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.
- 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.
- 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.
- 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.
- 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.
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.
How to Develop Super Human Confidence in Your Blog
Baby steps, my Young Blogging Padawans.
New bloggers, baby step your way to being super human confident in your blog. Being wracked by doubt, with a little wild excitement mixed in, you cannot gain unreal confidence in your blog today. But slowly and steadily gaining clarity gives you the foundation upon which to become a highly successful blogger who feels bold, knowing your blog rocks.
I am about super human confident in my blog. I am developing the same level of confidence in my eBooks and courses, too. Why? Believing in my blog and premium offerings helps me to help more people and I also make more money too, which is neat, considering I live a worldly life.
Follow these tips.
1: Feel and Release Fears-Doubts Aligned with Your Blog
Before you become confident, you need to purge any lack of confidence. I know this feels bad but tis a necessary step to become super duper confident in your blog and in your premium offerings, too. Sit with doubts, those nasty traitors. Be with your fears about self, your writing ability and your blog presentation. Feel these unpleasant energies. Clear the energies. Proceed from a clearer, more confident, space. Confidence is borne of clearing a lack of confidence. Do messy energy work to become uber confident in your blog and in your blogging abilities.
2: Surround Yourself with Loving Bloggers
Loving, caring, compassionate bloggers see brilliance in you when you cannot seem to see it in yourself. Although all confidence issues flow inside-out, you need a network of supportive people around you who believe in you, versus being around haters or negative nellies. Never, ever, ever surround yourself with poverty conscious, failure conscious bloggers. Are you running a cyber charity? Are you a therapist? No! Negative people stuck in fear and failure throw negative cross currents into your being, shaking your already fragile confidence in your blog.
Hang with folks who believe in you and who believe in your blog. Pros share where and how you can improve but they always believe in someone who follows their dreams, and will instill that faith in you, and in your blog, too.
3: Write Your Butt Off and Publish Content Like the Dickens
Writing and publishing content is like breathing to me. I do not lose confidence in my ability to breathe because this is an automatic, auto-pilot, process. I just breathe without thinking about it. Ditto for writing and blogging. I wrote and blogged for 20,000 to 30,000 hours so now it is an automatic, easy process I have super human confidence in. I do not even think about it because I do it routinely, automatically, on a type of auto-pilot borne of making writing and blogging a habit.
If someone criticizes my blog, it is like someone criticizing my breathing; sounds weird, or funny, but it stirs me not, because I have equal confidence in each.
4: Do Energy Work
I do not play around; 3-4 hours of energy work daily allowed me to face, feel and release blog doubts, to become the clear, confident blogger I am today. Consider meditating, or doing yin yoga, or doing Kriya yoga, and power walking. Or do it all. I spend 3-4 hours doing each – collectively – daily, to expand my awareness so I can feel and clear doubts and so I can blog mainly from an abundant, generous, relaxed, detached vibe.
Be confident guys. Believe in your blog. Follow these 4 tips to succeed and to become super human confident in your blog.
Should You Search for New Blogging Niche Ideas?
Ask yourself that question and you will get an answer that best suits you.
I went with the blogging tips niche for people who want to circle the globe. But I did not go for this niche to be new, edgy or different. I had lived that life for many years. This made sense for me. I was being genuine, honest and as authentic as one can be. Perfect match. But if I chose a new niche from an energy solely of financial gain, being popular or some other fear-based driver, I would have fallen flat on my blogging face.
Why would you ask someone for new niche ideas? What is the energy or intent there? Do you want the fast track to success? Or are you in a creative space, wishing to do something different? I see searching for new blogging niches as being a waste of time considering the endless, established niches we already have at our disposal. Why waste time and energy searching for some niche if you have all the niches you need right before your cyber eyes? Toss in the fact that you need to research the niche inside-out if you have no prior knowledge and you invest a significant amount of time just to get the blog off of the ground. Makes no sense to me.
What do you love talking about? What is your biggest passion? Start there. Select that niche. You already have an ample supply of information in your noggin and the confidence to discuss the niche in clear, cogent fashion. Who cares if the niche is new or old? The blogging tips niche – my main niche – has been around for a few decades. Who cares? There is nothing new under the sun blogging-wise but thousands of new bloggers join our ranks daily. I also find that I seem to be converting people to blogging the more I persist in creating and connecting, keeping at this gig, being present, helping spread awareness about a pretty cool blogging niche, and, about a pretty cool way to help people and to free yourself.
Go with What You Know
When it comes to picking a blogging niche, go with what you know. Pick a niche inside of your blogging and knowledge wheelhouse because being armed with knowledge, experience, and a pulsating passion for discussing the niche makes you stand out from the blogging crowd in a major league way. I created this blogging course in under a day. Imagine that? 6 hours of recordings and oodles of blogging knowledge, packaged into a course that I created in under 24 hours. Imagine how much I needed to know about blogging and how confident and clear I had to be in myself, to ship in 24 hours? I go with what I know; sure doesn’t hurt me.
But when you pick a new blogging niche you have no knowledge of, it takes you 2 months to create and ship the course. Not good. There is the quick, and the dead, in the blogging world. We need be patient, persistent and generous to succeed online but in the same regard, adding years to your learning curve by deviating from what you know is a foolish blogging idea. Why? Go with what you know to prosper mightily over the long haul and to hit the ground running.
But Is It Worth the Time?
One of my favorite check up blogging activities involves asking if some blogging action is worth the time. Someone may ask me to do something to benefit them. Sometimes, I do it. But often, it is not worth the time I would put into the action. Why? My time is precious. All time is precious. Thinking how a specific action leverages your presence in a specific amount of time gives you clarity in making a decision.
Someone may ask me to guest post on a blog completely out of my niche. Is it worth the time? Almost always, nope. But even if I do it once I likely never do it again because I only have so much time daily to work with, and I cannot spend 1 second trying to connect with an audience who has zero interest in what I have to offer. Just my gig. I have too much to do daily, to do anything otherwise. The secret for any new blogger is to learn this time posture tip and to put it into action before your schedule gets filled with clients and speaking to customers and creating and connecting. New bloggers believe they possess all the time in the world but this ain’t true. New bloggers need be as ruthless with their time or else other people will trample all over their time.
Imagine if someone asks you to self-publish an eBook on an unknown platform because the person enjoys reading eBooks on the platform. Would it be worth the 3 hours it took to write and proofread and ship the eBook to put it on a platform for one person? Nope. Waste of time. But you would be surprised at how many new bloggers or struggling bloggers make this foolish decision, choosing to waste their time for one person with weird, exotic tastes. What WOULD be worth your time? Write the eBook, self-publish on Amazon and gain access to an audience of hundreds of millions of people. This is smart use of your time because 3 hours of work gives you access to millions of people. Do you see why I promote my Amazon eBooks all day long?
Speaking of, buy my eBook:
because this read melds perfectly with the topic of this blog post. We need turn down or release certain online partnerships that do not resonate with our blog, brand, schedule and overall energy. I released a few of these over the years because I was not resonant with the gig. Accepting out of a sense of guilt, or, loss of opportunity-money, would have completely wasted my time. I would have needed to own that one, big time, because if you say “yes” to an opportunity you do not vibe with, you waste time every split second you engage with the business partner, or, in the business opportunity itself.
Check your value filter. What do you most value? Before you do anything with your blog, ensure this activity aligns with your values. I value writing to help people, I value promoting my eBooks and I value promoting my course, too. Which is why you see me guest posting here and on a gazillion other blogs while publishing 5 or more posts to Blogging From Paradise these days. I spend time on what I value to help more folks, to succeed and to have fun enjoying the ride.
Do the same before you decide to engage in any blogging activity.
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