Is a sole proprietorship the same as being self-employed?

Yes. If you earn content creation income without a formal business entity, the IRS treats you as a self-employed sole proprietor. You must pay self-employment tax (15.3%) on net profit and file Schedule C with your 1040.

Can I switch from sole proprietor to LLC mid-year?

Yes. You can form an LLC at any point during the year. For tax purposes, you will report all income for the year on the same Schedule C. Just make sure to separate finances from the formation date forward.

Do I need both a sole proprietorship and an LLC?

No. You choose one or the other. A single-member LLC replaces the sole proprietorship. You cannot operate as both simultaneously for the same business activity.

Does a sole proprietorship need an EIN?

Only if you hire employees. Otherwise, you can use your Social Security Number for tax filing. However, getting a free EIN from the IRS is recommended so you do not have to give your SSN to brands and sponsors on W-9 forms.

Guide

Sole ProprietorshipLLCContent CreatorBusiness StructureUSA

Sole Proprietorship vs LLC for Content Creators: Which Is Right?

Every content creator in the US starts as a sole proprietor by default the moment they earn their first dollar. The question is whether you should stay that way or form an LLC. This guide compares the two structures on liability, taxes, cost, and complexity so you can make the right call for your situation.

Last updated: February 26, 2026

Step-by-Step Guide

Assess your current income and risk

Calculate your average monthly content creation income and identify potential liability risks in your niche (product reviews, health advice, financial content carry higher risk).

Check your state's LLC costs

Look up filing fees and annual requirements on your state's Secretary of State website. Factor in annual reports, franchise taxes, and registered agent fees.

Decide based on the numbers

If your annual LLC costs (filing + annual fees) are less than 5% of your annual content income, the LLC is almost certainly worth it for the liability protection alone.

File your LLC if appropriate

Submit Articles of Organization online, get an EIN from the IRS, and open a business bank account. The entire process can be done in one afternoon.

Update your business operations

Move all income and expenses to your business bank account. Update your sponsorship contracts to use your LLC name. Issue W-9 forms with your EIN instead of your SSN.

What each structure actually means

Sole Proprietorship — This is not something you file for. The moment you earn money from content creation without a formal business entity, the IRS considers you a sole proprietor. You report business income on Schedule C of your personal tax return. There is no legal separation between you and your business.

LLC (Limited Liability Company) — A formal business entity registered with your state. It creates a legal separation between your personal assets and business debts/liabilities. By default, a single-member LLC is taxed identically to a sole proprietorship — the difference is entirely about legal protection.

Key distinction: The tax treatment is the same. The difference is liability protection and professional structure.

Side-by-side comparison

Liability Protection
- Sole Prop: None. If someone sues your business, your personal savings, home, and car are all at risk.
- LLC: Full separation. Only business assets are at risk (assuming you maintain the corporate veil).

Formation Cost
- Sole Prop: $0 (automatic)
- LLC: $50-$500 depending on state filing fees

Annual Cost
- Sole Prop: $0
- LLC: $0-$800/year depending on state (California is the most expensive at $800/year minimum franchise tax)

Taxes
- Sole Prop: Schedule C on Form 1040 + self-employment tax (15.3% on net profit)
- LLC (default): Identical — Schedule C + self-employment tax
- LLC (S-Corp election): Can reduce self-employment tax once you earn $50K+ net profit

Credibility with Brands
- Sole Prop: Some brands and agencies require you to have a registered business entity before signing contracts
- LLC: Professional and preferred by brands, agencies, and MCNs

Bank Account
- Sole Prop: Can use personal account (but should not)
- LLC: Business bank account with EIN required

When to upgrade from sole proprietorship to LLC

Stay as a sole proprietor if:
- You earn less than $500/month from content creation
- You are just testing whether content creation is for you
- You live in a high-cost LLC state (California) and your income does not justify the $800/year franchise tax

Form an LLC if:
- You earn $1,000+/month consistently
- You are signing brand deals or sponsorship contracts
- You review products, give advice, or create content that could result in legal claims
- You hire contractors (editors, thumbnail designers, writers)
- You want to build business credit

The general rule: once content creation is a real income stream (not a hobby), get the LLC. The $100-$300 formation cost is cheap insurance against a lawsuit that could wipe out your personal savings.

Disclaimer: This is general information, not legal or tax advice. Consult an attorney or CPA for your specific situation.

Pro Tips

You do NOT need to dissolve your sole proprietorship to form an LLC — the sole prop simply stops existing when you start operating as an LLC
Even as a sole proprietor, get a separate bank account and keep clean records — it makes the transition to LLC seamless
If you are in California, consider waiting until your monthly income exceeds $1,500 before forming an LLC due to the $800/year franchise tax
Your LLC can own intellectual property (channel name, logo, content library) — this is important if you ever sell your channel
An LLC does not change your tax obligations by default — you still pay the same self-employment tax unless you elect S-Corp status