When Should I Consider an LLC? | Bloggers Lair | Yakezie Forums

Hi Monica,

I'm not to the point of having my blog become an LLC but my actual business I own is an LLC.  One of the big benefits is the liability protection.  In case you were ever sued, they could only go after your business and not your personal assets.  That's just one benefit.  If you treat your blog as a business then you should separate it as so.  It's so much easier to keep up with transaction and write off your expenses.  

It's funny, I was just asking my accounting yesterday about the benefits of an LLC versus an LP or LLP.  In short, an LLC filing as an S-Corp can get away from the Obama tax where an LP cannot due to listing income as active versus passive.  This only applies when you have a significant amount of profit though.  

I'm sure there's plenty of other benefits.

Post edited 1:55 pm – March 13, 2014 by Larry @ The Skilled Investor

I agree with the comment to make some money first. However, I note that you are in Florida, so I do not know the laws and costs. In California, an LLC sets one up for paying $800 in business taxes every year that partnerships and sole-proprietorships do not pay.

Regarding liability, you are in law school I see, so you are learning the law. I did not read it, but you have disclaimers and disclosures on your site already. Look into any laws that might affect what you are saying on the web, but it is difficult to come up with scenarios that make you substantially vulnerable, if you stay clear of libel and personal attacks, which does not seem your style.

As for financial information, the laws regarding advice are centered on specific advice given to a specific individual, especially when paid for directly or indirectly, not to general information. If bad financial website information got bloggers in trouble, well, the jails would be …  

Also, associated with personal liability, if you have accumulated significant assets that could draw a predator, then an LLC might make more sense. If not, it might not be worth the potential cost and hassle. LLCs require more administrative attention than partnerships and sole-proprietorships. If you do not cross all the T's along the way, an LLC might be a more fragile shell that could be pierced in a legal action. However, something like legalzoom might help, but that is still low cost, but not free.

(Disclaimer: This is not legal advice. This is not financial advice. This is not any other kind of advice. With free you get what you pay for. No qualifications claimed, except ability to type and push buttons on a website.)

I wrote on this a while back for one of my blogs (see this post) if you want the pros & cons of it from my (non-legal) perspective. I do have my blogs in an LLC, but really only because I needed to set up the LLC anyway for my iPhone app. Plus it's very easy and inexpensive to do so in Arizona.

I have an LLC that covers all of my online businesses and sites. Cost to setup in Colorado was $50 per year. Very easy online forms. It is important to keep all of your finances for the biz separate to keep the LLC protections. Also, make sure to keep very good records for taxes if you go that route.

We actually just met with our insurance contact today for E&O coverage for our business. We already have an established LLC, but have been putting off E&O coverage for too long. He had a fairly extensive application we had to fill out and apparently has quite a bit of underwriting involved. Most of it goes through The Hartford, so hopefully we should end up with a good policy.

The rep we work with said it would likely be in the neighborhood of $1200 – $1400 annually. He said that for the most part you really can't get E & O coverage for anything less than $1000/year. We spoke with 4-5 insurance reps as well as USAA, who we have most of our personal coverage through, and they all said that they deal with The Hartford so I guess they're known for E & O coverage. That said, I'll definitely update as to when we get our final quote.

Post edited 9:10 am – March 24, 2014 by RootofGood

FrugalRules said:

The rep we work with said it would likely be in the neighborhood of $1200 – $1400 annually. He said that for the most part you really can't get E & O coverage for anything less than $1000/year. We spoke with 4-5 insurance reps as well as USAA, who we have most of our personal coverage through, and they all said that they deal with The Hartford so I guess they're known for E & O coverage. That said, I'll definitely update as to when we get our final quote.

We used The Hartford for E+O insurance back when I started a consulting biz during college.  It was around $500/yr for a million bucks coverage or something like that.  That was in NC.  

For my blog and freelancing, it's a sole proprietorship.  I may do an LLC eventually if the revenue goes beyond what I consider a well paid hobby level.  More for the ease of administration and to facilitate an exit strategy.  

I don't consider the liability protection worth very much (as a retired attorney).  You're still personally liable for your own actions that you do yourself.  If I write an article suggesting XYZ mutual fund is a good investment, and they sue me for making a recommendation that subsequently lost money, they would name me individually as a defendant as well as my LLC (if I had one).  There isn't any issue of corporate veil-piercing in this case since you can always be sued (even for frivolous BS!) in an individual capacity for your own actions.  

Oh, by the way, please don't take this as legal advice for your particular situation.  Consult your own properly credentialed attorney or accountant in your own jurisdiction.  :)

Edited to add: On second thought, the liability protection of an LLC could be useful if you outsource some work (like comment moderation) or have guests posts or posts from staff writers.  I don't personally outsource anything so I was answering the question from my small time blogger perspective.  :)