Should I Start an LLC for My Niche Website?

Starting a limited liability company (LLC) for your niche site 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 niche site, lawsuits can arise from things like statements interpreted by competitors as libel, disagreements over the contents of a contract, and an inability to pay lenders what they are owed.

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

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

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Do I Need an LLC for a Niche Website?

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

You should start 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 Niche Website

By starting an LLC for your niche website, 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.

Niche websites will benefit from liability protection because of the risk of copyright and trademark infringement, data breaches, libel claims, and professional liability.

Example 1: Your niche site is sued by the website designer who alleges he incurred certain extra costs when setting up your website. You believe the risk of such costs were his to carry. If, however, you lose the case, rest assured only your business assets would be affected by the judgment. Your personal assets are protected.

Example 2: Your niche site is taken to court by a vendor who delivers promotional material at the office. You maintain you placed no order for such material. However, if the vendor’s suit is successful, compensation can only be made from business assets, not your personal assets, which are protected.

Example 3: Your niche site falls in the SERPs and traffic to the site falls dramatically. Sadly, assets are much less than liabilities, and so some creditors will go unpaid. Regardless, they will be unable to pursue your personal assets, which are protected by the limited liability shield of your LLC.

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 Niche Website

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 niche website 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.

For questions about tax solutions for your niche website, we recommend scheduling a free tax consultation.

Credibility and Consumer Trust

Niche websites 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 professional 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.

A niche site will need liability insurance in the event it is sued for a copyright violation. General liability insurance also protects against other forms of property damage, such as damage to computer equipment.

Common Situations Business Insurance May Cover for a Niche Site

Example 1: Your niche website serves a specific type of reader by providing executive interviews and insights into your target industry. During an interview with an industry leader in your office, he trips over a box, breaks an arm in the resulting fall, and demands your company pay for his medical treatment. General liability insurance would cover his medical bills.

Example 2: As an employee conducts research at another business, she trips on a cable, falls into a stack of servers, and knocks them to the floor. General liability insurance would pay to replace the business owner’s damaged computer equipment.

Example 3: A competitor sues your business for libel. While you disagree with the claim, you know you need an attorney to prove your case. General liability insurance would pay for your legal defense and any required settlement.

Other Types of Coverage Niche Sites 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 niche sites should obtain.

Commercial Auto Insurance

Since you will be driving your business vehicle on public roadways, you are mandated by the state to carry a commercial auto policy. Auto insurance protects not only your vehicle but any liability you may have in an accident. Your personal car insurance will not cover you if you are driving the business vehicle, even if you are off duty.

Commercial Property Insurance

If you own your location instead of renting, you need commercial property insurance to protect the building. If your business is based out of your home, your homeowners' insurance will not cover the home when it is being used for commercial purposes. Property insurance also covers items owned by your business.

Niche sites invest heavily in the tools that are used to complete their work. Be sure that you have enough coverage to replace all of your tools in the case of a loss. This coverage is generally offered in a Business Owner Policy (BOP).

In addition to the policies outlined above, there are a few other types of coverage your niche site may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Workers' Compensation Insurance

If your niche site has any employees (full-time or part-time), you are legally required to carry workers’ compensation insurance. This type of coverage will help compensate your employees in the case that they get injured on the job.

Read more about workers’ compensation insurance.

Business Interruption Insurance

In the event of a fire, flood, or other catastrophes, there is a good chance your business operations will be halted for some time. Business interruption coverage is designed to help you recoup a portion of the revenue your business would lose due to the inability to operate.

This type of insurance is typically included in a business owner’s policy.

Commercial Umbrella Insurance

Umbrella coverage allows you to extend above and beyond the standard limits of your other business insurance policies. If you are faced with a large lawsuit or other claim situation, there’s a possibility that the coverage limits of your standard policies will be insufficient. In this case, your umbrella policy will allow you to surpass these limits.

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.

Read our Business Insurance article for more info.

Startup costs for a niche site may be as low as $100. They will include expenditure on a domain name, hosting, and website design. Ongoing costs will be payment to content creators, plus utilities and insurance.

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

Ongoing expenses of running a niche website include website maintenance, content creation, advertising, and insurance.

Learn more about running a niche website.

Niche websites make money in several ways, including affiliate links, which give them a commission for goods and services purchased from a third-party, membership fees, and digital courses.

Learn more about starting a niche website.

Niche websites target a specific market and provide services and information to satisfy the needs of the market. These websites usually create products beyond their web content to generate revenue.

Established niche websites can see profit margins as high as 80%.

Learn more about starting a niche website.