Do I Need an LLC for My Content Marketing Agency?
Starting a limited liability company (LLC) for your content marketing agency can provide several benefits.
Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.
For a content marketing agency, lawsuits can arise from things like not disclosing affiliate partners on your website, as well as from disputes with any contracted writers.
LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your content marketing agency seem more credible.
Recommended: Use Northwest to form an LLC for $29 (plus state fees).
Should I Start an LLC for a Content Marketing Agency?
LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.
You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.
LLC Benefits for a Content Marketing Agency
By starting an LLC for your content marketing agency, you can:
- Protect your savings, car, and house with limited liability protection
- Have more tax benefits and options
- Increase your business’s credibility
Limited Liability Protection
LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.
Content marketing agencies will benefit from liability protection because of the risk of lawsuits for personal injuries, trademark infringement, property damage, and more.
Example 1: An employee uses a licensed photo to illustrate an article without prior approval from the owner. The owner of the photo sues your business and asks for compensation. With your status as an LLC, limited liability protects your assets as the owner from being used for compensation.
Example 2: While visiting your office, a client trips and injures themselves. They are asking your business to pay for their medical bills. The business’s assets can be used for this but not your personal assets as the owner due to the limited liability as an LLC.
Example 3: An electrical fire breaks out in your office and spreads to other offices on your floor. These businesses demand you pay for the fire damage. Being an LLC, limited liability would keep your personal assets away from this situation — only letting business assets be used to pay.
An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.
To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.
LLC Tax Benefits and Options for a Content Marketing Agency
LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.
The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.
Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.
S Corp Option for LLCs
An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).
S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.
The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.
In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.
We estimate that if content marketing agency owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.
You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.
Credibility and Consumer Trust
Content marketing agencies rely on consumer trust. Credibility plays a key role in creating and maintaining any business.
Businesses gain consumer trust simply by forming an LLC.
A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.
Northwest will start an LLC for you for just $29 (plus state fees).
How to Form an LLC
Forming an LLC is easy. There are two options for forming your LLC:
- You can hire a trusted LLC formation service to set up your LLC for a small fee
- Or, you can choose your state from the list below to start an LLC yourself
Select Your State
- Alabama LLC
- Alaska LLC
- Arizona LLC
- Arkansas LLC
- California LLC
- Colorado LLC
- Connecticut LLC
- Delaware LLC
- Florida LLC
- Georgia LLC
- Hawaii LLC
- Idaho LLC
- Illinois LLC
- Indiana LLC
- Iowa LLC
- Kansas LLC
- Kentucky LLC
- Louisiana LLC
- Maine LLC
- Maryland LLC
- Massachusetts LLC
- Michigan LLC
- Minnesota LLC
- Mississippi LLC
- Missouri LLC
- Montana LLC
- Nebraska LLC
- Nevada LLC
- New Hampshire LLC
- New Jersey LLC
- New Mexico LLC
- New York LLC
- North Carolina LLC
- North Dakota LLC
- Ohio LLC
- Oklahoma LLC
- Oregon LLC
- Pennsylvania LLC
- Rhode Island LLC
- South Carolina LLC
- South Dakota LLC
- Tennessee LLC
- Texas LLC
- Utah LLC
- Vermont LLC
- Virginia LLC
- Washington LLC
- Washington D.C. LLC
- West Virginia LLC
- Wisconsin LLC
- Wyoming LLC
For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.
Do LLCs Need Insurance?
Your business needs insurance because your business is not covered by the limited liability of an LLC — only your personal assets are. Content marketing agencies need insurance because of threats in the industry like copyright claims or accidents. Should a client injure themselves in your office or one of your products infringes on a copyright, insurance can help with the costs involved.
Common Situations Business Insurance May Cover for a Content Marketing Agency
Example 1: An employee uses a licensed photo to illustrate an article. General liability insurance would cover your legal fees if the photo’s owner sues your company for copyright infringement.
Example 2: During a visit to your office, a prospective client slips on a wet floor. General liability insurance would pay for the client’s resulting medical bills.
Example 3: As you are replacing your office computers with newer models, an employee accidentally damages the wiring of several workstations. General liability insurance would help pay for repairing the damaged equipment.
Other Types of Coverage Content Marketing Agencies Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all content marketing agencies should obtain.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a work-related accident.
Professional Liability Insurance
Most content marketing agencies offer some degree of advice to their clients. Professional liability coverage protects the company in case an employee provides the wrong information or doesn’t mention pertinent information to a client — such as failing to notify them about a new disclaimer law for their product.
Commercial Property Insurance
If you own the building in which you operate, commercial property insurance would cover the cost of repairing or replacing your business-related property in the event of a fire, burglary, or natural disaster. This includes the cost to repair any structural damage to your building or grounds as well as to repair or replace any business equipment you store there.
Home-Based Business Insurance
If you run any part of your business from home, you may need home-based business insurance to safeguard your commercial equipment and space in your home devoted to your business. A typical homeowners insurance policy may only cover certain expenses if you don’t disclose you use your home for business purposes.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy. It also gives you more leeway to either keep fighting a claim or settle it according to the severity of the mistake.
Should I Start an LLC FAQ
Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.
Visit our LLC vs. Sole Proprietorship guide to learn more.
At a minimum, you’ll need general liability insurance, professional liability insurance, and commercial property insurance.
Read our Business Insurance article for more info.
The costs of opening a content marketing agency can be small if you’re versatile. If you choose to lease an office space, then you may be paying between $1,000–$6,000 a month, depending on office size and location.
Your ongoing expenses will vary depending on whether you are working from home or from within a separate office space.
Visit our How to Start a Content Marketing Agency guide to learn more about the costs of starting and maintaining this business.
Your ongoing expenses will depend on if you work from home or expand to lease a separate office. Working from home requires little additional overhead costs while leasing office space requires rent and utility payments. In addition, if you have employees, you’ll need to pay their salaries.
Learn more about running a content marketing agency.
A content marketing agency usually charges clients a set fee per project.
Learn more about starting a content marketing agency.
A content marketing agency focuses on creating content that drives business to a client. Some clients want to use traditional advertising to increase sales while others prefer to focus on lead generation or improving their company’s image. Content marketing agencies often achieve this via social media engagement with a target demographic group.
An established content marketing agency should aim for at least a 20% profit margin.
Learn more about starting a content marketing agency.
