Blogging is a Business – Should you Incorporate?

I have been very fortunate most of my blogging life – most clients that I’ve worked with are usually happy with my services. But there have been a couple of instances where I’ve dropped the ball on an assignment, especially during an extremely busy month. As a result, I took far longer than usual to complete an assignment and because of it I had to talk a client off the ledge – that is, out of demanding all of her money back.

What would’ve happened if I hadn’t succeeded and refused return the money? After all, I had done the work and the problem only arose when the client attempted to make changes and threw some things out of whack. I had kindly agreed to fix the problem free of charge, even though it was not my fault, but due to the holidays and some other crazy-business, I had forgotten and several months passed without me even realizing.

The client contacted me with a furious message and wanted me to refund all of the fees. I wasn’t going to do that. I knew that saying no wouldn’t be well received. The only thing I was willing to do, was honor my promise to fix the issue. Fortunately, the client accepted and everything was wrapped up rather quickly.

But if I hadn’t succeeded and that client decided to sue me at that time, and had I lost, I could’ve ended up forking over thousands more dollars straight out of my own personal assets. I hadn’t incorporated my business, I didn’t feel like I needed to.

You may have started your blog as a hobby or you may have started with the intent of making money – regardless of your reasons, at some point, if you’re earning a taxable income from blogging you will have to answer the question: should you incorporate?

Even if you don’t think what you’re doing is that serious and you’re not sure you’ll continue, the truth is: if you’re bringing in an income from articles you write, ebooks you sell or other products and services, you might want to seriously thinking about starting the incorporation process.

Here’s why:

Unhappy clients or customers could ruin your life! If you’re sued by a client and you haven’t incorporated your business, they could sue you as an individual and you could end up paying thousands of dollars out of your personal finances. If you had incorporated, it would protect your personal assets – in other words, only your business assets would be affected.

There are other benefits of incorporating such as paying less taxes (business instead of self-employment) and because your business assets will be separate from your personal assets, that includes credit – you could open up a line of credit for your business.

You might want to consider incorporating as an LLC

There are other business models to choose from, but the simplest way to protect yourself could be by starting up as a Limited Liability Corporation.

According to a post on the Shopify Blog:

LLCs can differ from one state to another, but generally speaking they are a hybrid business structure, combining the ease of a partnership with the liability protection found in corporations. Owners, frequently called members, pay taxes on the LLCs profits directly and the LLC itself does not file taxes as a separate legal entity. LLCs require a lot less record keeping than corporations do, provide some protection for the member’s personal property, and are burdened with fewer profit sharing requirements than corporations.

Since details can vary from state to state, it really is best to start by contacting your state business filing department. Fees may be involved, but they are usually less than $200 if you file yourself. Some states even offer filing services online, so the process is becoming easier and easier.

Don’t wait until something happens, take steps to get incorporated as soon as you start generating an income.

PerOla Hammar 陈家悦
Father of 2. Marketing, sales & web geek who is open-minded & eager to learn. Experienced a lot in the past years, both good and bad. Lesson learned? LIVE LIFE!