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What influencers and online entrepreneurs should know about income, liability, and forming an LLC

From streamers and YouTubers to TikTok stars and Instagram influencers, anyone who makes money online is running their own business. The internet side hustle has become the norm rather than the exception, and regardless of the number of followers or the amount of income you generate, understanding the legal implications of making money online has never been more important. The moment a person begins operating their online accounts with the intent to generate a profit, they step into the role of a business owner. Failing to properly organize a business can expose not only the business itself, but also a creator’s personal finances and property to risk, with consequences that may linger long after a post goes live.

At Church Church Hittle and Antrim (CCHA Law), we regularly advise individuals and businesses on structuring their operations to minimize risk and protect what they’ve built.

Income for digital creators extends far beyond traditional paychecks. Virtually any value received in connection with an online activity can be considered income, including payments from brand sponsorships, subscription or membership fees, partnership programs, bits, affiliate commissions, and licensing fees, along with other non-cash items such as gifted products, free trips, and business services. In the eyes of the law (and the IRS), if something of value is received, it is generally considered income. As a creator’s revenue grows and diversifies, formalizing a business structure becomes essential to protecting both the creator and the income they worked diligently to build.

Content creator filming cooking video kitchen

In the State of Indiana, an “LLC,” or limited liability company, is a business structure that offers protection of a member’s assets. Just as with corporations, owners of an LLC, also called “members”, cannot typically be held personally responsible for business debts or liabilities. In other words, members’ personal assets are protected from business debts. When a business is operated under an individual’s name, the creator and the business are legally the same, there are no protections in place to shield personal assets.

By way of example, imagine you find yourself in the middle of a lawsuit, you’re being sued by XYZ, LLC after failing to fulfill a contract for a social media post you were obligated to make. If you did not organize your business and instead operate under your individual name, your liability is not limited. If a judgment is rendered against you, XYZ, LLC can pursue your personal assets to satisfy that judgment, which may include real estate, vehicles, and personal checking and savings accounts. In comparison, if you owned and entered into the contract through a properly formed and managed LLC, the assets XYZ, LLC could seek would be limited solely to business assets, your personal assets would no longer be at risk.

Digital creator working laptop home office

Starting a business doesn’t have to be complicated or intimidating. Indiana’s streamlined formation process makes it easy to get a business started before legal issues arise, and CCHA Law can help. For creators and influencers who are already generating income, formalizing your business structure allows you to protect what you’ve built. For those looking to step into the world of content creation, starting your LLC at the outset of your journey puts you one step ahead while setting you up to grow with confidence. To get started with your own LLC, or for more information on starting or growing your digital business, contact Kathleen Boaz at CCHA Law.

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We serve clients across Indiana, with offices conveniently located in Fishers, Noblesville, Westfield, Tipton, Fort Wayne, Crown Point, and Zionsville.