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Choice of Business Entity for Bloggers

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If you run your blog as a business, one of the important decisions you must make early on deals with choice of entity.  This is an important business decision for any business, not just bloggers, and it can affect how you are taxed and also your legal liability.

As a CPA, I do a lot of (legal) tax planning with my clients so that they can keep more of their hard earned money in their own pocket.  When I meet with people who are going to start a business or who have recently started a business, choice of entity is one of the most important issues that we discuss.

Although I am specifically referring to U.S. entities, some of the concepts discussed will also likely apply to entities in foreign jurisdictions as well.

I list below 5 of the most common business entities that you might consider for your blog.

  1. Sole Proprietorship

A sole proprietorship consists of an individual who runs an unincorporated trade or business.  This appears to be the form of entity most commonly used by bloggers.

A sole proprietorship is the easiest type of business to set up and manage.  Sole proprietors don’t have to file a separate entity tax return for federal income tax purposes, which may help minimize professional fees.

The big downside of using a sole proprietorship is that there is unlimited liability for all business actions and debts.  Having limited liability could sure come in handy if you were ever sued. One way to minimize liability while keeping the tax simplicity of a sole proprietorship is to form a single member LLC, which is discussed below.

  1. C Corporation

A C Corporation is an incorporated business entity with a legal status separate from that of its owners.  A shareholder’s liability is generally limited to his or her investment in the corporation.  Another advantage of a C Corporation is that it can raise capital by issuing stock.

The big disadvantage of a C Corporation is that it is subject to double taxation.  For federal income tax purposes, the corporation files Form 1120 and pays tax on company profits.  Any dividends paid to shareholders are also taxable to the shareholder, resulting in 2 layers of tax.

Many businesses today, including blogs, choose not to operate as a C Corporation because of the double taxation issue.  There are other legal entities that provide limited liability without subjecting the company and owners to double taxation.  Additionally, C Corporations tend to have high compliance and administrative burdens.

  1. S Corporation

Similar to a C Corporation, an S Corporation is an incorporated business entity with a legal status separate from that of its owners.  A shareholder’s liability is generally limited to his or her investment in the corporation.

However, for tax purposes, an S Corporation is treated as a pass through entity.  This means that there is generally no entity level tax (although there are exceptions), and all profits and losses flow through to the shareholders to be taxed at the shareholder level.  Shareholders are taxed on earnings even if no distributions are actually made.  Form 1120S is the federal income tax return filed for an S Corporation.

Unlike many other types of entities, there are very strict limitations and restrictions on the number of shareholders allowed, as well as on who can be a shareholder of an S Corporation.  If you violate these rules, you could lose your S Corp status, which could have disastrous consequences.

  1. Limited Liability Company

LLCs are hybrid entities that offer the legal protection of a corporation but the option to be taxed as a pass through entity (i.e. partnership or disregarded entity), meaning there is no double taxation.  The owners of an LLC are called “members.”

If an LLC has more than one member, it is generally taxed as a partnership.  If it only has one member, it is generally disregarded for federal income tax purposes (but not legal purposes) and taxed as a sole proprietorship.  Income is generally taxed directly to the member or members regardless of distributions.

  1. Partnership

A partnership is another type of pass through entity that has 2 or more owners.  There is no federal partnership level tax and all income flows through to the respective partners to be taxed at the partner level, regardless of what distributions have been made.  A partnership generally files Form 1065 for federal income tax purposes.

A general partner is generally liable for all partnership debt, whereas a limited partner’s liability is generally limited to his or her investment in the partnership.  There are a number of different types of partnerships.

Sole Proprietorships vs Single Member LLCs

If you run your blog as a business, you should consider an appropriate type of entity for your blog.  For blogs with only one owner, sole proprietorships and single member LLCs tend to be very common choices.

In general, a sole proprietorship is the most simple and least expensive type of entity.  It is very easy to create and terminate, but the owner generally has unlimited liability for all business actions and debts.

A sole proprietorship may be most appropriate where there is little risk associated with the business (or any risk may be hedged against with insurance), the business is just getting started, and profits are low or nonexistent.  It may not be the best choice if the nature of the business is hazardous.

Many businesses start as sole proprietorships, but then convert to an LLC or other type of entity later on once they have grown or their needs have changed.

A single member LLC may be a little more burdensome to set up and maintain, but it generally provides much more legal protection than a sole proprietorship.

Neither has the disadvantage of double taxation or requires the filing of a separate federal income tax return.

Disclaimer:  The above article is provided for informational purposes only and should not be interpreted as professional financial, legal, or tax advice.  The issues involved in choosing an appropriate business entity are complex and this article by no means captures all of them.  Additionally, certain laws vary from state to state, so it’s important to obtain appropriate legal and tax advice for your specific situation.

This post was written by LD, a CPA and CFP® who blogs at Personal Finance Insider.  You can find out more about LD and sign up for his free personal finance e-lessons (covering all of the major topics in a good personal financial plan) here.

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My name is Foxy, and my job is to sniff out the good guest bloggers from the ones who aren't. This post was written by a contributing author to Blogging Tips. If you would like to learn more about becoming a writer (not one-time guest blogging) for BloggingTips.com, please contact us.

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Blogging

How Can You Start Blogging for Free?

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Impossible.

Blogging requires:

  • financial investment; domain and hosting at a minimum
  • time investment
  • energy investment

Blogging is a skill. You invest money to begin developing the skill effectively. Add time and energy through your blogging work and you lay the foundation for a successful blogging career.

You cannot start blogging for free because without financial investment you are not really blogging.

Imagine starting a blog on a free platform.

How can you ever impress people if you fear investing $7 a month on hosting and $14 on a domain?

People see the free platform, believe you to be an amateur, you lose your credibility as potential readers do not trust you, and folks exit your blog.

Investing Money to Make Money

Observe my blog:

Blogging From Paradise

I invested thousands of dollars in my blog over the years and made a lot more money than thousands of dollars.

I bought my domain and hosting 10 years ago as an investment in freedom and greater profits.

Fast forward a decade; I have circled the globe for 8 years, living in places like Fiji, Bali and Costa Rica. The thousands of dollars I invested allowed me to:

  • gain reader trust
  • convey a professional brand image
  • be seen as one of the top bloggers on earth
  • increase blog traffic
  • increase eBook sales, course sales and audio book sales
  • be featured on world famous sites
  • move higher in blogging circles

Imagine if I began blogging for free. Would Fox News want to interview a blogger using a free blogging platform? No. Of course Fox News seeks out renowned leaders and every blogging leader invests money in blogging to do blogging right.

Free Platforms Look Cheap and Unprofessional

Free blogging platforms look terrible.

Can you ever gain reader trust if your blog looks terrible?

Observe the long, wordy, non-branded domain name, including the free hosting company. Imagine if cnn.com was cnn.blogspot.com? Would you trust CNN if the corporation used a free blogging platform? No.

This is from my trip to Turkey.

Imagine if espn.com was espn.typepad.com. Would you trust the content? No.

Even if you intend to never profit through your blog you better buy your domain and hosting because few if any readers trust bloggers on free platforms.

How to Begin a Blog the Right Way

Invest money in:

Invest money in your success.

Begin blogging the right way to cut years off of:

  • your learning curve
  • your success curve

Money circulates; invest money today and it flows back to you multiplied exponentially.

Losing or spending money is impossible in a Universe of abundance.

Develop this prosperity consciousness to begin blogging from an abundant, successful, positive energy.

Develop a Money Consciousness to Make Money with Your Blog

The old saying goes; it takes money to make money.

I take it one step further; it takes a money consciousness to make money.

A high number of bloggers invest money in their blog but struggle to make money. Said bloggers believe they spent or lost money on their blog, which is not true.

Develop a money consciousness.  It takes a money consciousness to make money with your blog, meaning you need believe money circulates, as you release money and it returns to you multiplied in awesome fashion.

I discovered 2 unknown, unexpected income streams recently, both online. Why? I circulate money. I see any investment in my blog, in bills or in anything, flowing back to me multiplied.

Develop this positive, abundant mindset.

Invest money in your blog from day 1.

Begin blogging the right way.

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Blogging

How to Build Brand Authenticity Using Customer Generated Content

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Creating quality content is the best thing someone can ever do for their company. When done right, it generates a lot of traffic towards the website thus giving a high likelihood of converting the followers into leads. Unfortunately, quality content is expensive and can use up a lot of money, time, and very exhaustive.

Fortunately for us, there is another way to get quality content without having to go through all this hustle. When you make use of this strategy, it will turn out to be more powerful and accurate than other cumbersome methods. This solution is known as User Generated Content (UGC) since it is one of the simplest way to get results without getting tired.

What is the significance of UGC?

The moment you make use of content generated by customers, you automatically create trust with other customers. This is because more than 80% of consumers find content generated by their fellow customers to be convincing and true than what the brands can write about themselves. The assumption is that no one will ever write negatives about themselves unless third parties take over.

UGC is the most authentic type of content as 98% of it is true since customers have no interests in the customers creating profits. If something is bad, they will write it as it is. The reverse is also true. It is therefore recommendable to spend more time curating on the content written by consumers rather than the company itself. You can also use a tool like keyword.com to better create content for your audience and to also rank higher in Google for multiple keywords and search phrases.

The other advantage of UGC is the ability to track all the conversations and mentions. This mostly helps by finding out what the customers think about your services and products. In case of any problem, you can address the same issue. You are allowed to comment on the same wall towards their plights.

The other advantage is to help a company in saving time meant to write content. This time can be allocated to other issues that help in accumulating profits for the business.

Ways to Build an Effective UCG Marketing Strategy

1 – Choose your platform wisely

You do not just create a CGC in any area. The first thing is to ensure that you have a good number of active followers in online platforms. In addition to this, remember that each platform works differently; Facebook users are known for sharing content whereas Instagram is more of visuals. When you ask people for content, remember to be specific with what you want since a lot of us are ready to talk about anything we wish.

2 – Collect independent customer reviews

Customers’ reviews are very vital to any business as they act as personal recommendations to other people who are yet to try your brand. In fact, a lot of people prefer to read a number of reviews before making a conclusion on whether to buy or not. If someone comes across two or more negative comments, a good number will pull away from your page. Remember that savvy customers will always spot fake reviews hence the more reason to stick to authentic customers. The only way to win their hearts is by offering what you promised in the first place.

3 – Offer rewards

There is nothing as encouraging as being rewarded for doing something. Offering rewards attracts a lot of people towards your page as everyone is eager to get something. Don’t try too hard by getting expensive gifts. You can promise that a winner will have their tweets retweeted or you feature their article or business on your page. Not only will they feel happy that they are part of your success but will also attract new users to subscribe.

Neil Patel is often preaching about the process of offering rewards and getting users to submit an email address on your site — which you can then follow up with afterwards. You can read more on Neil and his most recent resources in this article from webdesignteam.com.

4 – Support a charity event

You need to remind your customers that your brand is not after making profits but rather in helping the community in different events such as acts of charity. Let people know that you have a greater vision for them too.

Online platforms can either break or boost your business. This is because a lot of people have turned to recommendation on social media by strangers or friends. If you want better reviews, ensure that your products are quality and services are up to standard.

User Generation Content is the Way to Go!

With more than a billion active websites and blogs on the internet today, content overload is happening daily. The same is true for brands and bloggers that are struggling to create original content on their own.

The better option is to build a platform or content creation and marketing plan that relies on content being created from other users. After all, how much content has Facebook or Instagram ever made… and look at how huge and massive their brands are!

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Blogging

Be Careful Who You Ask for Blogging Advice

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I retired to a life of travel through blogging.

Do you want to travel the world through blogging?

Invest in my blogging eBook.

My eBook lays out simple, step by step tips to follow for you to travel the world through blogging.

I know how to do it. I teach you how to do it. Easy. Simple. Smart, too; you ask a blogger who lives their dreams for blogging advice on how to live your dreams.

Imagine if you asked people from a blogging tips themed Facebook Group about how to travel the world through blogging? Who are these people? Do these bloggers know specifically how to retire to a life of travel through blogging? Have these bloggers written eBooks and created courses on the topic? Have they lived their dreams?

What ensures said bloggers offer good advice?

Do many of these bloggers offer terrible advice?

Are many of these bloggers experienced, skilled, knowledgeable bloggers, being tops in their niche, like me?

Most bloggers mean well. Some bloggers offer solid advice.

But many bloggers offer terrible advice to struggling new bloggers who follow terrible advice and all of them struggle horribly, following bad advice from bloggers who only know how to fail, versus knowing how to succeed.

Be careful who you trust.

How to Get the Best Blogging Advice on Earth

Follow the top blogging tips bloggers.

Invest money in their courses.

Hire them to coach you.

The best blogging advice on earth flows through premium blogging products and services created by the top bloggers on earth.

100% of the time, following this advice leads to success. Fool proof way to get only good advice because pros teach folks how to be pros.

The only reason why you’d get bad blogging advice is if you follow anybody other than the top blogging tips bloggers on earth.

Beware Free Advice Because it is Often Cheap

Free advice sites like Quora and Facebook Groups require no vetting.

Any blogger can offer terrible advice.

This was from my trip to Fiji.

Beware trusting advice from these spots; well-meaning bloggers often guarantee your struggles by offering failing, inexperienced, terrible advice.

Vet Bloggers Who Offer Advice

Gaurav Kumar offered excellent advice via a comment responding to my live Facebook Broadcast.

If you wanted to vet his advice, checking his Facebook profile and clicking on his eAskme blog link immediately proves he is a top blogger who offers sensational advice for succeeding.

Following blogs, investing in eBooks and hiring bloggers by scanning their blogs is the easiest way to:

  • vet advice
  • trust advice
  • get awesome advice
  • accelerate your blogging success

Research bloggers who offer advice on free forums. Some genuinely offer success-promoting advice through their blogs. Trust said bloggers.

If you click through to see no blog, or a blog hosted on a free platform, or thin, weak content, beware these red flags.

Follow advice only from top bloggers who put their advice in action and succeed from an abundant, generous, calm, confident vibe.

Go to the Top

Follow only the top blogging tips bloggers on earth to get the best blogging tips and to accelerate your blogging success.

Matthew Loomis at Build Your Own Blog offers success-promoting advice. Follow him. Hire him. Succeed.

Why spend hours asking for advice from folks who may or may not have any idea what they are talking about?

Go to the top.

Google popular search terms, vet guest posters on Blogging Tips, follow the best, get the best advice on earth, use the advice, succeed.

Blogging gets easier and easier when you only follow the top bloggers on earth and invest in their premium offerings because getting the best advice from the best bloggers positions you to be the best.

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