Last Updated: June 6, 2024, 2:58 pm by TRUiC Team


How to Start an S Corp as a Blogger

An S corporation (S corp) is an Internal Revenue Service (IRS) tax classification that may help your blogging business save money on taxes. Bloggers keep ongoing digital entries, chronicling what they are doing or detailing thoughts and findings on matters they find interesting. Often used for advice or entertainment, blogs can reach a wide variety of people and topics. 

Whether your blog is new or has been around for many years, electing to be taxed as an S corporation can potentially save you thousands of dollars each year.

Recommended: Save yourself the hassle and use a professional service like ZenBusiness to help you handle the initial S corp election paperwork.

Man sitting on the couch blogging.

What Is an S Corporation?

An S corporation (S corp), also known as Subchapter S, is a tax status with strict IRS requirements and restrictions. If your business meets the requirements to be taxed as an S corporation, you will be eligible for certain tax benefits such as pass-through taxation and self-employment tax savings, which can be significant. 

Essentially, an S corporation provides the perfect opportunity for business owners to have both the benefits of a default LLC with pass-through taxation and some of the perks of a C corporation without the dreaded double taxation. 

S Corp Requirements

In order to be taxed as an S corporation, your blogging business must meet the following requirements:

  • Has 100 shareholders or less
  • Is a domestic LLC or corporation
  • Issues only one class of stock
  • Shareholders are US citizens or permanent resident aliens
  • Is owned by private individuals

What Type of Business Structures Can Start an S Corp?

An S corp designation can be elected by a formal business structure, specifically an LLC or a corporation. Informal business structures such as sole proprietorships and partnerships are not eligible for the S corporation classification. 

How to Start an LLC Tip Icon

Don’t have a formal business structure? If your blogging business isn’t currently an LLC or C corporation, our friends at ZenBusiness can form your legal business entity for you and elect S corp tax status in no time.

S Corp Tax Benefits Bloggers Should Know About

S corporations enjoy certain tax benefits, such as pass-through taxation (all losses and profit — credits, distributions, deductions — pass directly to the owner). This is similar to how default LLCs are taxed. With pass-through taxation, all profits bypass the company and go directly to the owners, and owners pay on their personal tax return at their regular income tax rate.

Default LLC Taxes Explained

Business owners of default LLCs pay self-employment taxes and income tax on the distributions passed down to them. In other words, both types of taxes are imposed on all the money they receive after paying business expenses. Self-employment taxes include social security and medicare, and these two taxes. 

S Corp Taxes Simplified

With an S corporation, owners are classified as employees and are paid in two ways: a salary and distributions.

Reasonable Salary

Since owners are employees, they must receive a salary, and therefore they must run payroll. Business owners pay self-employment taxes and income tax on their salaries. Business owners must pay themselves a salary that is “reasonable” — that is, a salary that is equivalent to what someone doing the same work would be paid. Online resources like Glassdoor and the US Bureau of Labor Statistics can assist you with finding salary averages and pay scales for your work.

As of March 2023, the average salary of a blogger in the United States is $48,450. Blogs themselves do not make money without some extra effort, so you will have to explore options like advertisements, sponsorships, affiliate marketing, and others to monetize your blogging efforts. Be sure to do some research on these and other methods of making money before committing to a reasonable salary for your blogging business.

Distributions

Unlike with a reasonable salary, the owner only pays income tax on the distributions. This means the business owner does not pay the self-employment tax of 15.3% on money taken as a distribution.

When Should a Blogger Elect S Corp Status for a Business?

This is a subjective question and will depend on your business and your goals. You need to be sure to take enough money in distributions to benefit from the advantages offered by an S corporation and offset the additional paperwork and fee associated with running payroll. In general, you will likely benefit from S corp status once your business makes at least $60,000 in earnings and $20,000 in annual distributions. These numbers are after paying business expenses. The IRS requires S corp owners to pay themselves a reasonable salary to ensure they aren’t lowering their compensation to avoid paying more on taxes — which would lead to loss of S corp status, fines, and even business dissolution.

Use our S Corp Tax Calculator to find out if an S corp is right for your business. Calculate your savings below:

S Corp Savings Calculator

Calculate how much you can save by choosing an S Corp tax classification

Recommended:

Are you a solopreneur looking to start your S corp or convert your existing LLC and start saving on taxes? Get your S corp started today with ZenBusiness.

Six Basic Steps to Start an LLC and Elect S Corp Status:

Step 1: Select a State

Step 2: Name Your LLC

Step 3: Choose a Registered Agent

Step 4: File the Articles of Organization

Step 5: Create an Operating Agreement

Step 6: Get an EIN and File Form 2553 to Elect S Corp Tax Status

Step 1: Select Your State

Step 2: Name Your LLC

If you don’t already have a business, you will first need to form one. You will need to provide your state with a unique name that is distinguishable from all registered names when you file your LLCs formation documents.

Our Business Name Generator and our How to Name a Business guide are free tools available to entrepreneurs that need help naming their business.

Step 3: Choose an LLC Registered Agent

Your S corp registered agent will accept legal documents and tax notices on your business's behalf. You will list your registered agent when you file your LLC's Articles of Organization.

Step 4: File Your LLC's Articles of Organization

The Articles of Organization, also known as a Certificate of Formation or a Certificate of Organization in some states, is the document you will file to officially register an LLC with the state.

Step 5: Create an LLC Operating Agreement

An LLC operating agreement is a legal document that outlines the ownership and member duties of your LLC.

Our operating agreement tool is a free resource for business owners.

Step 6: Get an EIN and Complete Form 2553 on the IRS Website

An EIN is a number that is used by the US Internal Revenue Service (IRS) to identify and tax businesses. It is essentially a Social Security number for a business. 

EINs are free when you apply directly with the IRS.

Elect S Corp Tax Status

During the online EIN application, the IRS will provide a link to Form 2553, the Election By a Small Business form.

Steps to Take After Starting an S Corp

Once you formalize your S corp, be sure to get your financials in line so you are ready to begin operating.

For business banking, check out our guide on the best banks for small businesses.

If you need to build your S corp credit, read our guide on how to build business credit and get a business credit card through Divvy.

Recommended: You’ve worked hard and deserve a break! If you make at least $20,000 in distributions, let ZenBusiness start your S corp, so you can focus on your business.

Blogger Business Information

Bloggers write and edit blogs hosted on websites. The topics of blogs can be anything from movie reviews to lifestyle choices and everything in between. Most blogs are either used for educational or entertainment purposes, they can serve just about any purpose you can think of. Since they are hosted online, bloggers can work from anywhere with a good enough internet connection. Over 30 million bloggers update their blogs at least once a month in the United States alone.

Why Most Blogging Businesses Should Have a Legal Business Entity

Liability is the main reason your business should have a legal business entity. If a third party ever wanted to sue you over something to do with your business, you, as an employee, would be protected from liability if your blogging business has a legal business entity. 

For example, say on a sponsored post, you mention an upcoming product covered by the non-disclosure agreement you signed for the sponsor company. Now that this information is out in the wild, a competitor has put a similar product out and has cornered the market. If the sponsor were to sue you over this, they would not be able to sue you as an individual, only the business. This would mean in a settlement, it would be the business’ assets on the line and not your personal ones.

Is an S Corp Right for My Blogging Business?

To see whether your blogging business is right for an S corp, you must see if it falls under the requirements set by the IRS.

The first requirement is that you must run payroll for yourself and all the other employees of your business. For businesses with multiple employees, this is likely already done and taken care of. But for businesses that only have one employee, this can be costly and feel like an unnecessary expense. Considering many blogs are handled by only one person, this may be a large obstacle to becoming an S corp for a blogging business.

Another requirement is that all S corps must stay at or below 100 shareholders. The number of shareholders you have will vary, but if 100 seems like too low of a number, you will not be able to become an S corp. Instead, you may want to consider making your blogging business into a C corp.

The last requirement is that the owner of the business must take a distribution from the profits of the business. This distribution will be in addition to the reasonable salary, and it is recommended that it be of at least $10,000 to obtain all the tax benefits of becoming an S corp. For those that would rather reinvest that money back into the business, an S corp may not be the right fit for your blogging business. Instead, you may want to be taxed as an LLC.

Blogger S Corporation Examples

Not all blogging businesses will benefit from an S corporation. Here are two examples to help illustrate which types of bloggers should elect S corporation status.

Scenario 1:

First, imagine you run a travel blog. You were originally hosted on another website but now have your own website with some web designers, editors, and other bloggers that all write about travel and topics related to it. Regularly you receive sponsorships from companies wanting you to review their services and products, which you incorporate into your blog posts and help pay for payroll expenses and employee salaries. In addition to yourself, there are a few shareholders. The way things are going, you can see this venture continuing for years, and the idea excites you. 

A blog like this would be a good candidate for becoming an S corp. Since you already run payroll and have well below the maximum number of shareholders, the only major thing you must account for is taking your distribution.

Scenario 2:

Now, imagine you run a technology review blog. This blog is hosted on another website and features reviews of cutting-edge devices and gadgets to inform your readers and potential purchasers. As you have gained more readers, a few companies have sent you devices to review and sponsored your posts. Since it is just you, you are thinking about reinvesting the sponsor money back into your blog to hopefully make this more of a full-time job going forward. You are going to need to purchase and keep paying for your own web domain and hopefully purchase a better computer since yours is quickly falling out of date. 

This business should skip becoming an S corp for now. The cost of running payroll will take away from your plans of buying and maintaining a domain, and the same goes for the distribution you would have to take.

Start an S Corp FAQ

An S corporation (S corp) is a tax classification that an LLC or a corporation can apply for that provides self-employment tax savings on distributions.

If you already have an LLC or C corporation, you can form an S corp by filing Form 2553 with the Internal Revenue Service (IRS).

S corps offer businesses tax advantages, and owners of S corps can save thousands of dollars on self-employment taxes.

While both LLCs and S corps benefit from pass-through taxation, they are not taxed the same way.

With an S corp, owners pay personal income tax and self-employment tax on a predetermined salary. They may then withdraw any remaining profits from the business as a “distribution,” which isn’t subject to self-employment tax. With an LLC, all company profits pass through to the owners’ personal tax returns, and then the owners must pay personal income tax and self-employment tax on the entire amount.

Both LLCs and S corps benefit from a provision in the Tax Cuts and Jobs Act of 2017 that allows qualifying owners of pass-through entities to deduct 20% of qualified business income (QBI) from their tax returns. However, for S corps, the deduction doesn’t apply to profits paid out as wages.

According to Glassdoor, the average salary of a blogger in the US is $48,450 per year. This number will vary based on the methods you use to monetize your blog such as advertisements, sponsorships, and others. Depending on your methods and how often you use them, there could be a big difference between this number and what you expect. Be sure to do research on payment options and pay scales before committing to a reasonable salary.

A distribution is a dividend that a shareholder/owner can take from the business profits that remain after a company pays all of its employees’ salaries. Shareholders must pay personal income tax on distributions, but distributions aren’t subject to self-employment tax.

There’s no corporate tax rate for S corps. Instead, owners of S corps pay personal income tax on the company’s profits. This rate depends on each owner’s personal income tax bracket. 

In some states like California and New York, S corps may pay some form of tax at the corporate level.

No, the host website would not be a shareholder just because your content is there. They could become one, but they would not be a shareholder by default.

Yes, any employee of yours will need to have payroll run for them. Even if you run your blog solo and only used them for a short amount of time, you would need to run payroll for them.