How to Start a Live Streaming Business

Start a live streaming business by following these 10 steps:

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

We have put together this simple guide to starting your live streaming 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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Live Streaming Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a live streaming business?

A high-speed Internet connection costs about US$50 to $100 per month. You will also need a gaming computer for about $1,000, with a high-resolution monitor(s) that costs around $350 each and game players with controls (Xbox, Wii, Sony PlayStation) for each type of game you want to play, which are around $300 to $400 each.

There is a 30-day free trial for Twitch.TV and after that, there is a monthly subscription fee of $5.99 to $10.99 per month depending on the features desired.

What are the ongoing expenses for a live streaming business?

The ongoing expenses are a high-speed Internet connection, updating gaming equipment and a computer with a high-resolution monitor(s), and buying the games (although sponsored streamers can get games for free). This is about fifty to several hundred dollars per month.

Popular streamers also typically hire one or more assistants to help manage the workflow of communicating with fans, talking with sponsors, updating website information, setting up paid appearances, and organizing attendance at conventions and gaming tournaments. Assistants make about $250 per week for part-time help.

Who is the target market?

The customers are video game enthusiasts who want to learn how to become better players by watching how professionals play certain games.

How does a live streaming business make money?

The revenues come from advertisements, profit-sharing from channel subscription fees, sponsorship, in-person appearances at events, and earnings from winning game tournaments.

How much can you charge customers?

Streamers who have enough followers to qualify as partners are allowed to have a subscription button on their individualized web page within the streaming system. Subscribers to their streaming channel pay a monthly fee of $4.99 for that certain channel and get to have special features as well. Around 50% of the $4.99 goes to Twitch.TV, while the other 50% is paid to the streamer.

Viewers can also give donations to the streamers they like. Streamers who are top-rated, with lots of followers, can get fees from sponsorship just like professional sports players.

How much profit can a live streaming business make?

Professional streamers, who have enough subscribers (500+) to become partners, make US$3,000 to US$5,000 per month for full-time streaming. This means playing at least 40 hours each week. Additionally, they earn a portion of the advertising revenues which equates to about $250 per 100 subscribers for each month. The highest paid and most popular streamers make over $300,000 per year.

How can you make your business more profitable?

In addition to having a streaming presence, it is important to create a following by posting videos on a YouTube channel. There are two video gamers in the top ten YouTube channels and they earn millions of dollars per year. Here are the latest figures reported by Forbes of the top ten highest paid YouTubers that are also gamers (at least part-time):

Mark Fischbach who goes by the name Markiplier on YouTube brought home a cool US$5.5 million during 2016 for his video commentaries on video games, along with his other eclectic content.

The Swedish PewDiePie who shows video snippets of himself playing video games and his comedic sketches was the top earner on YouTube during 2016 with an astounding US$15 million in revenues. He had over 13 billion views on YouTube during 2016 and lots of profits from his best-selling book, entitled “This Book Loves You.” He also promotes mobile games. His latest game is “Tuber Simulator.” It is the number one mobile game app in the Apple app store. It was so popular it crashed the servers due to the excessive demand.

Streamers who also become YouTube celebrities can make a lot of money from advertisements, sponsorship, endorsements, public appearances, and winnings in professional gaming tournaments.

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 live streaming 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.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a Live Streaming business

• Check with your town, city or county clerk’s office
• Review Federal and State licenses and permits on the U.S. Small Business Administrative website.

Intellectual Property Agreement

This live streaming company will operate through a partnership with a larger streaming platform which initially requires a prerequisite membership account to be able to post live streams.

• By agreeing to the Terms and conditions of the Streaming Site (I.E Twitch), you are agreeing to allowing users to view your intellectual property (Live Stream) even after the time that you post it.
• Once the Partnership is established, this agreement holds a higher priority due to money being exchanged for a advertising space on the page where the video meets a minimum average number of viewers.

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?

One prerequisite for a successful live streaming business is to have top-level gaming skills in order to gain a following of viewers who will take time out of their day to watch and learn gaming styles from the streamer.

What happens during a typical day at a live streaming business?

Each day a professional streamer needs to answer the comments and emails from fans and make updates on Twitter. Then, the streamer needs to update news and perhaps make a posting of previous game play on social media. After this, the streamer plays video games live for the audience to watch according to a preannounced schedule. The streamer may play continuously for many hours (up to 18 hours in a row).

The average gaming session is at least four hours long. It is best to play continuously to keep viewers interested and take as little time out for intermissions as possible. The most popular streamers usually eat and go to the bathroom without stopping the gameplay. The typical times of day for gameplay start in the afternoon and continue until late at night or even until the next morning.

What are some skills and experiences that will help you build a successful live streaming business?

The ability to play the video games extremely well is critical, along with the ability to make interesting comments that keep viewers intrigued. Moreover, having excellent skills at becoming an influencer on social media will help bring more viewers to your streaming channel. It helps to be very friendly with popular streamers. Some of the nicer ones will help smaller streamers gain an audience by making recommendations to their subscribers to check out the newbies’ streams.

What is the growth potential for a live streaming business?

Using Twitch.TV as our example, there are about 14,000 professional streamers on the system. Each month, Twitch.TV has about 100 million unique visitors. Dividing those visitors by the number of streamers, shows there are about 7,000 visitors per streamer. This number continues to grow each year.

Not sure if a live streaming business is right for you? Try our free Business Idea Generator and find your perfect idea.