Should You Form An LLC For Your Podcast?

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(By Shawn Yesner) A limited liability company (LLC) is a type of entity that limits the liability of its owners. The LLC is a contractual relationship between the owners and the company, called an Operating Agreement (the corporation equivalent of bylaws), that governs the relationship between the owners and the company. If the Operating Agreement fails to consider a certain situation, then the statutes of the State where the LLC is formed will control the relationship. The LLC is formed by filing Articles of Organization (the corporate equivalent of Articles of Incorporation) with the Secretary of State.   An LLC has members (i.e. owners) and in most states can have managers (i.e. a Board of Directors or Board of Managers) and, in Florida can have Authorized Persons or Representatives – non-owners or managers authorized by the company to take certain actions, like setting up bank accounts, signing contracts, etc.

The biggest advantage of an LLC may be its income tax treatment. Different than a corporation where profits are taxed at the corporate level and then taxed again when distributed to the owners as dividends, the LLC is a “disregarded entity” for tax purposes, meaning all of the income and expenses of the LLC flows directly to the owner’s tax return – the LLC does not have to file an income tax return, except under certain circumstances (I am not a CPA so please check with your CPA or tax advisor for the specific income tax pros and cons of forming an LLC). If the LLC has multiple members, then each member receives a K-1 (similar to a partnership) to report income or loss for the year.

Now that you’ve started your podcast; should you start an LLC to “own” the podcast? Of course, my official legal advice is to consult with a local attorney to review the particular facts and circumstances of your situation, but here are a few of my thoughts:

Is your podcast to support your business (like mine) or is it a “side-hustle” or “passion project?” If the former, then an LLC may be unnecessary because, like me, anything the podcast could do to create liability would fall under the umbrella of my law firm. If the latter, then if there is any liability (like you gave bad advice in a blog post) that may flow to you individually absent an LLC.

Do you monetize your show? If yes, then consider an LLC for the tax advantages.   If no, then you may be able to skip an LLC (for now).

Do you have a co-host or a podcast network?   If so, then you may want to consider an LLC to govern the relationship between you and your co-host or network (via the Operating Agreement). If you’re a solo host, then this aspect of the analysis would be inapplicable.

Some people like forming their LLC in Nevada or Delaware or another state because of the anonymity to the owners provided by the laws of those states. To host a podcast, anonymity of the owner may be unnecessary. You also need to consider that to “do business” in a state, you may need to register in that state. For example, suppose I form a Delaware LLC but decide to sue someone here in Florida for something related to my show. Florida may not allow me to maintain that lawsuit without also registering the LLC in Florida thus making moot the anonymity provided by Delaware.

Finally, the age of your show may dictate whether you form an LLC. If your show is just launched, placing it within the ownership of an LLC may be overkill – since your state of registration likely has fees associated with forming and maintaining the LLC which adds to the costs of production.   If your show has a significant number of episodes, or listeners / subscribers / downloads, then using the LLC to protect it may be in your best interest.

Obviously, there are many factors to consider in determining whether to protect your podcast with a business entity like an LLC.   The best advice is to consult a local attorney in your state and review all of these, and any other relevant factors, before deciding to form a company to protect you or your show.

Shawn M. Yesner is the founder and owner of Yesner Law, P.L., and an attorney in Tampa, FL. Shawn hosts The Crushing Debt podcast, which supports the purpose of the law firm – to eliminate financial bullies from your life.

 

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