTube business owner is crucial because of your self-employment status. Better yet, once your YouTube channel starts generating millions of views, it’s necessary to have a good business structure that qualifies for tax write-offs, among other tax benefits such as a YouTube LLC structure.
Forming a YouTube LLC may not be the only available option for your YouTube channel. However, we’re here to help you decide what’s beneficial for your YouTube Business. After all, your YouTube channel is only useful when it generates enough traffic to attract more ad revenue. In this YouTube business full guide, we show you all you need to form an LLC for YouTube channels. We also take a closer look into all the factors to consider before forming an LLC for your YouTube business.
How To Start An LLC For YouTube Channels 2024?
- Choosing a name for your YouTube channel LLC
- Choose your registered agent
- File articles of organization
- Creating an LLC operating agreement for a YouTube channel
- Obtaining an EIN
- Create a financial infrastructure or a business bank account
- Understand maintenance requirements
YouTube LLC: How To Start?
An LLC formation process varies depending on your state. However, it follows the same steps regardless of the LLC service provider you use. Here is a complete guide on the formation process and the basic steps you should follow.
Choosing A Name For Your YouTube Channel LLC
This is the first step when forming an LLC. In the case of a YouTube channel, you’ll need to pick a perfect name that best describes what you do. It’s best to check if the name isn’t already in use by confirming your state’s business database.
Choose Your Registered Agent
A registered agent can be anybody as long as they are located in your state. Their work is to accept important legal documents, tax notices, and annual report reminders and be a point of contact for your business. Many top LLC service providers offer a free year of LLC registered agent service.
File Articles Of Organization
Your LLC’s registered agent will help you in this crucial step. They’ll file the important business formation documents, usually called the Articles of Organization. These documents contain basic information about your YouTube business and its owners.
Creating An LLC Operating Agreement For A YouTube Channel
Like any other business, your YouTube Business needs to have an operating agreement.[1] The document outlines key operational aspects of your LLC, including ownership and member duties, if any. Drafting an LLC operating agreement is crucial to both current and future entrepreneurs in preventing ownership disputes about the business.
However, other states don’t consider an operating agreement mandatory. Businesses can only acquire them for their own good.
Obtaining An EIN
The Employer Identification Number (EIN) is a federal tax ID number[2] that serves as a Social Security number for a business. With an EIN, you can hire employees for your YouTube business and pay corporate taxes. This number is freely available from the Internal Revenue Service.
Create A Financial Infrastructure Or A Business Bank Account
Your YouTube business needs a business bank account for efficient financial management. The account helps you keep your personal and business earnings separate. It will also help you acquire a business credit for business expenditures.
Understand Maintenance Requirements
Some states require you to keep up with the defined business compliance requirements. These include annual reports, tax reports, and any other requirements outlined in the relevant agencies. Remember, you need to stay up-to-date with these maintenance requirements to keep your LLC in good standing.
What Is An LLC?
An LLC stands for a limited liability corporation.[3] It simply refers to a business structure that combines all the features of a corporation and a sole proprietorship. When you form an LLC, your personal assets are shielded from the liability protection of your company. This means all profits or expenses enjoy personal liability protection, enabling you to avoid the intricacies of corporate taxes.
The owner of a limited liability company is not personally accountable for the company’s financial status. As such, if someone sues your LLC in the future, then your personal assets like houses or cars will not be at risk. This is a huge plus in today’s environment where someone can sue your business because of your wealth. Besides, there’s no cause for alarm if your business gets sued for debts or payment defaults. The superior level of personal asset protection will allow you to deal with business matters independently.
There are two ways of forming an LLC for maximum liability protection. You can contact an LLC service provider to set up your LLC at an additional small fee or do it yourself. Either way, you still have to comply with the rules and regulations surrounding an LLC formation service. For example, each state requires new business owners to pay relevant state filing fees before forming a legitimate business. This applies to any business, including forming an LLC for YouTube Channels.
LLC Benefits For A YouTube Business
Your YouTube business enjoys more than just limited liability protection by adopting the LLC business model. As an LLC owner, your business will enjoy numerous tax benefits more than other small businesses operating as sole proprietorships. However, you ought to know what personal expenses qualify as business expenses for your tax write-offs. Here are other benefits you’ll enjoy if you form an LLC for your YouTube channel.
Increased Credibility
Credibility is a key factor in building business confidence.[4] Whether operating a sole proprietorship or an LLC, you stand a chance to benefit from credibility because consumer trust plays a pivotal role in building and maintaining your business’s success.
For instance, any informal YouTube channel owner has a right to a DBA (doing business as) name. However, DBAs are not exclusive in the naming rights, and another YouTuber can easily use your DBA name and register a formal business entity with that name. This may prevent you from continuing to use your own assumed name.
LLC forming shields you from all these. It grants all LLC owners an exclusive right to use a business name of choice with the phrase “limited liability company.” This provides your business with a measure of credibility and attracts more sponsorship through paid ads. Your customers will also feel more comfortable doing business with an established business entity than with an individual.
LLC Tax Benefits
LLCs, pay tax as a pass-through entity the same way as partnerships or a sole proprietorship. As such, the business net income passes through to the LLC owner’s tax return. The net income is then subjected to income taxes depending on the owner’s tax bracket and self-employment taxes.
Your YouTube channel’s LLC can be taxed as a sole proprietorship or a partnership. However, you’ll enjoy more tax benefits and limited liability protection. With an LLC’s tax structure, your YouTube business itself won’t pay taxes. The profits will be passed through the business entity to allow you the chance to pay taxes on your earnings when filing personal taxes.
Similarly, if you start making money enough to afford an annual pay of $10,000 in distributions, then you’re eligible for an S corp tax status. This will help reduce your self-employment and overall tax burden.
Personal Asset Protection
Gaining access to the personal asset protection provided by the LLC business structure is one of the reasons you should form an LLC for YouTube channels. Whether it’s a simple channel or a full-fledged business channel with massive subscriptions, you need limited liability protections against copyright infringement and other intellectual property claims.
When another content creator finds you’ve plagiarized their content, you may be fined for the lost income. This may happen knowingly or unknowingly. Forming an LLC for YouTube channels will save you big time if you find yourself battling with lawsuits or copyright claims. The scope of your lawsuit will only be limited to your business assets. The LLC structure will ensure your personal assets are fully protected.
Do I Need An LLC For YouTube Channels?
One way to enjoy your YouTube business fortunes is to form an LLC for your YouTube Channel. This is an important YouTube business model that’ll let you make money and maximize overall earnings from your basic YouTube Channel. It also keeps personal assets separate from your YouTube business, allowing you more personal asset protection. Though you still have to pay self-employment taxes, most LLC services cater to the C corporation tax status to reduce the self-employment tax burden.
For YouTubers, forming an LLC is one of the best ways to increase your business income. It is seen as a simple and low-cost way to protect your personal assets and save money on taxes. As a YouTube channel holder, you also want to protect personal privacy from the very beginning of your YouTube business journey. Forming an LLC will afford you all that. A single-member LLC is more than capable of providing limited liability protection and tax options to your business.
How Much Does Starting An LLC For YouTubers Cost?
Forming an LLC for your YouTube channel will cost you depending on the state you are in. Most states will charge a higher state filing fee, which is the main LLC cost for YouTubers. Averagely, the costs vary between $50 to $500.
The Top 2 Limited Liability Company Services
| Northwest Registered Agent | ZenBusiness | |
| Award | Best Customer Support | Most Affordable |
| Detail | Read Review | Read Review |
| Link |
Limited liability companies have existed for ages to help entrepreneurs start and own businesses. They provide a low-cost and speedy alternative to forming a business no matter your state. When picking any LLC service provider, you need to check various factors such as its costs and pricing, turnaround time, and whether it provides LLC formations or incorporations.
The company’s online reviews will also hint at its reliability and what you should expect in terms of customer support. Below is a look into our two top LLC service providers with details about their services and everything else you need to know.
ZenBusiness
ZenBusiness was founded in 2005. This Texas-based company provides affordable LLC formation and incorporation services necessary for a successful business launch. The company’s starter package costs $39 and has everything you need to form an LLC or corporation.
The starter package handles all the basic LLC formation services, including an LLC operating agreement and a registered agent service. There are also extra services in higher packages, such as compliance services, business websites, expedited filing, free accounting consultations, and Google Ads Credit. Using ZenBusiness will also guarantee you the best customer support and quick turnaround times.
Northwest Registered Agent
Northwest Registered Agent Service was formed in 1998 to offer services related to forming and owning a business. The company boasts an easy-to-use online interface and excellent customer service to ensure your LLC formation is handled quickly and professionally.
Leveraging the company’s services assures you of key benefits among them, same-day filings, privacy protections, and registered agent services in all 50 states. The company is also reputable due to its many years of experience. Other services include:
- A virtual office.
- Mail forwarding services.
- Annual business compliance filing.
- Credit card consultations.
- Phone service.
- LLC operating agreement
Final Thoughts
YouTubers who need to operate legitimate businesses will find starting an LLC a good idea. An LLC offers the desired liability protection to keep your assets distinct from your business in a legal dispute. However, starting an LLC will first require you to familiarize yourself with all the provisions concerning tax businesses and other legal formalities. To be safe, consider LLC services out there ready to take care of all your business formation needs!
Frequently Asked Questions (FAQs)
The greatest benefit of forming an LLC as a YouTuber is the wide financial protection you get. Your assets won’t be touched in case of any legal issues.
Most of them provide legal advice. However, others will require you to hire a separate attorney or hire a law firm.
Yes, but it’s important to contract an LLC formation company to help you get over all the technicalities as a newbie.
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- Nwatu, I.S. (2016). Basic Information About Operating Agreements | U.S. Small Business Administration. [online] Sba.gov. Available at: https://www.sba.gov/blog/basic-information-about-operating-agreements.
- Irs.gov. (2017). Limited Liability Company (LLC) | Internal Revenue Service. [online] Available at: https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
- Sba.gov. (2023). Get federal and state tax ID numbers | U.S. Small Business Administration. [online] Available at: https://www.sba.gov/business-guide/launch-your-business/get-federal-state-tax-id-numbers.
- Ferreira, H. and Filipe, A. (2018). Importance of credibility for business confidence: evidence from an emerging economy. Empirical Economics, [online] 57(6), pp.1979–1996. doi:https://doi.org/10.1007/s00181-018-1533-5.