Should I Form an LLC as a Creator?

Whether you need a Limited Liability Company (LLC) if you are a creator on TikTok, Instagram, Twitter, or any other creator platform depends on the type of business you run. For most creators, the platform won’t require you to have an LLC.

In general, selling under a sole proprietorship may be enough starting out and doesn’t require you to have an LLC.

But if you are working with clients as a creator, starting to generate revenue, and/or you wish to expand and add members to your business, you should consider applying for an LLC — for tax purposes, legal protection, and flexibility in ownership.

Keep reading to learn what about the benefits of having an LLC, and how to open an LLC as a creator.

Why form an LLC as a Creator: For Peace of Mind

When a creator starts creating, they always picture the best-case scenario:

• The vision: being a creator known globally
• The grand outcome: millions of followers
• What success looks like: impacting people globally
• How gargantuan the business could be: monetization from your fingertips via courses, partnerships, product lines, content an dmore

But creators often underestimate a major downside scenario:

A lawsuit.

No one wants a lawsuit to happen and look, the chances of it happening are incredibly low…

But what if, just what if, an upset customer, partner, or client you are working with decides to file a lawsuit… and they have a valid case?

Without an LLC, you are by default a Sole Proprietorship, which means you have no separation between personal and business liability

This means in the case of a lawsuit:

You are personally liable for the debts and obligations of your business.

This means your personal assets and finances are not protected and can be seized or annexed to discharge any debts or liabilities.

It might sound like a no-brainer to always form an LLC, but let’s put ourselves in entrepreneurs’ shoes:

When you are starting a business: every. single. penny. matters.

Should you really spend $1000s on an LLC before you’ve sold your first product?

So here’s the big question:

What is the price for peace of mind?

What is the price for sleeping a little better knowing that you have personal protection against potential claims against your business?

With doola, you can form your LLC to separate personal and business for your creator business for a few hundred bucks + state fees.

Benefits of Having an LLC as a Creator

One of the most significant advantages of an LLC is that it protects your personal assets from potential legal problems that may arise from business activities.

In addition, an LLC can provide tax advantages because profits and losses can be passed through to LLC members, who are taxed only on their individual income tax returns. This can help reduce the overall tax burden on your business.

Below are the key benefits of having an LLC as a creator.

Limits Personal Liability

Under an LLC, your business is viewed as a separate legal entity — offering protection to your personal assets such as your car, home, and personal bank account. This is beneficial in the event the business incurs debt, faces a lawsuit or a member of the company commits any fraudulent activities.

Solidifies Your Business

The rules and regulations addressed in an LLC document bind a contractual agreement between the company members. This solidifies the business structure and creates flexibility in ownership and provides the necessary paperwork in the event the company is sold or passed on to a separate member within the LLC.

Builds Credibility

The legitimacy of an LLC adds value to its authority in the marketplace and is seen as a serious competitor — as opposed to a company that only holds a sole proprietorship. In addition, the financial infrastructure of an LLC is separated from personal assets, which further strengthens the legality of a company’s credibility.

Possible Tax Advantages

One of the appeals for small businesses operating under an LLC is the tax benefits. Members can benefit from the protection of legal obligations related to their personal assets. This allows them to separate their personal assets from the business, which protects them if the business is sued, goes under, or faces litigation.

Flexibility

The owner of an LLC has the option to register their business as a partnership, S corporation, sole proprietorship, or corporation. This provides money-saving benefits to the business that best suits its needs. The flexibility in tax deductions for businesses also makes it appealing to choose an LLC as a business structure.

Here’s everything doola offers you to set up an LLC

Now that you know the benefits of having an LLC as a creator, let’s go over everything doola offers in their 5-click LLC setup.

Decide on a Name

Every company needs a name that not only reflects the personality of the company but also establishes brand equity. When choosing a company name, make sure it is simple, concise, inviting, and appealing. It’s a good idea to brainstorm the possibilities and decide based on company values and how to portray them clearly and effectively.

Assign a Registered Agent

To open an LLC for your creator business, you will need a registered agent who will act as your official point of contact to manage your legal documents, communication from the state, and service of process. Having a registered agent is a mandatory requirement for opening any corporation or LLC. The registered agent acts as a mediator between you, the secretary of state, and the receiver of any services of process in the event of a lawsuit.

A registered agent is required in all 50 states in the US; you need to have a registered agent. This can be the business owner, another member, or a third-party service. It can be tempting, particularly if the business is a small one, to simply name yourself as the registered agent, but this isn’t always the best move to make. Why?

There is nothing preventing the owner of the business from acting as the RA for the company, but it is not often the best idea. If you operate from home or a fixed address and keep regular hours then perhaps being the RA would fit in with your schedule.

But before you commit you need to ask yourself some questions:

• Am I tied to one location from 8 am until 5 pm, five days a week? This may not be a problem, but if you want the freedom to go out to business meetings, pick up inventory, and make sales calls you can’t stay in one place.

• Am I organized enough? Being an RA requires planning and efficiency; your business can’t afford to miss responding to litigation or tax payment deadlines. For some entrepreneurs, being organized is part of their skillset, but for others, it may be better to have someone else prompting you to make sure you’re ready.

• Does my business operate in several states? A business needs an RA in every state in which it trades. Many companies, especially when starting out, don’t have the resources to have multiple premises and the only cost-effective way to deal with the problem is to hire a registered agent service.

• Am I happy to use my home address? If you operate a web-based business or work from home you will have to use that address as your RA address. This raises privacy issues as the address is in the public domain and no one likes to open themselves up to more junk mail or people turning up unannounced.

• Do I have a reputation to protect? Should your business be involved in litigation, are you happy to have a court summons or legal notice served to you in your home or place of business? For some, this is just part of the job description, but many people would find this difficult and fear their reputation might be damaged. Having an RA service insulates you from this situation.

So should you be your own registered agent?

The answer to this question depends on individual circumstances. If you are operating on a tight budget and able to keep normal working hours in one location, and are organized enough to do the work required, and aren’t too worried about having your address in the public domain, then there is nothing to stop you from being your own RA. For example, a retail store owner would likely not have a problem being their own RA.

However, it may be that as the founder and leader, a business owner is better off concentrating on core issues, guiding the company in its growth and direction. Everyone in business values their time and often it is better for a business owner to use theirs to build and nurture the company and leave the work of an RA to a specialist.

Read more in this blog post: What is a Registered Agent & Should I Be My Own RA? – Find Out Now

File Your Articles of Organization

Articles of organization are part of a formal legal document used to form an LLC with the state. It collects information such as the name of the company, address, member information, and the business purpose of the LLC. This document also creates a binding legal obligation to the members of the LLC.

Create Your Operating Agreement

An operating agreement is similar to an article of organization. It adds legitimacy to a business in the form of documentation should the company be sued. An operating agreement also establishes an LLC’s management structure, operating procedures, and liability statements.

Get Your EIN Number

An Employer Identification Number (EIN) is a registered document that identifies your business to the Internal Revenue Service (IRS) for tax purposes. An EIN also allows your LLC to open a business bank account, which legitimizes your business as a whole.

Register Your Business

If you’re ready to register your LLC as a creator, doola has all the tools to help ensure a smooth transaction and clear up any confusing terminology. With doola, you can register for an EIN, map out an operating agreement, and assign a registered agent for your company — all in one place at an affordable price.

You can find more details on how to get started in under 10 minutes here.

Get started today at doola.com

Become a Creator with Your Own LLC

Being a creator can be an exciting business that offers many growth opportunities. But it can be quite confusing when it comes to forming an LLC if you want your business to thrive.

We want to save you the time and headaches of figuring out how to get your EIN, registered agent, or other necessary legal documents.

Everything you need to start your LLC is all right here.

doola will ensure a smooth ride when it comes to setting up your LLC—including all the support and tools available to you and guiding you forward to forming an LLC for your creator business.