Should I Start an LLC for My Radio Station?

Starting a limited liability company (LLC) for your radio station 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 radio station, lawsuits can arise from things like making defamatory statements about a person or business or accidentally broadcasting an individual’s personal information without permission.

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

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

Do I Need an LLC for a Radio Station?

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 Radio Station

By starting an LLC for your radio station, 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.

Radio stations will benefit from liability protection because of the risk of copyright infringement, libel, and general business risks.

Example 1: A song you played during a morning talk show was copyrighted. Since you did not pay for it, the owners are taking you to court. Should your station lose in court, your personal assets can not be taken in the settlement since they are protected with limited liability as an LLC.

Example 2: A guest getting interviewed on your station’s morning show trips over equipment before air and suffers a concussion. They sue you for their medical expenses and lost wages. Your personal assets cannot be used to pay for this since they are protected with limited liability as an LLC.

Example 3: You take out a small business loan for some new equipment but miss several payments. Since your station is an LLC, limited liability would protect your personal assets so they could not be taken as collateral or repossessed over this matter.

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 Radio Station

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 radio station 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

Radio stations 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.

Radio equipment can be expensive so it is important to protect it. Insurance can cover your assets like antennas and audio equipment so if they are damaged by weather or human accident you will have assistance with paying for repairs or replacements.

Common Situations Business Insurance May Cover for a Radio Station

Example 1: When a big-name guest arrives early for an interview, he trips on a stack of records while exploring your studio, breaks a wrist in the fall, and asks your radio station to pay for his medical treatment. General liability insurance would cover his medical expenses.

Example 2: A rival talk radio station files a lawsuit against your best DJ, claiming she committed libel in a recent on-air promotion. While you disagree with the claim, you know you need to seek legal advice right away. General liability insurance would pay for your legal defense and any awarded damages.

Example 3: As an employee moves prizes for an upcoming event from your storage facility to a company vehicle for transport, he loses control of the cart and it hits an investor’s luxury car. General liability insurance would cover the investor’s vehicle repair costs.

Other Types of Coverage Radio Stations 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 radio stations should obtain.

Commercial Auto Insurance

Any vehicle you use primarily for tasks related to your radio station 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 materials you carry in your vehicle.

Workers' Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time workers. 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 workplace accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

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, workers’ compensation insurance, and commercial property insurance.

Read our Radio Station Business Insurance article for more info.

Startup costs vary greatly on the type of station you want. You can start an internet radio station for almost nothing, the only cost comes from the time and money spent creating programming. You can also create a low-power FM radio station for under $15,000, which includes all of the equipment you need. However, commercial radio stations are much more expensive, with approximately $515,000 for equipment and the station itself.

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

The ongoing expenses of a radio station include equipment maintenance, content licensing, rent, utilities, and salaries.

Learn more about running a radio station.

Radio stations make money primarily by selling airtime for advertisements and sponsored broadcasts on their station.

Learn more about starting a radio station.

Radio stations broadcast news, businesses, music, and talk shows. The portable format of radio makes it a favorite medium of news and entertainment for people on the move.

The average profit margin for a radio station needs to be at least 20% to be sustainable.

Learn more about starting a radio station.