Do I Need an LLC for My Live Streaming Business?

Starting a limited liability company (LLC) for your live streaming business 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 live streaming business, lawsuits can arise from things like accidentally broadcasting copyrighted material without permission (e.g., music, videos, etc.).

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your live streaming business seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Should I Start an LLC for a Live Streaming Business?

Even if you started live streaming as a hobby, viewership can increase quickly, putting more attention on your channel, which can create potential risk that you might not have considered. LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start 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 Live Streaming Business

By starting an LLC for your live streaming business, 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.

Live streaming is a growing business niche, and laws and regulations that affect it are still developing. One of the biggest potential risks for a live streaming business is copyright infringement. Simply playing a song in the background during a stream could trigger a copyright claim against you, and theoretically, a video game company could do the same, so you’ll want to make sure you’re protected.

Example 1: Your business was hacked, and the financial information of your partners is stolen. In the event of a lawsuit, only the company’s assets will be used to cover any compensation associated with the lawsuit, as limited liability protection would safeguard the owner’s assets.

Example 2: A technician is setting up a camera on a tripod when the tripod suddenly collapses, causing the technician to fall and hit his head on the ground. Following this, he proceeds to sue the business. If found liable, limited liability protection will protect the owner’s assets from being affected.

Example 3: An employee at your live streaming business begins to feel overwhelmed and starts experiencing symptoms of anxiety and burnout due to the overwhelming nature of the job. Following this, they sue the business for not creating a more work-friendly environment. If found liable, limited liability protection will ensure the owner’s assets remain protected.

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 Live Streaming Business

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 a live streaming business 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.

For questions about tax solutions for your live streaming business, we recommend scheduling a free tax consultation.

Credibility and Consumer Trust

Live streaming businesses 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).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional 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

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?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Live streaming businesses need insurance to cover unexpected costs and expenses that can arise from their operations. Insurance protects them from the financial losses they could incur due to risks such as cyberattacks, technical issues, or negative feedback from viewers.

Common Situations Business Insurance May Cover for a Live Streaming Businesses

Example 1: As you prepare to host a collaboration with a fellow streamer, your guest trips over a loose extension cord when they bring equipment into your studio. During the resulting fall, your guest breaks a wrist as well as their expensive equipment. General liability insurance would cover the guest’s medical bills and equipment repairs if they decide to sue.

Example 2: You host several fans in your studio for a tour after they win a promotional contest. During the tour, one fan separates from the group to examine your cameras. As the fan reaches for a heavy camera on a top shelf, they slip and knock the shelf down on their head. If the fan decides to sue for damages, your general liability coverage would cover your legal costs and any settlement payouts.

Example 3: During the delivery of sound equipment to your studio, the delivery driver backs into the loading area and accidentally hits a security gate. The crash rips off the delivery van’s rear bumper and damages its back door. General liability insurance would cover any vehicle repairs and legal costs associated with the incident.

Other Types of Coverage Live Streaming Businesses 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 live streamers should obtain:

Commercial Property Insurance

You’ve made major investments in your video equipment, game consoles, lighting systems, networking components, and other streaming tools. If a fire or natural disaster impacts your studio, replacing this specialized equipment would be extremely costly. Commercial property insurance protects your equipment and other business property in the event of an accident.

Business Interruption Insurance

If a fire, burglary, or other incident forces you to temporarily close your studio for repairs, it’s not always easy to take your equipment and film elsewhere. Business interruption insurance would cover your financial losses until you can reopen your studio.

Commercial Umbrella Coverage

Even the most responsible business owners can sometimes face a lawsuit that threatens to exhaust the limits of their primary insurance coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Data Breach Insurance

As part of today’s online world, your business is vulnerable to cyberattacks. Whether you’re dealing with an angry fan or someone seeking to usurp you on the top streaming websites, consider data breach insurance to protect both your personal and business information.

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 and commercial property insurance.

Read our Live Streaming Business Insurance article for more info.

To start a live streaming business, you will need a high-speed internet connection (costing around $50–$100 per month), a gaming computer (costing around $1,000), high-resolution monitor(s) (costing around $350 each), and game players with controls (costing around $300–$400 each).

Visit our How to Start a Live Streaming Business guide to learn more about the costs of starting and maintaining this business.

You will need to pay for a high-speed internet connection and updating or replacing equipment, including computers, related computer hardware, and gaming equipment. You may also need to purchase games and hire one or more assistants.

Learn more about running a live streaming business.

A live streamer earns revenue from advertising, sponsorships, in-person events, profit-sharing from channel subscription fees, donations from viewers, and winning gaming competitions.

Learn more about starting a live streaming business.

If you own a live streaming business, your primary source of income will likely be from broadcasting live video gaming footage while running ads. There are several popular websites on which gamers can share their content. Gamers who have a large following can qualify to stream their games live on these sites. The more internet traffic a gamer has, the more the streaming site will pay them.

Learn more about starting a live streaming business.