How to Start an LLC for Youtube (Step-by-Step)

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by LLC.org Team
Last updated: June 10th, 2024

If you’re starting to see success with your YouTube channel, you might want to protect your earnings and avoid potential future liabilities. Incorporating your channel as an LLC can provide legal protections and offer tax benefits.

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Why start an LLC for YouTube?

An LLC offers a range of benefits over other business structures. It is the most convenient for both new and prospective business owners. Keep in mind that as your business grows, you may later change the business entity.

  • LLCs offer more liability protection than a sole proprietorship.

An LLC allows you to separate your business profits and debts from your personal assets. If there are any lawsuits, debts, or other situations, your personal assets won’t be seized to pay off obligations. Liabilities that are common for YouTubers are defamation and copyright infringement claims.

If you were to talk about a famous person on your YouTube channel who later sues you for defamation and wins in a court of law, your personal assets are protected from fines and settlements due to your LLC status.

  • LLCs provide greater management control than partnerships.

You won’t have to get into a partnership with an LLC to get personal liability protection. You decide on how the business will operate while taking on full responsibility. You can avoid internal conflicts.

Sometimes, YouTube creators may get into business relationships to share expenses, such as renting or leasing equipment and office spaces or going on promotional trips. While you may agree to do these things with other creators, those creators do not have a direct say about how you spend your LLC profits or take on expenses outside of any given agreement or contract.

  • LLCs avoid tax disadvantages found in corporations.

Any profits made from YouTube are taxed as a pass-through. A pass-through allows you to list profits and losses on personal tax returns. You can use certain deductions and write-offs usually reserved for sole proprietorship.

You can write off streaming software, equipment, bank fees, any fees paid to affiliate partners, YouTube ads that you create, and salary/fees paid to subcontractors such as video editors or graphic designers. By doing so, you can lower your personal tax obligations. You also avoid double taxation on profits that happen with C corps.

  • LLCs can boost your YouTube image.

Having credibility is paramount as a YouTube content creator. Your credibility can dictate how many people believe in your content that they will return, which leads to higher profits. With an LLC, it shows that you take your channel as a serious business. Your commitment can increase the chances of attracting sponsors and advertisers.

Things to consider with a YouTube LLC

While there are many benefits to a YouTube LLC, there are also a few disadvantages. Understanding these disadvantages allows you to prepare yourself when picking this business structure.

  • Costs: Depending on the state, there are filing fees, annual state fees, and taxes. Evaluating local and state regulations allows you to stay in compliance.
  • Business limitations: You cannot issue stock to raise working capital and may need to update your LLC when providing future expanded offerings. This aspect usually applies to YouTubers who have brick-and-mortar establishments and use their YouTube channels to promote their products/services or offer advice as they may be looking for outside investors.
  • License and permits: Your LLC may need certain licenses and permits. For example, if you are a YouTube creator who makes short films, music videos, or features, you would need film permits to record on certain public/private properties — depending on the jurisdiction.
  • Administrative paperwork: Another factor is the increase in financial record upkeeping and creating annual financial reports. Keeping accurate records regarding your expenses and profits is essential when you file your taxes. You don’t want to accidentally mix your personal assets/debts with business assets/debts. If you become audited by the IRS, you’ll need to have this documentation to prove your financial obligations.

How to start an LLC for YouTube

To form an LLC, there are several steps to take to ensure it is registered with the appropriate state and federal agencies.

1
Select an LLC Name

Your business name will be the brand identity of the YouTube channel. It should be eye-catching as well as represent the services or products offered in your content. You’ll need to abide by state requirements that prohibit using names that are similar to or imply some type of affiliation with federal or state organizations.

Research your LLC name to avoid issues. You want a name that is memorable to your brand. It can describe your services or products or just be a catchy name that is memorable. You can also register one business name for the LLC and use a DBA when operating the business. However, if the name is too similar to another company, you may face legal problems. In addition, avoid any names belonging to a closed business that may have a bad reputation.

2
Choose a registered agent

A registered agent is someone designated to receive business correspondence on behalf of your LLC. Then, the correspondence is relayed to the LLC owner. You can designate yourself in this role, someone you trust, or hire a professional registered agent.

File the right documents on time. Your state will have time frames for certain documents, such as the BOI. Also, check for any time deadlines for permits, fees, and licenses. This is where a registered agent service comes in handy as they are your main point of contact with the state and ensure you file and receive these documents on time.

3
File Articles of Organization

The Articles of Organization are documents that provide information about your LLC to the state. Basic information in the document is the business name, business address, owner’s name, registered agent’s name and address, and the nature of your business operations. This paperwork is filed with your Secretary of State. Your state may have an online form or template to make registration easier.

4
Obtain an EIN

An Employer Identification Number (EIN) works like a social security number, but it is for businesses. The EIN is used when filing taxes, hiring employees, offering work benefits, and other factors. You can obtain a free EIN from the IRS.

5
File a Beneficial Ownership Information Report (BOI)

A BOI Report is a new document requirement in 2024 that must be filed with the Financial Crimes Enforcement Network (FinCen). The document provides ownership information of the LLC and who benefits from it. Filing this document is required, or you could face penalties or fines.

Additional tips

  • Create an operating agreement for your LLC. An operating agreement isn’t required when registering an LLC. Yet it can help provide details about your LLC’s business ownership and management roles. This advantage is key if you are bringing in other people to help run the LLC. The operating agreement can avoid legal disputes regarding ownership.
  • Get expert advice when needed. Nobody is expected to instinctively know how to file an LLC or to have your YouTube business stay in compliance with local laws. If at any time you are confused on what to do, seek out professionals who can get you back on track. They can offer legal advice and file the necessary documents on your behalf.

Types of business structures

A business structure describes how your business is organized legally. It provides details regarding who owns the company, what products or services are offered, and how it makes profits. The business structure also provides details regarding financing, what roles people take in daily operations, and how it’s taxed.

The following business structures are common for YouTube content creators.

  • Sole Proprietorship: Most small businesses are a sole proprietorship by default when first starting out since there’s no paperwork to file and you file taxes on your personal return. However, this means that your personal and business assets, debts, and liabilities are one and the same legally.
  • Partnership: A partnership allows two or more people to own the business. There are two types of partnerships: general and limited. General partnership structures allow both people to have management control while taking on all debt liabilities. A limited partnership has one person as a general partner who takes on full liability and the other person taking a limited liability role.
  • Corporation: A corporation is the most complex business structure. It allows shareholders to own the company and offers strong liability protection of assets. There are two types of corporations: S Corp and C Corp. The difference between an S Corp and C Corp is how profits are taxed. S Corp profits are taxed through personal returns, while C Corp profits are taxed as both a corporation and through distributions of shareholder dividends.
  • Limited Liability Company (LLC): A Limited Liability Company combines aspects of a partnership structure with a general corporation structure. With an LLC you gain operational flexibility like a partnership plus a corporation’s protection for personal assets. You gain tax benefits while having limited liability if you face legal disputes. Your personal assets are safeguarded from seizure from business debts or settlements.

FAQs

Is there a difference between an LLC and a single-member LLC?

Yes. An LLC can have multiple owners who are considered members. A single member LLC only has one member. The owner can have an EIN or use their Social Security number when filing taxes and other business paperwork. 

What liabilities do I have to deal with as a YouTube content creator?

The main liability that YouTubers face is intellectual property rights. Using any artwork, songs, videos, or clips that belong to someone else can lead to a lawsuit. You may also have to deal with other people pirating your content to monetize their channels.

Are permits or licenses required for a YouTube channel?

It may be a requirement depending on the type of featured content. If your content isn’t licensed as Creative Commons, then you will have YouTube’s Standard License for ownership of the channel. Otherwise, you will need a Creative Commons attribution license if you want to give other creators permission to use your YouTube video or other content on their channels.

If you are posting industry-specific content, you may require permits and licenses related to that industry. Yet YouTube itself will not require you to have such industry permits/licenses to upload content.

How much does it cost to have a registered agent?

It depends on who it is. If you are the registered agent, or you have a friend fill that role, it may cost you nothing. If you go with a company, prices can range from $50 to $500 per year.

What equipment can be considered a tax write-off for Youtubers?

Any equipment or furniture that you use for your YouTube channel can be considered a write-off under IRS section 179, This write-off includes microphones, laptops, gaming chairs, software, and even your phone if you use it to record and upload videos.

Just be aware that the equipment that is purchased must be used in the same year that you claim the equipment deduction. So if you purchase equipment and place it into storage for a year before using it, you cannot write it off immediately on your taxes that first year.

How do I pay into Medicare and Social Security as a YouTube LLC?

An LLC is still considered self-employment since you are the owner. Your self-employment taxes will go towards Medicare and SS. You cannot pay these taxes on your earnings and profits (distributions) of the LLC.

Should you monetize a YouTube channel?

You don’t have to monetize it. Many people simply use YouTube to share information and connect with people. Yet you can make money when monetizing it with advertisements and affiliate links. Just be aware that YouTube decides which videos are eligible for monetization, which can impact your earnings.

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