Have you officially registered your blogging business? | Bloggers Lair | Yakezie Forums

This is a bit premature on my part, but as my blog grows (and hopefully the money I earn from it), I know I should register it legally.  If you have already established a blog business, did you set it up as a sole propietor or as an LLC?  What are the benefits or drawbacks of each?

incorporating is well worth it. i initially started as a sole, but incorped within a year after seeing faster than expected growth.

anyone know if a general umbrella insurance policy would cover blog related issues? i would think so – if so, it's something to consider?  i'd recommend it regardless for anyone with a reasonable amount of net worth / assets to protect

Melissa,

We've written quite a few articles on this subject including this one that ran on Sam's blog last year. You should set-up a single-member limited liability company (LLC).  You don't have to incorporate in your home state.  In fact, if you live in California or New York, never incorporate in your home state.  We recommend incorporating in our home state of Nevada (cheap and lots of privacy) or Delaware (most favorable corporate legal climate in the country).  

Here's why you should do it today:

-An LLC lets you write-off more business expenses then filing under a Schedule C.

-If you file for your LLC  to be treated like a sub-chapter S Corp; you pay yourself a "reasonable" salary and take any additional income as a year-end distribution thus reducing your self-employment tax liability.

-A single-member LLC is diregarded for tax purposes.  This means you don't have to file a separate tax return for your business.  You save money on tax prep and still get all the tax and liability protection benefits of incorporation.

-As you grow you can convert your LLC to a series LLC, allowing you to have lots of sub-LLCs within one serial LLC.  This diversifies your liability while keeping your legal, tax and filing fees affordable. Series LLCs are legal in both NV and DE but not every state allows them so check with your state of incorporation.

-Liability protection is huge.  An umbrella policy may be okay BUT, let's face it, most insurance companies are not in the business of paying claims.  If you're sued; you'll be fighting with your insurance company as much as the Plaintiff.  Simply having an LLC will prevent most nuisance suits since the plaintiff's attorney realize: 1) they have to work harder to prove liability, 2) they have to work harder to find assets, and 3) they have to work harder to collect on a judgement against an LLC. See the pattern? Lawyers like easy money.

Probably too much information huh?

Betty

Here's our affiliate link to CorpNet if you want more info. about incorporating online.

I would definitely suggest to incorporate your blog if you are thinking of building a business out of it. Having said that, if you don't make at least $1,000 per month, the benefits of an incorporation are close to nothing ;-)

financialstudent said:

I'm offical in the sense I have business checking and savings accounts. I registered with my state (Ohio) for a DBA (doing business as). Total cost was only $50. I also applied for a tax ID number. I'd say you don't really need to incorporate until your revenues are $10,000+ per year.

I'm not worried about liability in my case for a few reasons. One: I'm a college student with no real assets to speak of. Two: I honestly can't imagine of anyone suing me at this point. Obviously, as income increases, the potential for lawsuits seems to increase. But I'm no where near that yet.

They have also sued blogs over what is clearly fair use excerpts.    To be clear, that is a 6-figure, cross-country legal battle for an excerpt of a news article.  Most people cave and settle because the lawsuits demand $100,000 and the
domain name, while they are willing to settle for mid 4 figures.  

As far as your assets, a lost lawsuit can mean a garnishment for the rest of your life.  Nothing now doesn't mean nothing to sue for.

One more thing and then I promise to go away…

If you're not making any money and don't think you're ever going to make money then you're indulging a hobby not running a business.  The IRS doesn't allow you to deduct any expenses associated with a hobby.

My advice applies only to anyone wanting to build a profitable business.  

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A friend of mine runs a forum with strictly local audience.   One of the forum members posted a complete article–with a link to the source–from a Nevada newspaper.  That newspaper was affiliated with Righthaven, and sued my friend for having that article posted.  He settled out of court for what I would consider a painful amount.
 

Jason, your friend could have won that lawsuit.  There is case law that says that forum owners aren't responsible for what members post.  Of course fighting the lawsuit in Nevada might have cost him more than his settlement.  If I were sued though in similar circumstances I think I'd have to go to court.