Have you ever wondered about all the legal issues when it comes to blogging? While it is definitely a good idea to hire a CPA to help you understand the rules for your specific state, we thought this post from Julianne would be helpful to share as a starting place!
Hello, Blogging on the Side readers! My name is Julianne, the editor of a new wedding blog called What the Bride Wore. This blog post provides a brief overview of how to conduct business as a blogger. Before I started blogging, I researched anything and everything on the topic. One day, it hit me that my future blog was an actual business and I could not just sell some products or place some ads on my website and let the money roll in. If you make even $1.00 as a blogger, you are legally conducting business and this post applies to you!
Below are some things I have learned about the business of blogging. As a brief disclaimer, this post is not meant to constitute professional advice. The law varies, and it depends on all of the facts in any given situation, which would make it impossible for me to give you a “one size fits all” solution or an all-inclusive guide. This post is simply meant to inspire you to ensure that you are blogging both legally and in a form that best suits your business.
Registering to Conduct Business
While many bloggers operate as a “sole proprietor” (a business owned and operated by one person), many other bloggers choose to form a legal business entity, such as a limited liability company (also known as an “LLC”–more on this later). Regardless of the business form you choose, you must register to conduct business. Each state in the United States has different laws. For more information, look up your Department of State. Many Department of State websites contain very helpful resources for small business owners. And, as always, Google can be your best friend. I recommend searching, “How to register to do business in [INSERT STATE NAME].”
You must also file a Form SS-4 with the Internal Revenue Service (“IRS”). This is an Application for an Employment Identification Number, which is basically like a Social Security Number for businesses. It is used for tax filing and reporting purposes, as well as some business purposes, like applying for a business bank account.
Sole Proprietorship v. Limited Liability Company
When registering my blogging business, I personally decided to form an LLC for primarily one very important reason: LLC owners are generally not personally responsible for the corporation’s debt and any legal judgments or other obligations. This provides a personal layer of protection to me as a business owner. If something goes terribly wrong with my business, I generally do not have to worry about losing my house to pay the businesses’ debt or harm my personal credit as a result. As a sole proprietor, you can personally have unlimited liability for your businesses’ debts and legal obligations. This means you and your bank account.
That being said, forming an LLC may not be the right choice for every blogger. Here is a breakdown of the key differences between conducting business as a sole proprietor versus and LLC:
- Unlimited personal liability for business debts and legal judgments or other obligations.
- Less start-up costs and paperwork.
- Allows business and personal funds to be mixed.
- If you sell this personal type of business, you must sell each individual asset and get new bank accounts and tax identification numbers.
- No annual fees or reporting requirements.
Limited Liability Company (“LLC”):
- Generally, no personal liability for business debts and legal judgments or other obligations.
- More start-up costs and paperwork.
- Easier to grow a business because new members can be admitted and investors also have limited liability.
- Business and personal funds may not be mixed.
- You can sell this type of business as a whole (you do not need to sell each individual asset), and bank accounts and tax information can remain intact.
- Can require annual fees and reporting requirements.
How to Form an LLC
To form an LLC in my state, I simply filled out a short form that I downloaded from the Department of State’s website, identifying myself and my business. The filing fee for me was $125.00. A few weeks later, I received the form back stamped by the government, which certified me to conduct business as an LLC. (This can be more complicated, however, in other states or circumstances, such as a blogging business involving more than one person. It may require professional advice.)
I also filled out a short form to conduct business under a “fictitious name” and paid an additional fee of $70.00. While state laws may vary, generally you should register a fictitious name if you choose to conduct business as anything other than, “Your Business, LLC.” For example, if you call your LLC “Blogging is Fun, LLC,” but your blog is called simply “Blogging is Fun” or “Fun with Blogging” or “My Fun Blog,” you will likely need to register a fictitious name. This is so that both people and the government may more easily determine who is conducting business as whom or what. For more information, check your Department of State’s website.
Finally, I opened a must also open a business bank account for checking, savings and credit, since my personal and business funds cannot be mixed. This required about an hour of my time at the bank I regularly use.
While blogging is fun, it also requires bloggers to be businesspersons, if they make even $1.00 by blogging. It is important to educate yourself as to your state’s laws on registering to conduct business. Bloggers should also consider whether to conduct business as a sole proprietor or as an LLC. One essential difference is that there is generally no personal liability for bloggers conducting business as LLC’s, whereas bloggers can be personally liable for business debts and obligations as sole proprietors. Making this decision may require professional advice. Be sure to be legal when conducting your blogging business online!
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