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Do OnlyFans Creators Need an LLC?

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Has your Only Fans account taken off? It’s time to strategize

Creating an LLC is the natural first step in legitimizing your business. These three little letters add more than just credibility to your title. 

I have assisted in the LLC creation process for countless clients as a tax professional. In today's post, I will fill you in on everything you need to know about creating an LLC and help you decide if this is the right move for you and your business. 

First of all, what is an LLC?

I’m glad you asked! LLC stands for limited liability company. It’s a business structure specific to the US and forming an LLC will do a few things for your business;

  1. Offer liability protection, meaning if your business runs into financial troubles such as filing for bankruptcy or being sued, your personal assets will be protected. 
  2. Add legitimacy and potentially protect your content from copyright and trademark infringement. 
  3. Aid in anonymity by adding an extra layer between yourself and your business activity. 

As only an independent contractor you are entitled to all profits earned and are entirely responsible for any debt, losses, and liabilities. Simply put, if anything happens to your business without an LLC you will be personally liable. 

Should I Form An LLC?

LLCs give you peace of mind that your personal assets are protected. If you have any business partners, contractors (photographers, assistants, etc.) clients, or individuals on your payroll, then I would say yes- you should form an LLC. 

Does an LLC Create Tax Breaks?

Initially, single-member LLCs are taxed the same as a sole proprietorship. Creating an LLC does not automatically save you money when it comes to tax time. 

However, you can opt to be taxed as a Small Business Corporation (S Corp). 

S Corp Tax Election

Once you have an LLC, you can change your business's tax status with the IRS. Electing to be taxed as an S Corp will create a distinct separation from your business and personal finances. 

Filing as an S Corp allows you to reduce self-employment taxes and contribute to a pre-taxed 401k or health insurance premium. 

While these are attractive savings, you will be responsible for paying yourself a salary via a W-2, which creates additional tax return preparation and bookkeeping expenses. This option isn’t for everyone, make sure to consult with a tax professional. 

How To Form An LLC

The process of forming an LLC will differ in each state. 

Here is a gist of what you will need to get started: 

  1. Select your state
  2. Name your LLC
  3. Choose a registered agent
  4. File your LLC with the state
  5. Create an LLC operating agreement
  6. Get an EIN

When forming an LLC, you do not have to register in your home state; however, this may be the more straightforward and beneficial option. 

Time for the exciting part… choosing a name for your empire! When deciding on your company name, there may be specific regulations depending on the state you file in. Already have a name in mind? You can run it through this search tool to make sure it is available. 

Once you have decided on the perfect name, you will have to choose a registered agent. This is the person that will be responsible for the correspondence of all legal documents for your company (I’d be happy to help with this). 

After you you decide on a registered agent, you're ready to complete LLC formation documents with the state's business division. This is known as The Articles of Organization as well as Certificate of Formation or Certificate of Organization. The fees for this vary by state.

Lastly, you’ll need to obtain an EIN from the IRS. Depending on the state you formed your LLC in, you may be responsible for one more step, a certificate of publication. 

LLC Certificate Of Publication 

If you have formed your LLC in New York, Nebraska, or Arizona, your LLC will not be official until the certificate of publication is complete. 

Simply put, you will have to announce your LLC formation in an approved newspaper. Each state has particular requirements, including what county you must publish the announcement in, how many times it must be published, how many newspapers, and the completion of specific paperwork. 

Maintenance and Renewals

It’s important to note that each state has different requirements to maintain an LLC. Some states require biennial reports, franchise tax reporting or a flat annual tax. If you don’t keep up with these requirements then your LLC could end up in bad standing with the state revoking your personal liability protection. 

The Bottom Line 

While an LLC does not offer an immediate tax break, it can protect your personal assets, legitimize your business, aid in anonymity as well as mitigate copyright and trademark infringement. You work hard for money - stay legit.

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