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Last updated July 29, 2021

Should I Form an LLC for my Website?

Personally, I think you should.

The costs of forming an LLC is cheap compared to the personal asset protection it provides.

LLC filing fees range from $40 to $500 (the average fee is $132).

There are risks with all businesses, even if you just have a website.

Wait until you make money = bad advice

I hear a lot of advice in the online business world about waiting until your income hits a certain level before you form an LLC.

I don’t think this is a good idea. In fact, this is bad advice.

Making money has nothing to do with risk and liability.

If you don’t have a couple hundred dollars to form an LLC, you should consider saving up before starting your online business.

No LLC = Sole Proprietorship by Default

If you don’t form an LLC, you are by default, operating as a Sole Proprietorship.

Most people that operate as a Sole Proprietorship just feel overwhelmed about the process of forming an LLC and they’ve been misguided.

They think it is more complicated than it really is.

They think it will cost thousands of dollars.

It’s not complicated. And we can help.

The average LLC filing cost is $132.

And yes, some states have LLC filing fees that are $300 (Texas and Tennessee).

Even worse, an LLC costs $500 in Massachusetts.

But still, those costs are minimal compared to the liability protection that you get when you form an LLC for your website.

To check on filing fees in your state, click here: LLC fees by state.

Need help with your LLC? Have a professional LLC service file for you:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

Legal Risks of Owning a Website

Just because you have a website or online business does not make it “safer” than a physical one.

There are vulnerabilities with all types of business.

And unfortunately, we live in “sue-happy America” and people can sue you for any reason, at any time.

Here are a few things to consider:

Libel or Slander

Consider the fact that just by writing words on your website, they could be interpreted as libel or slander.

Affiliate Offers

Do you link out and promote to any affiliate offers? That also carries liability.

List Building/Email Collection

Does your website collect personal information from an email opt-in or newsletter? If so, then you need to make sure your website complies with data protection laws. If it does not, you have liability exposure.

Defamation

Does your website contain gossip? If so, be careful. This can often be considered defamation.

Copyright & Licenses

Does your website contain copyright material owned by others, such as images, videos, or audio?

If so, you need to make sure this information is properly licensed.

Back when I started in web development, I accidentally used photos from Google Images, thinking they were royalty-free. I ended up getting two letters, one for an $800 lawsuit and one for over $1,000 claiming copyright infringement.

Products or Services for Sale?

Does your website sells products or services? If so, these industries are often heavily regulated, and many small business owners fail to remain in compliance.

Look, the above information is not meant to “fear you into” forming an LLC. It’s just meant to make you aware of the risk that comes with owning a website.

An LLC keeps you protected

Forming an LLC for your website keeps your personal assets protected.

In the event that someone wants to sue you, they’re actually not suing you personally, but instead they’re suing the LLC.

Your personal assets, like your home, your cars, and your bank accounts, are protected in the event that your business is sued.

Forming an LLC for your Website

Forming an LLC requires 5 to 6 steps (depending on your state). They are:

1. Researching your desired LLC

You’ll need to research your LLC name to make sure it’s available for use. You need to make sure your desired LLC name is unique and distinguishable before filing your paperwork with the state.

If your name is not unique the state will deny your filing, and some states will hold onto your money until you correct your paperwork.

2. Selecting a Registered Agent

A Registered Agent is a person or a company who agrees to accept Service of Process on behalf of your LLC.

Service of process is any paperwork pertaining to a lawsuit or a subpoena.

Most online filing companies (unfortunately) trick you into hiring them as your Registered Agent.

You or someone that you know (like a friend or family member) can act as your LLC’s Registered Agent, so long as you or they have a physical address located in the state where your LLC is formed.

3. File LLC formation documents

Your state will require that you file LLC formation documents and pay a filing fee in order to form your LLC.

LLCs are formed at the state level, therefore each state has its own documentation and unique filing instructions. You need to ensure your LLC is properly filed.

The average turnaround across the U.S. is about 7 to 10 business days for approval, however some states take longer (2 – 2.5 weeks).

4. Draft and sign an LLC Operating Agreement

Once your LLC is approved with your state, you’ll then complete your LLC Operating Agreement.

The LLC Operating Agreement is a contract among the members (even if there is just one member) which spells out how much of the LLC each member owns, how the LLC is managed, and how the LLC pays taxes.

An LLC Operating Agreement is typically 3-6 pages, but some can be longer depending on the industry that you’re in and the complexity of your business.

5. Obtain your Federal Tax ID Number (aka EIN) from the IRS

Your Federal Tax ID Number (aka EIN) is like a social security number is to an individual… it identifies your business/LLC to the IRS for tax purposes.

You also use your EIN for opening up a business checking account.

Obtaining your EIN is a free service provided by the IRS.

Don’t let other websites trick you into paying exorbitant fees to have them do this for you.

If you become a member of our online course we will walk you through the IRS’s online questionnaire to ensure that you get it filled out correctly.

This process takes approximately 10 minutes and at the end of the application you will receive your EIN in a PDF print out.

Remember: only file for your Federal Tax ID Number (EIN) after your LLC is approved. Having an EIN attached to the wrong LLC is not fun. Dealing with the IRS to make corrections and cancel EINs is a pain in the butt!

6. Keep your LLC in compliance by filing your Annual Report

Over 90% of the states require LLCs to file an Annual Report in order to remain in good standing.

The Annual Report can take on many names such as the Annual Registration Fee, Annual Review, Biennial Report, and many other names.

We will refer to it as the Annual Report for simplicity.

In a handful of states (about 5-7 of them) there are no fees associated with the Annual Report, but in most states there is a filing fee, with the average being between $50 and $100.

LLC Annual Reports are usually due on an annual basis (go figure!), but many are due every other year.

Are you serious about your website/online business?

If you are serious about your website, then I strongly recommend that you set up an LLC.

The cost is minimal compared to the personal liability protection that an LLC provides.

Just because you’re running the website does not mean that you are safe from exposure to liability.

A great quote from Brendon Burchard is, “Don’t let your small business make you small-minded.”

Forming an LLC for your website is not only a good idea from a liability perspective, but it also adds credibility when dealing with customers and partners.

Matt Horwitz
Matt Horwitz
Founder & Educator, LLC University®
Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.

28 comments on “Should I Form an LLC for my Website?”

Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

  1. May I ask you a question please, I’ll make up a generic example. I want to make a LLC for Spero’s Apples. So it will be Spero’s Apples LLC. The use of this will be to cover the activities of Spero’s Apples.com, a website to write about apples and maybe have some advertisers. What simple words do I write in the operating agreement (or elsewhere?) to assure that the activities of the website are covered by the LLC? Or can the LLC be Speros Apples.com LLC? I’m new to this, thanks in advance.

    • Hi Spero, you could form either “Spero’s Apples LLC” or “Speros Apples.com LLC“. You don’t have to get “.com” in your LLC name in order to have your website fall under your LLC. Simply register your domain and purchase hosting with your LLC. You don’t have to include language in the Operating Agreement, although you certainly could. However, were not able to provide additional clauses to add to your Operating Agreement at this time.

      • Thank you for taking the time to respond to my question.

        May I complicate the question one step further? If I have already personally bought the Spero’sApples.com domain name 2 months ago, how do I say that the (future) LLC now owns it? I will be the only operating member of the LLC.

        Thank you again for your kind attention.

        • You can create a Bill of Sale or Website Purchase Agreement and sell the domain name and all associated rights from yourself to your LLC. I just emailed you a sample agreement you can use. You’re welcome Spero!

          • Is there any way you can send that sample agreement? I have my website up already but it isnt available to the public yet. This would still work right? Thank you for your time.

            • Hey E.Cap, I made the form available for download here: Website Purchase Agreement. And yes, it’s okay that the website is up and running. You can just back-date the agreement if you’d like, since it’s just between you and your LLC. Hope that helps!

          • Could you possibly email me a sample of this agreement as well. In the same boat!

            • Hey Kandra, please look one comment up (my reply to E.Cap). You’ll see a link to download the Website Purchase Agreement in Word format. Hope that helps!

  2. Are there tax benefits to starting an LLC months before my website will generate income? For example: tax write offs, tax returns, etc

    • Hey Aaron, if you operate as a Sole Proprietorship for that partial year (filing on a Schedule C) you could still write off those expenses, so I’d say no, no tax benefit. However, this is not tax advice and we recommend speaking with an accountant. The timing of when your LLC goes into effect could save you money on your LLC’s first Annual Report though. We have more details on that here: LLC effective date. Hope that helps!

  3. Thanks for the good info. You answered some of the questions that online chat with other LLC websites were unable to answer for me.

  4. Are DBA’s under LLC’s given the

    same protection?

    • Hi Maria, no. DBAs have no protection. However, the DBA is “looked through” since it’s just a “nickname” for the LLC. Hope that helps.

  5. Hi! You kinda already answered a question I was thinking of but I wanted to clarify. If you are planning to open a website and an LLC for the website. Which should be done first? The creation of the LLC or website? Also how is the website linked to the LLC? If the LLC is made first how exactly is it known that is it for the LLC or is the LLC etc. Thanks!

    • Hey Ryan, great question. It’s easiest to form the LLC first. Then when you setup your domain registrar and hosting account, list the LLC as the owner (you’ll see a field for “company name” usually). Then in your legal disclaimers (privacy policy, terms of use, copyright notice, etc.) make sure to use the LLC name. Hope that helps!

  6. Is it better to have multiple LLCs for each monetized website vs one “umbrella” LLC to cover several sites? Is the latter option “OK but not best”?

    Thanks

    • Hi Brent, there isn’t a black and white answer to it, so you could go about it either way. It depends on the details of the business, risk, management of the LLCs, etc.

  7. Hey, Matt. Thanks so much for the article and answering everyone’s questions above. I learned a lot. Im in New York where I have to pay a fee for publication in magazines/newspapers. We have the choice of paying a company to do this or we can do this ourselves. I thought I could do this myself as it may be cheaper (though more work) and I’d have more control over which outlets I’d be advertised through. Any thoughts on the matter? Thanks in advance.

  8. Hi – Thank you for this good information. I am an American citizen but have been living in Italy for 3 years and am a resident. I’ve started a blog and will be selling digital products and do affiliate programs like Amazon and Etsy. I am so confused as to how to incorporate or form an LLC. All of my income will be online through the sale of digital products or affiliate income with American companies. Any advice? Grazie!

    • Hi Susan, you’re welcome :) Will you be returning to the states after your travels or will you stay in Italy indefinitely? While it sounds like you’re LLC won’t be doing business in a particular state, it may be easiest long-term to form the LLC in the state in which you are a resident.

      • Thanks so much for replying. I will probably stay in Italy forever. I own a home here and will become a permanent resident here next year. The last state I lived in the US was Texas and that is my registered address in the US. Of course I am still a citizen of the US. But this is an online business, blog + IG where I will sell products online and receive affiliate income. Grazie mille 🤩 Susan

        • Hi Susan, you’re welcome :) In that case, you can pick any state you’d like to form your LLC. You can pick Texas too if you’d like. One benefit to a Texas LLC is that a friend or family member can be your Texas Registered Agent (and therefore save you money each year). Hope that helps.

        • i want to start a online store aswell. How do i go about getting products or if i have a brand name but like to sell my name on products?? Or sell other people products?

          • Hi Ashley, our website focuses on LLC formation, not product sourcing. Thank you for your understanding.

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