Should I Start an LLC for My Podcasting Business?

Starting a limited liability company (LLC) for your podcasting 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 podcasting business, lawsuits can arise from things like accusations that your business has stolen content from a blogger, and an inability to repay a loan following a drop in revenue.

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

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

Do I Need an LLC for a Podcasting Business?

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 Podcasting Business

By starting an LLC for your podcasting 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.

Podcasting businesses will benefit from liability protection because of a variety of risks associated with the distribution of potentially slanderous information, or other information/audio protected by copyright laws. There are additional risks associated with employees and guests visiting your physical studio location.

Example 1: A blogger accuses you of taking content from his blog for your podcasts and insists you must share the funds from that content. If he decides to sue for infringing on his intellectual property, limited liability will limit the lawsuit to your business assets only, while your personal assets will be protected.

Example 2: Your audience renews their annual subscription to your exclusive podcast episodes. Months later, you fall sick and need to take a break. Consequently, you are unable to give them value for their money. They want a refund, but you are ill and cannot afford it. If they sue, your business may be affected, but you will remain safe.

Example 3: You sell advertising spots on your podcast and experience a drop in revenue. As a result, you struggle to make payments on the loan you took out to purchase equipment for your podcasts. If your business defaults on its debt, the lender might be forced to sue. In this scenario, the lender will only be able to take legal action against your business rather than your personal assets, provided you didn't guarantee the loan personally.

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 Podcasting 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 podcasting 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.

Credibility and Consumer Trust

Podcasting 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.

Podcasting businesses need insurance to protect them from hazards such as damages to equipment and software as well as potential lawsuits arising from slander or trademark infringement.

Common Situations Business Insurance May Cover for a Podcasting Business

Example 1: As a guest star tours your studio, they trip over some cords linked to your equipment. Not only do they knock over several monitors, but they also hit their head and fracture their wrist. General liability insurance would cover your guest’s medical bills as well as the cost of repairing your equipment.

Example 2: As a delivery vehicle drops off some special equipment, your ramp malfunctions. This pushes your new equipment and the delivery driver into the door of the delivery vehicle. The weight of the equipment crushes the delivery driver’s left arm and damages the door. General liability insurance would cover the driver’s medical bills and vehicle repair costs, as well as any legal costs in the event of a lawsuit.

Example 3: After a meeting with potential sponsors, one sponsor stays after hours to see how you record live shows. As they reach to plug in a microphone, they receive an electric shock from a bare wire and sustain several injuries to their hands. The sponsor needs medical attention and sues everyone involved with the podcast. General liability coverage would pay for your legal costs, the sponsor’s medical bills, and any other damages awarded to the injured party.

Other Types of Coverage Podcasting 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 podcasters should obtain:

Commercial Property Insurance

If you own your studio, you’ve likely made major investments to create an amazing recording space filled with the best equipment. Yet, a fire or a severe weather event could easily damage your expensive equipment. Commercial property insurance can help replace your valuable podcasting tools and repair any damage to your studio so you can get back to work.

Workers’ Compensation Insurance

Whether you have one employee or 20, most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. If one of your employees becomes injured at work or falls ill as the result of a work-related accident, this insurance would cover their medical costs and, if appropriate, any disability benefits.

Commercial Umbrella Coverage

Your business faces multiple risks that could jeopardize your career if you can’t pay for legal costs and damages stemming from a lawsuit. Even if you’ve already invested in comprehensive general liability insurance, legal fees can exhaust your primary policy limits in some cases. If you lose a lawsuit and the related costs exceed the terms of your other policies, commercial umbrella insurance will prevent you from paying out-of-pocket.

Home-Based Business Insurance

Before you open your own studio, you’ll likely host your podcast from home. However, your regular home insurance policy will not cover any accidents related to your podcasting business. Home-based business insurance covers such situations, and you may purchase it as part of your comprehensive business owner’s policy or BOP.

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 Business Insurance for Podcasters article for more info.

A podcast owner will need to purchase a portable XLR recorder, an audio interface, a basic laptop, good audio editing software, and publishing software All in all, basic startup costs amount to a little under $1,000 if the business is starting as a low-budget one.

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

The main ongoing expenses you’ll incur are those costs associated with equipment replacement and maintenance, in addition to information gathering and travel costs.

Learn more about running a podcasting business.

Profit is generated in a number of ways. Sponsors can be a great way to generate money. Additionally, podcasters often ask for donations from listeners. Other podcasters might offer partial shows for free, and entire shows for a small price.

Learn more about starting a podcasting business.

Podcasts are an increasingly popular medium by which consumers access informative and entertaining content, most notably as an alternative listening medium apart from music and radio.

The average podcasting business makes an average profit of $12,000 a year, but the top podcasts make much more.

Learn more about starting a podcasting business.