Last Updated: June 10, 2024, 9:38 am by TRUiC Team


How to Start an S Corp as a Vlogger

An S corporation (S corp) is an Internal Revenue Service (IRS) tax classification that may help your vlogging business save money on taxes. Vloggers use their charisma and storytelling ability to document moments in their lives and use them to entertain their fans. Some even use this to create amateur documentaries regarding their life or events they partake in. 

No matter if your vlogging business has been filming for a decade or a month, it could be saving thousands of dollars each year if it is taxed as an S corp.

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

Woman vlogging while sitting at computer.

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 vlogging 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 vlogging 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 Vloggers 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. As the owner, you must pay yourself a “reasonable” salary, or what someone doing the same work as you would be paid. This can be difficult to pin down with a job like vlogging, which can be inconsistent, but online resources like Glassdoor and the US Bureau of Labor Statistics can help you find average and pay scales to assist with your research.

Vloggers usually do not make a consistent amount of money each month since a good deal of their income fluctuates depending on if they have sponsorships, sell merchandise, or run ads on their vlogs. As of March 2023, the average salary of a vlogger in the US is $69,683. This can vary depending on the platform you use for your vlogs and the variables listed above. For example, Glassdoor put the average salary for a vlogger on YouTube at $37,643 per year. Be sure to do research on platforms and payment methods before committing to a reasonable salary for your vlogging business.

Distributions

Unlike with the 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 Vlogger 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.

Vlogging Business Information

Vloggers make video logs of their lives and events they partake in to entertain their audience. They are usually paid through sponsorships and marketing deals in which they promote products or places. Social media is a key component of this work as it requires a lot of promotion and interaction to build an active fanbase. Usually, vloggers live and work in large cities since it is typically more exciting and there are more things to do; however, this work could be done anywhere so long as you have a fanbase interested in your work. 

It’s hard to know how many vloggers work in the United States as many influencers may occasionally vlog, but estimates from January 2023 put the number above 100,000.

Why Most Vlogging Businesses Should Have a Legal Business Entity

Liability is the main reason your blogging business should have a legal business entity. When filming in public, there is a chance you may capture something unexpected that could put your business in legal trouble, but as a legal business entity, employees will be protected. 

For example, while filming a vlog in the city, you happen to accidentally film a local politician embracing someone that is not their spouse. Your viewers catch this, and the story goes viral, leading to the politician's divorce and public mockery. Since the politician did not give you the right to show their face, they are suing you. With a legal business entity, the business itself could be sued, but not you as the vlogger, as employees are protected from liability in matters like this.

Is an S Corp Right for My Vlogging Business?

When deciding, keep in mind that there are certain requirements a business must meet to become an S corp. Breaking these requirements will lead to you losing the status if you had it already.

The first requirement is that you must run payroll for all of your employees. Oftentimes, vloggers work solo, maybe having a small team of editors that work with them. Payroll can be costly, especially if you are the only employee so the money you save on your taxes may not be worth the cost of running payroll.

The next is that you must keep your vlogging business at a maximum of 100 shareholders. Since most vloggers won’t have any shareholders, this will likely not be an issue. But if you run a large operation and are an incredibly popular creator, you may have shareholders or want to get some for your business. If you feel your business would not be able to stay below the maximum, you may want to look into making your business a C corporation.

Last, all S corps are required to give their owner a distribution. In addition to the reasonable salary, the business owner must take a distribution of the net profits. To receive the full tax benefits of an S corp, you are recommended to take at least $10,000. If you would rather reinvest that money back into your business, then being an S corp would not be wise at the moment. Instead, consider being taxed as an LLC.

Vlogger S Corporation Examples

Not all vlogging businesses will benefit from becoming an S corporation. Here are two examples to help illustrate which vloggers should elect S corporation status.

Scenario 1:

Imagine you run a very successful vlog series on YouTube. Once a year, you go to another country and document the experience for your fans. These globetrotting series do quite well, but you also do domestic filming in between, which has sponsorships and advertising attached to them to bring in some more money. While you started by yourself, you now have three editors and a merchandising manager that work with you, all of which are covered by payroll. You and your team are quite close, and they are the only shareholders attached to your business. This formula has done you quite well in the past, and your team is excited to continue working and traveling with you. 

A vlogging business like this would be a good candidate for becoming an S corp. Since you already run payroll and sit well below the maximum number of shareholders, you would only need to decide what your distribution will be before you can reap the benefits of an S corp.

Scenario 2:

Alternatively, imagine you run a vlogging business in which you do outdoor trips and survivalist outings in National Parks and the woodlands around your home. You do not have a large amount of fame yet but have been consistently growing. Since you began uploading the vlogs onto YouTube, you have gotten some sponsorships, and your revenue has kept growing. This vlog is entirely filmed and edited by you with no assistance. While you don’t want it to replace your current work, it would be nice to see it grow. Currently, you plan to purchase some better quality cameras and some equipment like tripods and waterproofing material to get better shots in the field. 

This business may want to avoid becoming an S corp. Shareholders seem to be of no concern to you, but the money you would take as a distribution would interfere with your plans, and paying to run payroll for only yourself would be costly and unnecessary.

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.

The average salary of a vlogger in the US is $69,683, according to Glassdoor. This number will vary depending on the platform you use to upload your vlogs and the ways in which you monetize the content: merchandise, advertisements, sponsorships, etc. For reference, the average salary of a YouTube vlogger is $37,643. You will need to do some research on monetization and platforms 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.

Yes, any money that would come from the stream would count as income for your business. This applies regardless of the website or platform you use.

Unless they are a resident of the United States, no. S corps cannot have any shareholders that are nonresidents of the US.