In theory, S corp taxation can help your YouTube business save money by reducing your self-employment tax burden. There are quite a few limitations to electing S corp taxation, but most U.S.-based YouTubers have no trouble meeting these requirements - your business cannot have more than 100 owners, they all must be either residents or citizens of the United States, etc. The other option is S corporation taxation. You can also choose for your YouTube business to be taxed as a C corporation, although this option isn’t very popular because it subjects your business to what’s known as double taxation - meaning that your profits are taxed first on the corporate level and again on the personal level when they’re distributed to you. With this tax structure, your business itself does not pay taxes, but rather the profits are passed through the business entity and you pay taxes on that money when you file your own personal taxes. Your YouTube channel’s LLC can be taxed as a sole proprietorship (for single-member LLCs) or general partnership (for multi-member LLCs), which is the default option. Still, the LLC provides more options than you would get from an informal business entity or a corporation. The LLC’s options for taxation are another major advantage, although not to the same degree as you’d find with some other business types. In other words, your personal assets will be protected by the business structure you’ve chosen. On the other hand, if you form an LLC for your YouTube channel, and you operate and maintain that LLC in a compliant fashion, the scope of your viewer’s lawsuit will be limited to your business assets. If you find yourself on the business end of a defamation lawsuit or copyright claim, a sole proprietorship or general partnership will not provide the asset protection you need. Whether you operate a simple channel where you post occasional videos or if you’ve fleshed out your YouTube presence with an integrated eCommerce website, you need the limited liability protections that an LLC can provide.Įven with a basic YouTube channel, you run the risk of (either knowingly or unknowingly) violating copyright laws, or committing libel or slander. The top reason to form an LLC for a YouTuber is to gain access to the personal asset protection provided by this business structure.
Why Starting an LLC for a YouTuber Is Important Personal Asset Protection
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