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The Recipe for a Successful Blogging Business: How to Minimize Your Liability


… by Nellie Akalp

You’ve logged long hours behind the glare of your laptop display, battled writer’s block valiantly, and tried your best not to get rattled by the occasional negative comment or flame war. Along the way, you’ve produced some great content and have joined the growing ranks of more than 175 million blogs worldwide.

While blogging has become a serious industry, most bloggers don’t necessarily consider the business aspects of their blog when they’re just starting out. But soon enough what may have started as a casual interest turns into an extra source of income, or even a full-time business.

If you’re a self-employed or self-starting blogger, you’ve got to be aware of a few things as you navigate the legal and business aspects of your blog.

Liability issues

Yes, I know, it’s hard to imagine that sitting behind a computer can put you at any real risk of a lawsuit. And certainly managing a blog is inherently less risky than managing a sky diving business. However, there are some liability issues to consider: What it you accidentally plagiarize another writer’s work? What if you write about a mobile phone prototype left behind at a bar? What if you’re fined by the FTC or named in a class-action lawsuit for positively reviewing a defective product?

If you’re involved in blogging or social media, you’re most likely aware that back in 2009 the FTC revised their guidelines to bring social media and Internet advertisers into the mix. At the heart of this revision was a concern that recognizing ads in social media was becoming increasingly harder. And since then, we’ve seen a handful of controversies surrounding celebrities not properly disclosing brand relationships.

Here’s my recipe (just three simple steps) to minimize your liability as a blogger:

Step 1: 1 cup of disclosure

You need to disclose any ‘material relationship’ with an advertiser or brand. A material relationship can be anything and everything from receiving cash, free samples, a free product, or free trip in exchange for a product review or blog post. Let’s say that Jimmy is an online gaming expert who drinks lots of energy drinks and blogs about his gaming experiences. A game manufacturer sends him a free game and asks him to write about it. Accepting this free game creates a material relationship that must be disclosed or Jimmy can face substantial fines.

If you’re not sure what constitutes a material relationship, err on the side of caution. After all, do you think Jimmy’s readers will be upset to learn he received a free game (particularly, if he’s known for enthusiastic, albeit dead honest, reviews)? Beyond FTC penalties, I believe that disclosure is good practice, as it maintains the relationship of trust that you’ve built with your audience.

Step 2: Sprinkle reviews with results that consumers can ‘generally expect’

It’s no longer acceptable for a blog review to make outrageous claims like “I made $30,000 last month from home selling on eBay; I lost 50 pounds in 2 months.” This is true even if you put a disclaimer ‘results not typical’ in fine print. Like advertisers, bloggers are required to disclose results that “consumers can generally expect.” If you don’t comply, you could receive substantial fines or a consumer protection lawsuit. In most cases, the company itself will be the defendant, but as a participating blogger, you could also be named in the lawsuit.

Step 3: Form an LLC or corporation

Most bloggers aren’t really thinking about business structure when they first start out, meaning that most begin as sole proprietors. While you may think you should incorporate in order to lower your taxes, the main benefit of incorporating or forming an LLC has to do with separating your personal and business finances and minimizing your personal liability.

With an LLC or Corporation (S Corp or C Corp), your personal assets, such as property or a savings account, are shielded from any judgment if your blog happens to be sued or fined. On the other hand, if you’re sued as a sole proprietor, you’ll be sued personally. This means that your personal assets are all at risk. And what you initially started as an interesting side project could end up wiping out your down payment savings.

Also be aware that creditor judgments can actually last up to 22 years. This means that if you’re sued today, your personal assets will still be vulnerable for up to 22 years.

This may sound like scare tactics. And I’m not a fan of scare tactics. But I am a fan of education. Most likely, you’ll never run into any sort of problems with your blog except for the occasional troll. But following this simple recipe of shielding your personal assets through an LLC or Corp, using common sense when choosing your advertising/marketing partners, and always erring on the side of transparency will help make for the sweet success of your blog and business.

Nellie Akalp is a passionate entrepreneur, small business advocate and mother of four. As CEO of CorpNet.com, an online legal document filing service, Nellie helps small business owners form an LLC or incorporate a business in order to start and protect their new business ventures the right way. To access free guides, advice and informative videos on small business legal topics, visit here: http://bit.ly/pChZbV

At next week’s BlogWorld in LA; Nellie will be exhibiting information for attendees to learn the benefits of forming that business structure to a new venture and why it’s an integral part of the success of a business. She will be giving away one iPad2 on November 4th and one on November 5th to BWE attendees. People just have to stop by the booth and look for the ‘Word of the Day’. Once they find it; they need to Tweet to @CorpNet or comment on the CorpNet Facebook page with that word to be entered to win. If they tweet and comment; they are entered twice.

Philly’s Blog Tax: You’re Mad for the Wrong Reasons


Last week, Valerie Rubinsky of the Philadelphia City Paper broke a news story that’s been getting national attention. Bloggers in this city are now required to purchase a $300 business license if their blog is designed to make money. For many bloggers, that price far exceeds the amount of money they make on their blog. Heck, even if they take the $50 per year option instead of the one-time $300 option, many bloggers are still losing money every year.

Keep in mind that this is on top of local taxes any blogger has to pay on earnings. For some bloggers, this may mean they have to shut down their blogs.

To say that this is an unpopular law is an understatement. I’m seeing bloggers across the country tweeting about it, outraged at the idea that hobby bloggers will have to buy a license. That’s typically the initial reaction whenever people have to pay more in taxes.

I’m not a tax professional. Not at all. If you want a tax professional, head to taxgirl, who is, coincidentally, from Philly. So, if you think I’m misinformed on any of the below points, please, please, please correct me. I’ve spent some time reading about this issue, doing the best research I could do in a limited time, and this is my main conclusion:

Ya’ll are mad for the wrong reason.

I get it. No one wants to pay more money. Everyone is already responsible for paying taxes on any income they earn from blogging, and this seems like overkill. But if you really are outraged by this law, you should have been fighting for small business rights a long time ago.

Hear me out.

Point One: This isn’t a new law.

This is a law already in place that they are newly trying to enforce. Yes, I do believe its because the city needs money, not because they feel like some great injustice is occurring. That doesn’t change the fact that businesses in Philadelphia have been required to buy a license for…well, I can’t find a date when this policy was first put into effect, but before last week! What is new is the fact that they are now identifying bloggers as business owners, whereas they did not before.

Point Two: Bloggers ARE business owners.

Not every blogger is a business owner, of course, but if you’re actively trying to make a profit on your blog, you certainly are! I’ve fought tooth an nail to be considered legitimate, to teach people that blogging is not just about having an online journal. Heck, there’s even a panel at BlogWorld about how to treat your blog more like a business. The definition of business is “commercial enterprise: the activity of providing goods and services involving financial and commercial and industrial aspects.” If you make money from your blog, even just a little, you’re providing goods (content) for money. Go ahead and argue with me that I’m not a business owner. I will claw out your eyes.

Point Three: Not every business is successful.

Let’s say a new restaurant pops up in your community. After about a year, the owner declares bankruptcy because they haven’t been successful at making money. Does that mean that they weren’t actually a business? No way. Businesses try to make money, but it doesn’t mean they aren’t a business if they don’t actually make any money or make only a small amount. So if you’re a blogger trying to make money, it shouldn’t matter how successful you are. You’re a business, the same way a failed restaurant is a business.

Point Four: The world isn’t fair.

Businesses, including bloggers, have to pay for a business license in Philly. They don’t have to in other jurisdictions. That’s not fair.

Dude. The world isn’t fair. No matter where you live, there’s going to be something that isn’t fair about it. It’s not fair that I have to pay for trash removal when my friend, who lives a few towns over and pays the same tax rate, has his trash picked up for free. It’s not fair that my parents have to pay more money for Internet service than I do because they live in a rural area. It’s not fair that people in some counties of Pennsylvania have to pay for an annual emissions test on their car, while people in other counties do not.

I am not saying that you should just live with it. If you disagree with the fact that Philly requires a business license, you don’ t have to live there. Move outside of the city limits. I know that’s not an easy thing for many people to do, but we all get to choose where we live. No one’s holding a gun to your head and making your live in Philly, so if you don’t agree with the city’s policies, don’t live there.

Or, better yet, head to the polls and vote for people who make policies that fall in line with what you believe. Get out there and support Bill Green and Maria Quiñones-Sánchez in their quest to change this law so that a clear line is drawn between what is and what is not a business. But don’t do so because you don’t think it’s fair for you to have to pay for a license. Do so because you think it is the most fair option for all businesses in the city, both online and brick-and-mortar.

Point Five: It is really easy to not be a business.

The last point I want to make is this: if you honestly don’t consider your blog a business, you should have no problem taking down your advertising. From what I’ve read, Philly is not saying that hobby blogs with no form of income have to buy a license. The city is only requiring to purchase the license if you make money some way. So, if you made $10 in the past year and are outraged that someone would consider you a business because it’s only $10, remove your ads and truly be a hobby bloggers. After all, in your own words, it was only $10.

If that thought makes you mad, if you believe you have the right to make back some money for the content you provide on your blog, congratulations – you are a business. Yes, you absolutely have the right to make money – just remember that in Philly, the law says you have to be licensed to do so, no matter how much money you make.

I hope I haven’t created too many enemies with this piece. Even some of the other people here at BlogWorld may not agree with me on this one. It certainly is a hot topic right now, and whenever people are told they owe money, it’s an involuntary reaction to go on the defense. As it is written, the law isn’t fair, in my opinion…but there needs to be a threshold in place for all businesses, not just bloggers.

Allison Boyer is a writer for BWE’s blog and the owner/manager of After Graduation. She’s promises not to claw out your eyes if you disagree with her, only if you tell her she’s not a legitimate business owner. Disagreeing (in a mature way) is as encouraged as showing support!

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