What Type of Business Should I Form?

 

What Business Type Should I Form

If you’ve been blogging for any time, you’ve probably come across people who have talked about incorporating yourself/your blog.  Blogging as a business is not a new phenomenon.   Making money from blogging, however, is becoming a reality for more and more people.  As such, you may want to consider becoming a business.  Why, you ask?

Having a formal business structure offers a host of financial and legal advantages, as wel as a level of professionalism.  From being able to deduct legitimate expenses, building up Social Security credits, or even paying yourself a salary, a formal business structure can give your blogging a sense of legitimacy.

A formal business structure can also show brands and PR agencies that you are a real business not just a hobby. It also lends credibility to you and your information when approaching outsiders for sponsorships.  In addition, most business structures allow you to shift liability to your business and away from you personally.

While each state has its own laws, there are several basic structures you can choose for your blogging business.  The four main types of business structures are (1) sole proprietor, (2) corporation, (3) limited liability company or limited liability corporation (LLC), or (4) partnership.  Each has its benefits and drawbacks.  The best one, though, will depend on your specific circumstances.

Sole Proprietor

A sole proprietor is one person who owns a business.  Up until the 1980s, this was the only way one person could own a business if they did not want to go through the process of becoming a corporation.  Being a sole-proprietor does not require any type of special filing with your state.

In most cases you will not need to obtain a Federal Employer Identification Number (EIN), you will just use your social security number.  Although, using an EIN does mean that you don’t have to give out your social security number. And it also make you look more professional to outside ventures.  Some of the benefits include deducting legitimate business expenses, paying your kids, and using health care reimbursement arrangements.

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Sara