💸 How To Set Up Your Streaming Business
Getting your business legally registered can seem daunting, but once you get a feel for the basics and get the right help in managing it, it becomes like any other task. If you've been meaning to tackle this topic but have been putting it off because it seems too complex, read through some of this information so you can start to process it.
This is just a general overview and I strongly recommend talking to a lawyer or accountant about your particular situation, but here are some of the most common business types in the US that creators set up:
1. Sole Proprietorship
I'll go over each one to provide some general guidance so you can be better informed once you start to set up your operation.
This is the most common option for creators who are just starting out since it requires no legal setup. In fact, if you file your taxes as an independent contractor, then you're already a sole proprietor. In a sole proprietorship, there is no legal distinction between the business entity and the owner. As such, the biggest downside to being a sole proprietor is that you will have unlimited personal liability, meaning any debt you take on for the business or any legal troubles will ultimately fall on you.
LLC stands for limited liability corporation, and as the name implies, separates the owner from certain business liabilities (unlike the sole proprietorship). However, it also comes with increased setup fees and annual franchise taxes (this can vary by state). As a sole proprietor, you have two options: either register for an LLC and then an S-Corp as your streaming income increases, or hold out until you're making a certain amount of income to jump from sole proprietorship to an S-Corp directly. The latter will likely save you money, but it'll also leave you exposed in terms of liability.
An S-Corp is a small corporation and provides more tax benefits than an LLC (in addition to the limited liability). Predictably, since it saves you more on taxes AND provides limited liability, it's also more costly to set up and run in terms of time and money. In addition to increased annual fees, you're also likely going to need some outside help managing it correctly, so it's wise to not rush into this one. Generally speaking, it's good to begin considering an S-Corp once you start getting close to making six figures.
Again, this overview is only intended to help provide you with a starting place for your planning. I still recommend talking to a legal or tax professional about your unique situation since costs and liability can vary by state and country.
I hear a ton of questions around this topic from new streamers, and if you're looking for support don't hesitate to drop us a line on Discord!