One of the most common questions we get as content creators open an LLC is whether they should file in Wyoming or Florida. There is a lot of information online about the tax benefits of opening your LLC in another state. While it may be cheaper to open an LLC in another state, it might actually not be the best option for you. Let’s take a look at LLCs and whether you should start yours in Wyoming or Florida.
LLC Basics
An LLC is a limited liability corporation, and its main purpose is to provide a legal separation between your business assets and your personal assets. If somebody were to sue your business, they would not be able to go after your personal assets like your home or car. Instead, only your business assets would be at risk.
Outside of legal protection, there are several other benefits to registering your content creation business as an LLC. One of the biggest reasons is to legitimize your work in the eyes of the IRS. If the IRS ever classifies your work as a hobby, you wouldn’t be able to take advantage of the tax deductions as a self-employed worker.
You also gain more identity protection. As an LLC, you can use an EIN (Employer Identification Number) instead of your personal Social Security number on tax forms. All those W-9s you fill out for your brand deals and sponsorships put your identity at risk because you share your SSN. Using an EIN will keep that information private.
Done-for-you taxes and bookkeeping for creators
The Drawbacks of Filing an LLC in Wyoming and Florida
If you don’t live in Wyoming or Florida, it’s very rare that we’d recommended to open an LLC in those states. While they may offer lower costs to register, a lot of the benefits of having an LLC will not apply if you don’t live in those states. Your LLC provides legal protection for the state in which you registered.
If you’re in California or New York and have an LLC in Wyoming or Florida, your personal assets are at risk. We recommend opening an LLC in the state where you live because that’s where your personal assets are protected.
There is a lot of misleading information about having zero state tax. An LLC is a pass-through entity, meaning that the income passes through the business to your personal tax return. You will have to pay state taxes according to the state you live in, not the state where your LLC is in. If your state has state tax, you are expected to pay those taxes.
This all said, we do recognize that the decision to open an LLC in Wyoming might still be beneficial. As we said, it is very rare. We recommend booking a call with us to determine if it’s the right choice for you.
How to Decide Where to File Your LLC
As a content creator, where you live can be fluid. You may travel constantly for your work, or you may spend time in other states or parts of the country. Whatever state you consider your state of residence, it should be the state where you register your LLC. This will ensure that your personal assets are protected. If you do not live in Wyoming or Florida, it’s best to avoid forming your LLC in those states.
Conclusion
Navigating taxes as a creator comes with a lot of complications. We work with creators like you to answer all your questions about LLCs, S Corps, Taxes, and so much more. If you would like some more specific advice about where to register your LLC, we can help. Book a call with us to see how we can work together to manage your business paperwork, bookkeeping, and tax needs.