Podcasts have become the “talk radio of the internet,” and have established themselves as a massively popular form of communication and media. Millions of people all over the U.S. are listening to podcasts each day on topics ranging from news and business to sports and comedy.
But did you know that podcasts can also be a good way to start a business? Podcasters are making serious money. According to recent data cited by Nieman Lab, an estimated 73 million Americans are monthly podcast listeners (26 percent of the population over age 12), up from 67 million in 2017. And the market for podcast advertising is estimated at $313 million.
Starting a podcast can become a viable business. You might be surprised at how much revenue you can earn from your podcast, especially if you can build a loyal audience and get sponsorship partnerships in place.
Advertisers are willing to pay more to reach podcast audiences, because these audiences tend to be loyal, dedicated listeners who are more highly educated and more affluent than average consumers.
Here are a few reasons why you should consider forming an LLC for your podcast — and how to know when it’s time to “make it official.”
Keep Your Business Expenses Separate
Forming an LLC for your podcast will enable you to get an Employer Identification Number (EIN) for your podcast business, which will also help you set up a business bank account for your podcast. If your podcast is starting to make some significant revenue, you will want to have a dedicated business bank account for that income.
Having a business bank account is simply the right way to do business; it lets you separate your business and personal expenses, it helps you build credit under your business’s name and it can make it easier to manage your documentation and details for tax time.
Get Tax Advantages for Your Podcast Income
Forming an LLC for a podcast business is also a valuable way to get certain advantages at tax time. First, your business bank account will make it easier to keep track of your tax-deductible podcast-related business expenses, including travel, payments to podcast platforms, web hosting and any other incidental costs of producing, promoting and distributing your podcast.
Second, if you have an LLC that is set up to file taxes as an S Corporation, you can potentially reduce your tax liability for self-employment taxes and pay a smaller percentage of your overall income in taxes.
Talk to an accountant or professional tax advisor for more details on this, but getting a podcast LLC is often a great first step to keep a larger share of your business profits at tax time.
Protect Yourself from Personal Liability
If your podcast is starting to attract a sizable audience, and especially if your subject matter might be controversial (perhaps criticizing prominent business leaders in your industry or making predictions about the stock market), a podcast LLC can provide personal protection against liability from lawsuits related to your podcast business.
No one goes into business wanting to get sued, but it could happen. Having a podcast LLC can provide additional peace of mind knowing you are protected against certain worst-case scenarios of being in business as a podcast host.
Make Your Podcast “Official”
Another advantage of forming an LLC for podcast hosts is that it gives your podcast an added degree of credibility and legitimacy. Knowing that your podcast is not just a hobby or a short-term project, but that it is an actual business with a legal business entity backing it up, can help you do business more effectively with potential sponsors, podcast guests, distribution partners, social media marketing partners and more.
When you contact potential partners and ask them to help promote your podcast, be guests on your podcast, sponsor your podcast or otherwise support your work, you are not just an individual person with a quirky podcasting hobby — you are a business owner who has made it official by forming an LLC and doing the legal paperwork.
Running a podcast can be a wonderful creative outlet, a great way to explore an area of interest and, if you’re lucky, a viable way to start a business and build an audience based on your passion and expertise.
But don’t go it alone with your podcast; form an LLC for your podcast business to help you protect yourself from liability and manage your business the right way. As you are becoming more “professional” as a podcaster, your podcast LLC can help make your podcast business professional and official so you can hopefully see success for years to come.
Are you ready to start a business, form an LLC or reorganize your business structure to meet the changing needs of your company? Talk to Incfile today! Our incorporation experts can help you evaluate your options with state-specific advice.