[This is part of the Escaping the 9-5: My Road to ProBlogging series.]
At some point in your blog’s growth you might have wondered this question:
Should I turn my blog into a business?
Typically what you’re thinking about is creating a more formal entity of your blog as it relates to an S Corp, C Corp, or a Limited Liability Company [LLC].
But how do you start thinking strategically in those terms and how to you move forward in the wisest manner? I hope to shed some light for you with this blog post!
Let’s jump in:
Treat Your Blog Like a Business from Day 1
Let me first start off and say that even if you never turn your blog into a formal business it definitely pays to treat it like one, even from the very beginning.
In this blog post here I lay out 3 guiding principles that will help any blogger take their blog to the next and will pave the way to become even more profitable long term:
- Financial Management and Reporting
- Goal Setting
- Review and Refinement
These things, in and of themselves, doesn’t mean that you’re ready to jump right into making your blog “official” as a business but it’ll keep you on the right track as well as provide a guidepost for how well you’re doing.
But that still doesn’t answer the question of “when” right? Well, we’ll get there! Let’s first hit up the “why“:
Why Incorporate a Blog?
The answer to this question is really the same as with any business that you may have thought about starting: Incorporating a business (instead of doing 1099 contract) can give you many benefits as it relates to your overall protecting of your assets as well as many tax advantages.
Here are some of the highlights as to why you’d consider it in the first place:
- Protect Yourself and Your Personal Wealth – Both corporations and LLCs allow you to separate and protect your personal assets and money. This is a good thing as a blogger if you’re covering content that might be a little bit “touchy” or do a lot of investigative journalism that “might” get you in trouble. Let the corporation (in this case your blog) take the liability for business debts, legal issues, and other such obligations.
- Increase Your Credibility – Some argue for and against this but generally speaking adding the “Inc.” or “LLC” to your business and blog can increase authority and credibility within your space. Your visitors, customers, and even potential partners might treat you a bit more seriously as they see you’re serious about your blog and business. In some cases some businesses won’t do business with your blog unless you’ve got something like that!
- Brand and Name Protection – Other competitive businesses, in most states, can’t file your exact corporate name or LLC in the same state.
- Perpetual Existence – This is a fancy way of saying that your blog will continue to exist even if the ownership or management changes. To some this gives them greater freedom to and opportunity for them to sell the business (or blog) or assets related to the blog. You can also increase owners and partners with this model as well.
- Tax Advantages – There are tax advantages galore as you can elect to be taxed as a corporation as an LLC and as a corporation you can avoid double taxation by electing Subchapter S tax status.
- Business and Blog Expenses – If your blog and business is growing then you’re probably spending a few dollars here and there to continue to grow it so you’ll be able to deduct blog expenses now as a business. Things like salary for yourself and others and more. Things like medical, life, and disability insurance premiums are tax deductible too.
- Raise Capital and Support – Thinking about going “big time” and raising some capital to help fund your blog’s growth? Corporations can raise capital by issuing stock, bonds or other securities! Sweet.
There are even more advantages but these are some of the much more obvious ones that people cite.
Please note that I am no expert here, so please consult your own legal and business counsel when you decide to move forward! I’ve done it more than a few times but that doesn’t mean that I would feel comfortable with someone paying me to help them set it up!
S/C Corp or LLC for Your Blog?
This is a question I get a lot as well and I’ll tell you that I’ve always started with a Limited Liability Company [LLC] for my blogs as it’s a bit easier to get started and a lot more flexible with varying different circumstances. Also, you don’t have as many reporting requirements by the state and local levels.
But, for your knowledge, here’s a grid to help you understand the differences a bit:
I hope this provides some guidance for you! As I mentioned before, I’ve always started with a LLC and then moved to an S Corp later as things grew or as needed.
Are You Making $6,000 a Year from Your Blog?
Ok, so you’re sold on the reasons why you would want to incorporate your blog and you’re pretty sure the type of corporate structure you want to start off with. So when are you going to make the jump?
Here’s what I typically counsel bloggers who are eyeing the business route of for their blogs: Make $6,000 in Annual Revenue.
For the sake of simplicity I use this figure because it assumes that you’re making, on average, $500 per month from your blog.
This is a great and easy goal to gun for but there’s also some reasons surrounding why I choose this number:
- If you’re consistently making $500 per month you’ve got something that’s working “right” about your existing content strategy, execution, and delivery.
- From my perspective you’ve “got what it takes” and you generally know what you’re doing when it comes to monetization (or the beginnings of making money from your blog). You may not be optimal but you’ve got some good money coming in!
- You can now generally afford the cost of establishing your business. The cost of doing so can vary widely from doing it yourself completely and just paying the file fees (a few hundred dollars) or having a professional come in and do it for you which could be a few thousand dollars easily.
- Generally, you should be able to get you EIN (Employer Identification Number) as well as you Federal Tax ID number, with some professional guidance and help for filing, for less than $1,000. With $500 coming in per month you can generally afford this cost and you expect to make it back in a few months time.
Use this as a baseline for your thinking and goal setting as your blog matures and grows over time. Of course, like many things, there is huge flexibility here and you can do it sooner or much later if you’d like. In fact, you never have to incorporate at all! There’s no pressure, naturally.
But, I have found it to be very helpful and I’ve benefited from the tax incentives of a small business and have saved myself more money than the cost of setting the business up in the long run.
Will TentBlogger Go LLC?
The short answer is “Yes!” This blog is not currently not in the black as it relates to what I’ve spent on it so far but in due time (hopefully) it’ll start making a few dollars here and there.
I will, based on the counsel that I’ve given you, wait until I’ve crossed the $6,000 a year mark before I make it into a formal LLC. When will that happen? I’m not too sure and I’m ok with not knowing exactly!
But you guys will be the first to know.
What About Health Insurance, Benefits?
Check out this post here!
[This is part of the Escaping the 9-5: My Road to ProBlogging series.]