Should Creators Have an LLC? Most Wait Too Long

Almost every creator eventually asks the same question, should I have an LLC?

Maybe you've wondered about this yourself.

Maybe you've started a podcaster, YouTube channel, or maybe you're building a following

on social media and things are starting to gain traction.

And at some point, someone says, you should probably set up an LLC.

And that's when the questions start.

Is it really necessary?

Is it too early?

Is it expensive?

Is it complicated?

And maybe the biggest question of all, does my little podcast really need a company behind

it?

Well, here's the truth most creators eventually discovered.

If your content is going to power a real business, the structure needs to exist first,

because the business needs somewhere to live.

Now, today we're going to be talking about why so many creators wait too long to form

an LLC and why the smartest creators build that infrastructure first.

Welcome back to legit podcast pro on Gordon Firemark, the podcast lawyer, and for more

than three decades now, I have been working with creators, media producers, entrepreneurs

and entertainment companies, helping them protect and grow their businesses and behind them

their ideas.

And lately, I've been talking a lot about something I call the modern media mogo mindset.

It's the idea that creators shouldn't just think about making content.

They should think about building a business that works from that content.

Now, last week, we talked about one of the biggest myths in podcasting.

The idea that the podcast itself is the business, but the truth is actually something very different.

Your podcast isn't the business, it's the engine that powers it.

And that leads to an important question.

If your podcast is powering a real business, where does that business actually live?

Now, before we talk about companies and LLCs, let's take a step back.

Imagine that you're building something valuable, a brand, an audience, a body of content,

a reputation, those things are incredibly powerful assets.

Your audience trusts you.

Your content carries those ideas of yours.

Your brand becomes recognizable.

That is the land that you're building on, but land by itself isn't protection.

Land is just the place where something valuable might grow.

And what's important is that it's your land.

I mean, after all, you can build the most beautiful beach house in the world, but if you

don't own the beach, it's only a matter of time before some owner comes along and evicts

you, right?

Now, if you want to build something to last, you really need to have a structure as well.

And this is where your LLC comes in.

Modern media mogo folks understand something that many, many creators tend to overlook.

If you want your podcast to power a real business, that infrastructure has to come first.

The company becomes the foundation.

It's the container that holds the brand, the content, the revenue, all the intellectual

property, and all of the relationships.

Think of it like the castle keep.

Inside that structure is where the valuable things are kept and the important people live.

The brand, the intellectual property, the content library, the deals, the revenue streams,

the partnerships, the audience information.

Without the keep, everything else is just sitting there exposed.

When creators operate without a company, everything they build exists in their personal name.

The brand, the contracts, the money, the liability, all of it.

And that's risky.

And that's not how durable businesses are built.

Modern media moguls build the structure first, so the success that follows has somewhere

to live.

Now, one of the biggest mistakes I see creators waiting too long to form an LLC.

And the reasons are usually really, really very similar.

They say things like, my show is still small, or I'm not making money yet, or I'll deal

with that later, or sometimes I just don't want to deal with the paperwork, or I don't

know what I need to do.

And I understand the instinct.

When you're just starting out, you want to focus on creating, not filling out forms.

But the irony is that success often arrives faster than creators expect.

An audience grows, sponsorship opportunities appear, partnerships start to form, revenue

streams start opening up, and suddenly, the creator realizes something important.

They're behind eight ball.

All of this activity is happening in their personal name, which means they're liable for

anything bad that happens.

They're on the hook.

It means the business structure is being built after the fact, and fixing structure after

growth happens is almost always harder than doing it right from the beginning.

Now, once the LLC exists, it becomes the structure, as I said, that holds that business together.

Think of it like the walls of the castle, the walls organize and protect what's happening

inside.

This includes things like opening business bank accounts, separating personal finances

from business finances, signing contracts in the company's name, not your own, owning

intellectual property in the name of the company, not your own, running deals and partnerships

through the company, where the company is the signer of the contracts.

These things might sound like just administrative trivia, but they're actually really, really

important.

Because when the company operates properly, it creates that separation.

The creator exists as an entity separate from the business, and that separation protects

the person behind the brand when things go wrong, go awry, I should say.

Now, around the castle keep and the walls, you'll also see a moat, right?

The moat makes it harder for problems to reach the structure.

In the creator world, the moat includes things like the contracts, the trademark and copyright

registrations, the contracts with collaborators, advertising agreements, all your policies

and protections.

Each of these things adds another layer of protection around the business that you're building.

And that's why we're spending the next few episodes talking about these different layers.

Because building a media business isn't just about producing content.

It's about protecting the structure behind the content, and without the moat in place,

the protection in place, it's kind of like leaving the drawbridge down all the time.

You know, the bad things will just find their way in.

So you really want to get this taken care.

So now let's simplify a little bit about today.

And LLC does three very important things for the creator.

First, it separates personal liability from business activity.

If something goes wrong in the business, the company is the first line of exposure.

Next, it creates a professional structure for revenue and deals, partnership responsibilities,

sponsors, collaborators.

Everybody are far more comfortable working with a company than they'll ever be working

with just an individual creator.

And thirdly, it creates clarity around ownership.

The company can own the brand, it can own the content, it can enter agreements, and that

clarity becomes incredibly important as the business grows.

So modern media moguls think about these things earlier than most creators do.

They understand that the podcast, the YouTube channel, or the social platform is the engine.

The engine needs somewhere to live.

They need a structure that can support the business being built around them.

Modern media moguls don't wait until success arrives to build the structure.

Now they build the structure now, so success will have somewhere to land and to live.

Now let's come back to the big idea here in this episode, should creators have an LLC?

Well, in many cases, the answer is yes.

But the deeper point is this, if you're building a brand, if you're building an audience,

if you're building revenue streams around your content, building merchandise lines and

other brands as well, you're building a business and businesses need structure.

Modern media moguls know that a structure isn't an afterthought, it's the foundation,

it needs to be built first and it needs to be built right.

Now if you're thinking about your podcaster creator platform as part of a real business,

I've created a resource that I think will help.

It's called the legal checklist for podcasters and it walks through the key legal and structural

foundations that creators should have in place as their shows grow.

You can download it at podcasterchecklist.com, that's singular podcasterchecklist.com.

It's a great starting point for making sure your podcaster, any platform that you're working

with, a YouTube channel, a social media channel, whatever, make sure that that's built

on solid ground.

Now in this episode, we've talked about the importance of that LLC, that foundation,

that container, but just forming an LLC doesn't automatically solve all of your problems.

In fact, there are several mistakes that smart creators make with LLCs that can quietly

destroy the protections they thought they had.

So next time, we're going to talk about those mistakes, things like mixing personal and

business related money, signing deals the wrong way, failing to assign the intellectual

property into the company, and lots of other issues that can weaken the structure that

you worked hard to build.

So that's our next episode where we'll talk about the LLC mistakes creators make and how

to avoid them.

Till then, I'm Gordon Firemark, the podcast lawyer.

This has been legit podcast pro, and I will see you next time.