What are the implications of creating an LLC for a blog?

The rule you’re speaking of is the IRS hobby rule. If a limited liability company (LLC) has not turned a profit in at least three of the prior five years, the IRS will categorize your business as a hobby. If the IRS classifies your blog as a hobby it would prevent you from claiming a loss related to the LLC. The IRS also lists factors on its website to help people “determine whether your activity is an activity engaged in for profit or a hobby:

  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Do you depend on income from the activity?
  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
  • Have you changed methods of operation to improve profitability?
  • Do you have the knowledge needed to carry on the activity as a successful business?
  • Have you made a profit in similar activities in the past?
  • Does the activity make a profit in some years?
  • Do you expect to make a profit in the future from the appreciation of assets used in the activity?

Hope this helped! At LawTrades, we’ve have helped a bunch of bloggers deal with their legal concerns by offering affordable legal representation from top-notch attorneys. Stop by for a free consultation or a free price quote.

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