Should I Start an LLC for My Social Media Influencer Business?

Starting a limited liability company (LLC) for your social media influencer 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 social media influencer business, lawsuits can arise from things like defamation (e.g., by posting a sponsored review that contains factually incorrect statements) or copyright infringement (e.g., after posting a copyrighted photo to your social media account).

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

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

Do I Need an LLC for a Social Media Influencer 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 Social Media Influencer

By starting an LLC for your social media influencer 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.

Social media influencers will benefit from liability protection because of the risk of claims of false advertising, defamation, personal injury, copyright and trademark infringement, and breach of contract.

Example 1: A social media influencer is sued for defamation after posting a sponsored review of a product that contains false or misleading statements. If the influencer's business is a limited liability entity, their personal assets, such as their savings, investments, and personal property, will generally not be at risk in the event of a lawsuit.

Example 2: A social media influencer is sued for copyright infringement after using a copyrighted image or video in a sponsored post without permission. If the influencer's business is a limited liability entity, their personal assets will be protected from the financial fallout of the lawsuit.

Example 3: A social media influencer is involved in a contract dispute with a client or sponsor. If the influencer's business is a limited liability entity, their personal assets will be protected regardless of the court's ruling.

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 Social Media Influencer

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 social media influencer 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

Social media influencers 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 limited liability protection from being an LLC protects your personal assets, not your business assets.

Social media influencers have a unique set of risks surrounding their business that requires special insurance coverage. Whether they are creating content, traveling to events, or engaging in other risky activities, having appropriate insurance can give them the peace of mind to focus on growing their business.

Common Situations Business Insurance May Cover for a Social Media Influencer Business

Example 1: During a meeting at a potential client’s office, you accidentally spill coffee on her expensive laptop. General liability insurance would pay to replace the client’s damaged property.

Example 2: Another social media influencer sues you for slander and libel. General liability insurance would cover your legal defense and any required settlement.

Example 3: While touring a client’s place of business, you accidentally knock a customer over and she breaks an arm. If she decides to sue you for damages, general liability insurance would pay for your legal fees.

Other Types of Coverage Social Media Influencer 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 social media influencers should obtain:

Professional Liability Insurance

While you strive to satisfy both your clients and fans, there’s always a chance someone might decide you made a mistake that caused them harm. If a client or fan sues your business for negligence, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment in the camera equipment, computers, editing software, and other supplies you use to run your business. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property.

Data Breach Insurance

This coverage — also known as cyber attack insurance — protects your business from liability if a cybercriminal hacks into your computer system, steals client data, and your clients sue you for damages. In the event of such a lawsuit, data breach insurance would cover your legal fees and any settlement payouts.

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.

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.

Read our Social Media Influencer Business Insurance article for more info.

Starting a social media influencer business requires little capital. At the very least, influencers starting out need to have a computer, internet, camera, or smartphone. Some influencers even start out by using library resources, while others with a heavy budget use software like Hootsuite and Buffer to manage their profiles.

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

The ongoing expenses of running a social media influencer business include internet access, subscriptions to post scheduling applications, photography and graphics support, and insurance.

Learn more about running a social media influencer business.

Social media influencers make money by charging brands a fee for posting content related to a product or service.

Learn more about starting a social media influencer business.

Social media influencers charge brands a fee for posting content related to a product or service.

They can decide to operate within a specific niche such as fashion and beauty or food.

The influencer market is projected to reach $15 billion by 2022. Brands are increasingly partnering with influencers who have a following and credibility in the market. The average social media influencer can take home anywhere from $30,000 to $100,000 per year. Celebrity influencers can make more than $100,000 per sponsored post.

Learn more about running a social media influencer business.