How to Start a Fact Checking Business

Start a fact checking business by following these 10 steps:

1. Plan your Fact Checking Business
2. Form your Fact Checking Business into a Legal Entity
3. Register your Fact Checking Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Fact Checking Business
6. Get the Necessary Permits & Licenses for your Fact Checking Business
7. Get Fact Checking Business Insurance
8. Define your Fact Checking Business Brand
9. Create your Fact Checking Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your fact checking business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

What are the costs involved in opening a fact checking business?

Opening a fact-checking business doesn’t require a large initial investment — at least if you plan to do the work yourself. You just need a phone and a computer to get started. But, if you want to make more rapid progress, you may find it helpful to have skilled employees and/or partners to cover areas in which you lack expertise. You can only do so much on your own.

Keep in mind that while you may only need $2,000 or so to purchase your basic equipment like a laptop and phone, you’ll need a way to pay your bills while fact-checking. You can certainly work another job while you get started, but your progress will be slow.

What are the ongoing expenses for a fact checking business?

Fact-checking businesses' ongoing expenses can vary considerably, depending on each organization’s size and structure. If you and your employees all work from home, for example, you won’t need to pay for office space. Even if you do rent office space, you can expect your biggest costs to be labor-related. The average salary of an entry-level fact-checker is $30,000 to $35,000 per year.

Who is the target market?

Some fact-checking businesses seek to partner with media organizations, social media platforms, or government entities. Others aim for a direct relationship with the public. Before you get started, you’ll need to create a detailed business plan that establishes how you’ll fund your organization and make a profit if you plan to run a for-profit business. While fact-checking businesses can target multiple potential markets, it’s usually best to focus on just one as you get your business off of the ground.

How does a fact checking business make money?

Many fact-checking businesses operate as nonprofits and fund their operations through grants, endowments, and similar funding sources. But, some fact-checking organizations do operate as for-profit enterprises like Snopes and PolitiFact. Businesses like Snopes make much of their money from ad revenue generated by their websites. Because everyone knows they can go to Snopes to check facts, the business gets plenty of online traffic. That makes Snopes’ ad revenue a significant income generator. One other common way for fact-checking businesses to generate revenue is to partner with larger businesses interested in checking facts – like social media outlets.

How much can you charge customers?

There’s very little information available online about what smaller fact-checking organizations charge their customers. But, the larger organizations publish their earnings from one of the biggest customers in the industry: Facebook. According to the Columbia Journalism Review, Facebook paid Snopes $100,000 in 2017 and $406,000 in 2018. Facebook also paid $188,881 to FactCheck.org in 2018 and another $242,400 in 2019. While these figures may not help you determine what to charge your first client, they do give you an idea of what organizations at the top of this industry can earn.

How much profit can a fact checking business make?

Most fact-checking organizations operate as nonprofits because it’s difficult to make a lot of money fact-checking. If you choose to start a nonprofit because you have a passion for finding the truth, your main focus will involve finding funding for your work from various sources. As long as you can pay yourself and your team a living wage and keep the lights on, you’ll be doing well.

If you instead want to start a for-profit, fact-checking business, it’ll likely take time to start turning a profit. As noted above, the biggest names in fact-checking earn $100,000 to $400,000 per year from large, corporate clients.

How can you make your business more profitable?

The most direct way to boost the profitability of a fact-checking business is to build a stellar reputation. If your target market can identify you as a shining star of fact-checking, you'll be much more likely to secure clients and/or funding. Your target market also can have a significant impact on your profitability. Large corporate clients often pay more than you’d earn from advertising revenue, for example.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your fact checking business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

If you have a passion for facts and a willingness to conduct thorough research on a topic, you might be an ideal candidate to start a fact-checking business. Journalists or former journalists operate some fact-checking organizations while individuals with backgrounds in the social sciences run others. But, even if you don’t fit into either of these categories, nothing will prevent you from entering the fact-checking arena if you can contact experts, conduct research, and write detailed explanations of your findings.

What happens during a typical day at a fact checking business?

A typical day at a fact-checking business primarily focuses on research. Getting the facts straight takes considerable time and energy because you must identify potentially false claims, determine a plan of action to discover the truth, and then do the legwork to execute that plan. This may involve making multiple phone calls, conducting interviews with experts, pouring over data, and more. Then, once you have all of your information ready, you must write your argument for your readers.

What are some skills and experiences that will help you build a successful fact checking business?

Several skills can help you build a successful business as a fact-checker. First, you’ll need solid research skills — something an academic background or journalism experience can help provide. Strong interviewing skills also can prove useful. Thoroughly verifying facts on complex subjects often requires talking to experts so you’ll need to excel at finding and interviewing those experts. Finally, writing skills will help you present your arguments effectively in your writing.

What is the growth potential for a fact checking business?

While growth potential does exist for fact-checking businesses, the exact potential remains unclear. The number of fact-checking organizations grew by 26 percent from 2018 to 2019, according to Poynter. But, the rising number of these businesses doesn’t tell the whole story. While their number continues to increase, it’s still unclear how many will be able to fund their operations in the long term. Most operate as nonprofits because it’s challenging to generate significant revenue from fact-checking. It is possible, as Snopes and PolitiFact demonstrate, but not necessarily easy.