So, your YouTube channel is finally taking off. You have hit the monetization threshold, your subscriber count is climbing, and brand deals are starting to slide into your DMs.
Congratulations! You are no longer just a "creator." You are a media business.
But with that revenue comes a boring but critical reality: Taxes and Liability.
If you are operating as a sole proprietor (which is the default if you have not registered anything), your personal savings, car, and house are at risk if your channel ever gets sued for copyright, defamation, or trademark issues.
This guide will explain exactly why YouTubers need an LLC, when you should form one, and how to do it without spending a fortune.
Do YouTubers Really Need an LLC?
The short answer is Yes, eventually.
When you first start uploading videos, you are a Sole Proprietor. This means there is no legal separation between you and your channel.
- The Pro: It is free and easy to set up.
- The Con: If you get sued (for example, for using a copyrighted song or accidentally defaming a brand), lawyers can come after your personal bank account.
An LLC (Limited Liability Company) creates a "corporate veil" between you and your business.
1. Liability Protection (Protect Your Assets)
In the creator economy, lawsuits are rare but devastating. An LLC ensures that if your business gets sued, your personal assets like your house or personal savings are usually off limits. They can only touch the money inside the business account.
2. Tax Flexibility (Save Money)
As a sole proprietor, you pay roughly 15.3% Self Employment Tax on every single dollar of profit.
With an LLC, you can eventually elect to be taxed as an S Corp. This strategy allows successful creators (earning $60k+ profit) to save thousands of dollars annually by legally reducing their self employment tax bill.
Resource: You can estimate your potential savings using an S Corp Tax Savings Calculator.
3. Privacy (Don't Dox Yourself)
When you file paperwork as a sole proprietor, your home address often becomes public record.
By forming an LLC (especially in privacy friendly states like Wyoming or Delaware), you can use a Registered Agent's address instead of your own. This keeps your home address off the internet.
[STICKY CTA SLOT: Insert your "Non-US LLC" or "Formation" Sticky CTA here]
(e.g., "Start Your LLC for $0 - State Fees Apply")
When Should You Form an LLC?
You do not need an LLC for your first subscriber. But you definitely need one before your first big brand deal.
Here is the general rule of thumb:
- Wait if you are earning less than $1,000/year and it is just a hobby.
- Form an LLC as soon as you start earning consistent revenue (AdSense, Sponsorships, Affiliate Commissions) or if you plan to sign contracts with brands.
- Consider an S Corp Election once your net profit exceeds $60,000/year to justify the extra payroll costs.
Which State is Best for YouTubers?
If You Live in the US
Form the LLC in the state where you live.
Even if you form a "Wyoming LLC" to save money, your home state will likely require you to register as a "Foreign LLC" anyway, meaning you pay two fees. Keep it simple and register where you film.
If You Are a Non US Resident (Digital Nomad/International)
This is where it gets fun. Since you do not live in the US, you can choose the "best" state.
- Wyoming: The Gold Standard. Low fees ($102 to start), no state income tax, and high privacy.
- Delaware: Best if you plan to raise venture capital or sell your channel to a media conglomerate later.
The "Write Off" List for Creators
One of the biggest perks of having a formal business structure is the mindset shift toward deductible expenses.
If you use it for your videos, it might be a write off. Common deductions for YouTubers include:
- Hardware: Cameras, lenses, lighting, powerful editing PCs/laptops.
- Software: Adobe Creative Cloud, Epidemic Sound, Midjourney subscriptions.
- Home Office: A portion of your rent/mortgage (if you have a dedicated studio room).
- Props: Items bought specifically for a video review.
- Travel: Flights and hotels for VidCon or collabs.
(Disclaimer: Always consult a CPA. Do not try to write off your personal groceries.)
For more details on what counts, refer to the IRS Gig Economy Tax Center.
How to Start Your YouTube LLC (Step by Step)
You can hire a lawyer (expensive) or use a service like Doola or Tailor Brands (affordable and fast).
Step 1: Choose a Unique Name
Your LLC name does not have to be your channel name.
- Channel Name: "TechGuy Reviews"
- LLC Name: "TGR Media Holdings LLC"This gives you flexibility to launch new channels under the same company later.
Step 2: Get a Registered Agent
A Registered Agent is a person or service that receives legal mail for you. Never be your own Registered Agent if you value your privacy. Use a service to keep your address off public records.
Step 3: File Articles of Organization
This is the document you send to the State Secretary. It officially births your company.
Step 4: Get an EIN (Employer Identification Number)
Think of this as the "Social Security Number" for your business.
- You need an EIN to open a business bank account.
- You need an EIN so you do not have to give brands your personal SSN on W-9 forms.
Many new owners delay their EIN and get stuck at the banking stage.
Northwest can obtain the EIN while filing your LLC so everything is ready at approval. Click here to apply
(Read the EIN guide before deciding)
Step 5: Get a Business Bank Account
Critical Rule: Never mix personal and business money.
Once your LLC is open, get a business account (like Mercury or Relay). All AdSense and sponsorship money goes in here. All camera gear and editor payments come out of here.
Step 6: File Your BOI Report
As of 2024, most new LLCs must file a Beneficial Ownership Information (BOI) report with FinCEN within 90 days of formation (or 30 days for entities created in 2025 onwards). It is free to file, but mandatory. You can file it directly at the FinCEN BOI E-Filing System.
[STICKY CTA SLOT: Insert your "Banking" Sticky CTA here]
(e.g., "US LLC + Bank Account - No SSN Required")
Frequently Asked Questions
Q: Can I put my AdSense account under my LLC?
A: Yes! In your Google AdSense dashboard, you can change your "Tax Info" to your LLC's EIN. This ensures Google sends the 1099 form to your business, not you personally.
Q: Do I need a separate LLC for each channel?
A: Probably not. You can have one main "Holding LLC" (e.g. Smith Media Group LLC) and run multiple channels (DBAs) under it. This saves you from paying annual state fees for 5 different companies.
Q: What if I already started making money as a person?
A: That is fine. You can transition. Form the LLC now, open the bank account, and update your payment details with YouTube, Amazon, and Sponsors to pay the LLC from now on.
Final Thoughts
Building a YouTube channel is creative work, but protecting it is business work. Forming an LLC is the best way to signal to brands (and the IRS) that you are a professional.
It costs a few hundred dollars to set up, but the peace of mind knowing your personal assets are safe is worth every penny.
Frequently Asked Questions
1. Can I write off my gaming PC or camera if I use it for personal things too?
You can only write off the "business use percentage" of the item. If you buy a $2,000 camera and use it 80% for YouTube and 20% for family photos, you can deduct $1,600 (80%). To be safe, many creators buy dedicated equipment solely for their business to claim the full 100% deduction.
2. Does my LLC own my YouTube channel copyright?
By default, you (the creator) own the copyright. However, you should sign an "Intellectual Property Assignment Agreement" to officially transfer the rights of your videos, logos, and trademarks to your LLC. This ensures the asset is fully protected by the company's liability shield. You can learn more about copyrights at the US Copyright Office.
3. How do I pay myself from my LLC?
If you are a single member LLC, you do not pay yourself a "salary" with a W-2. Instead, you take an "Owner's Draw." You simply transfer money from your business bank account to your personal bank account. Just remember to set aside ~30% of that money for taxes, as no taxes are withheld automatically.
4. Can I hire freelance editors from other countries?
Yes. If you hire contractors outside the US who do the work outside the US, you generally do not need to withhold US taxes or file a 1099 form for them. However, you should have them sign a W-8BEN form to prove they are not US taxpayers. Keep this for your records in case of an audit.
5. Do I need a business license if I just film in my bedroom?
It depends on your city. Some local municipalities require a "Home Occupation Permit" or a general business license even for online businesses. Check with your city clerk's office or use the SBA Business License Tool to find local requirements.
6. What happens if I have a co-founder or business partner?
If you start a channel with a friend, you are automatically a "General Partnership" unless you form an LLC. This is risky because you are liable for their mistakes. If you form a Multi-Member LLC, you absolutely need an Operating Agreement. This document defines what happens if one person wants to quit, how profits are split, and who owns the channel if you break up.
7. Can I deduct the cost of my internet bill?
Yes, but only the portion used for business. If your home internet costs $100/month and you use it 50% for uploading videos and 50% for Netflix, you can deduct $50/month. You generally cannot deduct the full bill unless you have a dedicated business line.
8. Do I need to charge sales tax on my merch?
If you sell physical merchandise (T-shirts, mugs) directly to fans, you likely need to collect sales tax in states where you have "nexus" (a physical presence or significant sales volume). If you use a platform like Teespring or Merch by Amazon, they usually handle the sales tax collection and remittance for you.
9. Can I transfer my existing AdSense account to my new LLC?
Yes. You do not need to create a new AdSense account. You can update the "Payee Name" and "Tax Info" inside your existing AdSense settings to match your new LLC's name and EIN. This seamless transition ensures you do not lose your monetization history.
10. Is my LLC name the same as my YouTube channel name?
It does not have to be. You can name your LLC "Jane Doe Enterprises LLC" and have your channel be "Jane's Tech Reviews." If you want to accept checks or contracts under the channel name, you can file a "DBA" (Doing Business As) for the channel name under your LLC.