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So you are a blogger now . . .

February 28, 2009

Green Apple on BooksSo you became a blogger.  You started small, sharing your blog with your family and friends and before you know it you have 2000 visitors a day and you want to start making a profit.  Whether your are planning on getting direct sponsorship or merely adding search engine ads on the side, it is important to realize that you are now a business and you need to start acting like one.   As a corporate attorney, my focus is that a blogger runs their business properly.  If you are looking for more information, Aviva Directory has a great round up of the 12 Important US Laws Every Blogger Needs to Know that focuses on best practices for bloggers concerning their use of links, pictures, comments and other need-to-know items.

First things first, bloggers can protect themselves from personal liability by incorporating. Unlike personal ownership (which is known as a sole proprietorship), when a business becomes incorporated, the individual’s liability is limited to the amount invested in the company.  In a sole proprietorship, the individual’s personal assets, such as your house, are reachable to pay any debts of the business.  If you wait to “cross that bridge when you get there,” it is likely already too late. In the world of business, being proactive and resourceful are the entrepreneur’s greatest assets, and these qualities should be extended into ALL aspects of the business, including its formation.

So how do you incorporate.  Well first you need to decide which state and in what form.  If your business is a blog and likely to stay that way, a LLC in your local state is likely the best choice.  If you think you will be expanding in some way, such as offering web 2.0 services of some sort, it might be best to go with a Corporation.  A general rule of thumb is: if you anticipate obtaining angel or venture funding from investors, then you should likely incorporate as a Corporation in Delaware or California (and you should definitely consult an attorney).  Otherwise forming a local LLC will probably be the most effective and cost-efficient choice.   To get started you need to choose a name (that is acceptable by the state) and file articles of organization.  As part of this process you are assigning the blog domain and its related content to the company.  From then on, it is important to keep your personal expenses and bank accounts separate from the company’s expenses and bank accounts.

Disclaimer: The information contained in this Web site is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.  We recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.

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5 Comments leave one →
  1. March 12, 2009 5:15 am

    Great post, lots of useful advice.

    It’s also a really good blog, well written and the recipes make me hungry🙂

    • heidiesq permalink*
      March 12, 2009 1:22 pm

      Thanks Tom! I will try to continue to provide useful advice for start-ups, as well as indulge in some good food and wine! Thanks for stopping by.

  2. March 12, 2009 3:14 pm

    Thanks for the tips, nice blog. I am not a lawyer but my understanding is that forming a LLC or incorporating really does not protects individuals. It is more to protect companies from potential liabilities created by their employees or other third parties working for the company. For example imagine you own you business and have employees and one of your employees gets into a car accident with the company van. The employee is liable and your company can be liable, lets say the van had faulty brakes. but in this case the owner of the company would not personally be liable. But lets say you as the owner get into an accident with the company van you are still personally liable, including you personal assets. So individual bloggers should be aware that forming an LLC or incorporating is not a “legal buffer” unless they plan to have other writers post on their blog.

  3. heidiesq permalink*
    March 12, 2009 4:32 pm

    On the contrary, forming an LLC can provide a great legal buffer for individual bloggers. Protecting from liabilities created by employees or third parties is just one of the many thousand ways a company can get sued. A blog posts lots of information and that can lead to lawsuits. The last couple years has seen a tremendous rise in such suits on the basis of defamation, libel, copyright infringement, etc. Some big companies are known to “cyber-bully” in hopes of keeping their SEO position, or scaring away negative comments about their executives, products, etc, which involves bringing lawsuits. If you have set up a company, then the company gets sued. If your “legal buffer” succeeds (and it might not depending on multiple factors), then your family home or car is not going to be on the hook if the LLC owes money, because debtors could only reach through to the company’s assets, not the individual’s.

    If you were defending your castle from future attackers, would you not build a castle wall to protect your home and those inside, even if there is a small chance the wall might get knocked down in the fight?

  4. March 12, 2009 4:57 pm

    I think it is a fascination subject. I am a sole proprietor and just recently started my own blog. Two years ago I consulted with my lawyer/CPA about forming an LLC for my business (not blog), he pointed out to me the miss conceptions that people have about LLC legal buffer and personal liabilities.. As I pointed out in my previous post, persons are still liable for their own actions and can not hide behind a corporate umbrella. Having said that I would hope that bloggers are more protected by the first amendment then by an LLC. It would be great to get a third opinion on this by a lawyer who is not connected to the “LLC and incorporation industry”.

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