Part One
*The information below is not legal advice. To procure legal advice, become a Legalpreneur Member*
Content creators, you are more than just an artist. You are a business, even if you think it’s just a hobby or side-hustle, and a lucrative one at that. And it’s time you take the right steps to secure your assets and grow your business.
Here’s why: in a market where brand-identity continues to secure its spot as a top-shelf strategy for big and small businesses alike, content marketing persistently surpasses trend-status into the realm of best-practice. In fact, in a survey conducted last year, two-thirds of content marketers planned to expand their budget in 2022. What’s more, with the Great Resignation — where many individuals have left their traditional careers for autonomy, creativity, and freedom from toxic corporate culture — the small business sector has welcomed throngs of members seeking the entrepreneur life.
The synthesis of these factors means that — in the SEO-speaking, competition-heavy, world-wide-social-web of brand identity—content creators will continue to be a premium and relevant asset for any business that stands a chance. Spelling it out, content creators are and will continue to be vital to the marketplace as content marketing sees an upward growth—not just currently but in the foreseeable future. Therefore, content creators should capitalize on this potential now. Even if you have a corporate job, the market, at this time, offers opportunities to grow your potential through freelancing, exposing you to various industries that are hungry for your talents. This, in turn, expands your portfolio and net worth.
If you decide to pursue these opportunities, you should strongly consider legally protecting your work (business). For those of you who already freelance and have a business, the same applies to you: it is crucial that you legally protect this business.
That’s where we come in. As promised, we are going to walk you through some steps to consider as you go through the process of turning your idea of freelancing into a legally protected business. Generally this is a four step process, and includes:
- Establishing your business as an LLC for personal liability protection
- Staying legally compliant
- Covering your business with contracts
- Protecting your intellectual property
First things first, we want to acknowledge what some of you may be thinking: this looks like a lot of work, Legalpreneur. True. It’s a lot of work, but we’ve done most of it for you. And since when is hard work an excuse to abandon your goals or your business?
At Legalpreneur, we believe the world needs to see your work. It’s why we exist. We are here to support your business by handling the daunting legal stuff, so you can focus on your purpose. If you are worried about time and the process, we encourage you to partner with us so that way we can intercede and help you realize your vision. In the meantime, here is the content creator’s blueprint to legal:
1. Establish your business as a Limited Liability Company: Let’s make you official — from an idea to a business, by establishing your business as a Limited Liability Company.
What is an LLC?
There are several business structures you can operate under, and an LLC is one of those options. It’s typically the legal entity we recommend for content creators because it includes some of the asset protection given to corporations, without the complex paperwork and upkeep. Unlike a sole proprietorship, LLC’s shield the owner’s personal assets from business debts. For tax purposes, a one-member LLC is typically seen as a “disregarded entity” unless otherwise classified by the member (read here for LLC classifications). This means that the activities of the LLC, under these circumstances, would be reported on the owner’s federal tax return. However, as mentioned, unlike a sole proprietorship, in terms of liability, the member is not held personally liable for business debts/judgments—notwithstanding some crucial factors we will cover later. Rather, the LLC bears the liability if measures are in place to ensure the business is compliant as an LLC status.
Why should you consider forming an LLC?
The main reason (and an important one) to do this is to protect yourself from personal liability. The great advantage of an LLC, unlike a sole proprietorship, is that it draws a bold line between the business and the owner when it comes to liability. Put plainly, it shields your personal assets from business debts and judgments. Here’s an example to show what we mean:
Brenda loves knitting. So much so, that she started knitting sweaters, scarves and other gifts for her friends and family. Soon, people started requesting custom items, so she turned her hobby into a side hustle and launched an Etsy store. Busy Brenda never thought about the legal aspect of her business, because really it was just a hobby. All of her payouts went into her personal checking account, and she used her personal assets to pay for all inventory related purchases.
One day, Brenda received a letter in the mail. She was being sued by a customer, who had purchased a sweater that ended up catching fire when she was cooking. The client was suing for damages. What Brenda didn’t realize was, because she didn’t file a separate legal entity for her business, she was not at risk of losing her home and her other personal assets, including her car, her summer home, and her savings.
If Brenda had established an LLC, the client could not come after Brenda’s personal assets. Instead, the client would be limited to the assets within Brenda’s business (i.e., yarn, knitting needles, etc.).
Because having an LLC or not can mean the difference between forfeiting your business tools vs. a home, we absolutely recommend that you consider filing one immediately. Visit your state’s Secretary of State (SOS) website to learn how you can get started on this process. Because we know that time is money, and that your time is precious, our LLC filing services make the LLC setup process seamless for busy content creators like you.
Okay, Legalprenuer, get an LLC for my business; got it. Is that all I need to do?
Mmmm, no. In Part two, we will touch on how to ensure your LLC is maintained,so you, personally, can be protected from business debts.
For more resources on legal protection for your business, make sure to subscribe to The Legalpreneur Podcast.