Digital media has changed hobbies into careers and dreams into businesses.
It’s a wild, fun, and rewarding ride. However, the transition from small-to-big-time often occurs to Creators quicker than they can adjust.
Taxes, incorporations, payroll: all complicated things that come with the territory of a making your YouTube operation into a legitimate business.
“Siri, What’s Incorporation?”
Basically, incorporation separates a business from its owner, which shields an owner from personal liability to the company. Additionally, incorporation allows for potentially big tax savings.
To summate it all, becoming incorporated makes all the costs of running a business worth it.
Am I ready?
So when do you know it’s time to take your business to the next level and incorporate? It’s a question we at Semaphore get all the time from Tubers.
Here are some things to consider:
- Income
As we all know, it doesn’t take one million subscribers to make money on YouTube. But until your channel is making $100,000-$150,000 annually, it’s difficult to justify incorporation. The costs involved with incorporation are difficult to substantiate until that threshold is met.
- Protecting Personal Assets
Do you like the things you own? Of course, you Instagram them all the time. When you’re not incorporated, your personal assets are at risk. Personal assets include your home, your car, your bank accounts, and more. If your operation sees rainy days, you could be sued for your own things. If you have liability concerns, you should incorporate as soon as possible.
- Tax Benefits
If you’re just beginning to consider incorporating, you may not have even thought of the tax benefits associated with this transition. When you incorporate, your business is assigned an Employee Identification Number, also commonly referred to as a federal tax ID. Simply, these enable you to hire people and open business bank accounts. You want those.
- Credibility
When incorporating a company, you legitimize your business and your channel. So when brands want to work with your channel, you will have already established a higher level of credibility than a sole proprietor just by being incorporated. When your business is a corporation or an LLC, it gives customers and partners a greater comfort thanks to the aura of credibility incorporation gives.
If you need more help understanding your taxes, please visit our live chat at our website (www.semaphoretax.com) to get in contact with one of our experienced tax professionals, or call us at 866-736-2444. We’re excited to hear from you!
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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor or tax advisor with respect to matters referenced in this post. Semaphore assumes no liability for actions taken in reliance upon the information contained herein.