Should I Start an LLC for My Copywriting Business?

Starting a limited liability company (LLC) for your copywriting business can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a copywriting business, lawsuits can arise from things like using copyrighted text in an article, intentionally releasing statements to harm a client’s reputation, or not finishing the work for a client by the agreed-upon date.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your copywriting business seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Copywriting Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Copywriting Business

By starting an LLC for your copywriting business, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Copywriting businesses will benefit from liability protection because of the risk of trademark claims, libel, and more.

Example 1: An employee at your copywriting business accidentally used copyrighted text in an article for a client. When the owner of the copyrighted material heard of this, he filed a lawsuit against your business for its infringement of his property rights. In this example, limited liability would preclude any business liability to pay damages from extending to you personally.

Example 2: Your copywriting business signed a contract with a client promising to deliver five 2000 words articles in a week. However, when this deadline passed without all five articles being completed, the client sued your business for breach of contract. Limited liability would prevent the court from being able to seize your personal assets to satisfy business obligations.

Example 3: After a client refused to pay for the services of your copywriting business, claiming he was dissatisfied with the quality, you decided to release numerous articles containing false and damaging statements about the client in an effort to harm his reputation. As a result, the client sued your business for defamation. In this instance, any business obligation to pay damages is limited entirely to the assets belonging to your business.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Copywriting Business

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a copywriting business owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Copywriting businesses rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a trusted LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Insurance is an invaluable resource for copywriting businesses and provides a number of useful benefits. The most valuable of these benefits is the peace of mind it grants. All businesses are exposed to risk, and that is no different for copywriting agencies, however, insurance offsets this risk to an insurance agency so that your financial and physical assets remain safe.

Common Situations Business Insurance May Cover for a Copywriting Business

Example 1: A client accuses one of your copywriters of plagiarism. General liability insurance would cover your legal fees to fight or settle the claim and restore your business’ reputation.

Example 2: Because your business name is similar to the name of a content marketing agency in another state, that agency sues you for loss of business due to customer confusion. General liability insurance would cover your costs in fighting the lawsuit.

Example 3: During a visit to your office, a client trips over a computer cord you didn’t properly secure behind a workstation. General liability insurance would cover the client’s medical bills associated with their resulting injury.

Other Types of Coverage Copywriting Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all copywriting businesses should obtain.

Commercial Property Insurance

If you own the building in which you operate, commercial property insurance would cover the cost of repairing or replacing your business-related property in the event of a fire, burglary, or natural disaster. This includes the cost to repair any structural damage to your building or grounds as well as to repair or replace any business equipment you store there.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees — including those working remotely. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a work-related accident.

Professional Liability Insurance

Copywriting businesses may instruct clients on how to structure their content to better align with their brand. Because clients may consider this professional advice, you need professional liability insurance to protect your business and cover your legal costs in the event a client claims your advice harmed them.

Commercial Auto Insurance

Any vehicle you or your employees use primarily for business — such as to visit clients — requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured but also sufficient protection for any business-related equipment you carry in your vehicles.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance and professional liability insurance.

Read our Business Insurance article for more info.

Startup costs for a copywriting business can be incredibly low since, as a minimum, all that is really needed is a computer and a stable internet connection.

That being said, if you are planning on starting a large agency with its own employees, this cost will increase dramatically as it will have to include invoicing software, conference software, and high-end computer systems.

Visit our How to Start a Copywriting Business guide to learn more about the costs of starting and maintaining this business.

You’ll likely need to pay for your office space, employee salaries, utilities, service fees for merchant accounts, and invoicing software.

Learn more about running a copywriting business.

A copywriting business charges clients to produce copy — either by the word, by the hour, or per project.

Learn more about starting a copywriting business.

A copywriting business is a type of marketing business that specializes in creating written content, usually for online platforms. This could include blog posts, social media posts, industry reports, or other types of content.

Copywriting companies usually work on a freelance basis because most businesses don’t hire writers full-time. As a result, a copywriting business needs a steady stream of new clients to remain profitable.

A copywriting business’s profit potential depends on the number of clients it has and its hourly rate for producing copy.

Learn more about starting a copywriting business.