When you start your YouTube channel, it’s fun to think of it mostly as a creative outlet where you can make fun videos and reach people. However, as it grows it becomes apparent that the channel will need to turn into a business that supports itself as well as a team of other people who help you manage your content, community, opportunities, and more. In this video I share with you the background story of my own YouTube business here at Video Creators and give some advice on when and how to turn your own YouTube channel into a business.
Sunny wrote and asked a question in a private Facebook group that I’m a part of creators here in the Cincinnati area. And she asked this: “I understand what is to be done from the creator’s standpoint. But when it comes to growing the channel and knowing when to do what, as far as turning it into a business, that seems to be a best-kept secret. I have heard your basic story, and then the story of countless other channels. But none of the stories ever get into the details. When did you know it was time to get a business license slash establish an LLC? When did you realize you needed to get an accountant’s help? At what point can you really consider the channel a legitimate business?”
Video Creator’s Background
Let me just tell part of my story, some background, and then I think I will make the answers to a lot of those a lot more clear.
So in 2005, I was bored one night, and this is pre-YouTube days. And I just decided to register a domain instead of playing the normal Guild Wars video game that I normally played eight hours a day, unfortunately, back then. And I made this website. Long story really short is that I turned it into a blog, and I was working as a youth and family worker at the time. And so I just started writing about youth and family work. And long story, again, even shorter is that it eventually became the most widely read blog on the internet in that youth and family niche.
In 2010, I actually transitioned onto that blog as my full-time income to support me, my wife, and my kids. I made a lot of mistakes. The only business model that I considered at that time was sponsorships and paid advertising.
Around that time, I was becoming more and more of a thought leader in the YouTube industry. And so when I started to shift from my blog to living on YouTube full time, I knew I had to do it intentionally with a business model that extended beyond just ad revenue and sponsorships and brand deals. Those things are great, but I knew I needed to have some products and services of my own, rather than just selling other people’s products and services.
And surprisingly to me, it worked. After six months of watching Video Creators, this channel’s earning about $10,000 a month on a subscribership of about 3,000 people. The full story of how I did that and the principles that you need to have in place for your channel in order to do the same, I actually have a whole entire podcast episode that deals with all that. So that’s linked up in the description below. I highly recommend that you listen to that if making money as a small YouTube creator is something that you’re interested in.
Now, just like growing a YouTube channel, business isn’t necessarily just always a big straight upward climb over time of prosperity and success. There are some dips. And what I’ve learned is true both in audience growth on YouTube is also true in business growth, consistency and persistence are key, but so is learning from your mistakes and not repeating the mistakes over and over and over again.
It was around that time where I just started reading as many business books as I could. I just wanted to learn as much as I could about business. And I actually got an Audible.com subscription, and I just started cranking through these books on double speed in every piece of spare time that I had. And I highly recommend you guys do the same. If you want to know what books were most helpful for me in growing my YouTube business, I will put a video link in the description where I review some of those books. And if you want an Audible.com trial account, you can use it to get any of those books completely for free to keep. It’s just AudibleTrial.com/VideoCreators, and you can pick any book you want and go for it for free, and then see if it’s right for you or not, to continue on with other books.
Fast forward a few years to today. Now there is a small team of us here who work at Video Creators to serve you guys the best that we can. I am still learning and growing a lot every day. And I’m still making mistakes. And I’m still learning from them. But I think I’ve learned enough to be able to answer your three questions, Sunny. So let’s get into them specifically.
When is it time to get a business license/establish an LLC?
For those of you who don’t know, an LLC in the United States is a Limited Liability Corporation. It’s just official legal stuff for starting to establish a business. I actually have a dedicated video from a few years ago that goes into all the different business classifications that you should be considering for yourself as a YouTube creator. And so that is linked up in the description below as well. That’ll go into more details.
But to answer your question, Sunny, there really is no black and white answer to this question. I would recommend that if you’re making about $100 a month or so, that seems to me like a pretty healthy place where you can probably comfortably go and invest the money into establishing that LLC. You’ll get an employee identification number. You’ll be then able to open up a separate business checking account and funnel all of the money that has anything to do with your YouTube channel through that, keep it separate from private. And you can start doing tax deductions easier, and taxes and everything will be easier because you’ll be better separating the business and the personal finances.
But it does cost anywhere between $100 if you’re in Delaware or $800 if you live in California. So if you live in California, maybe it might be worth waiting until you’re making a little bit more than $100 a month to go ahead and invest into setting up that LLC.
When did you realize that you needed to get an accountant’s help?
Personally, I realized I needed help with that very early, because I was not a person who understood really any of that stuff, nor how it worked. And for me, I’m more of a creative type of guy. I just like to make stuff that helps people and serves people. And getting into QuickBooks and Excel spreadsheets and all the numbers, it’s really emotionally draining for me.
So for me, very quickly it was well worth the money to bring on an accountant who will do all the bookkeeping for me, who will manage all my taxes, who will help me with sales tax implications for selling stuff, and everything. In case you are looking for a good YouTube accountant, the guys I use, the same guys have been using for years, I love them, MidAtlanticCPAs.com. Or you can just email them, firstname.lastname@example.org.
And in terms of full disclosure, I do get a referral bonus if you decide to sign up and start using their service with them. But I do highly recommend them because not only do they help me now with budgeting and paying my quarterly taxes and everything, they’re also really good teachers. And so now I do understand how the whole tax system works and how it all goes, because they’re teaching me about my business, and helping me make better financial decisions about my business going forward, rather than me just paying them to do it themselves. I like that they teach me.
And your third question, Sunny, is at what point can you consider your channel to be a legitimate business? That one’s a little bit harder for me to answer because a legitimate business technically is just any business that has legally formed and is lawfully following all the principles and practices and all the laws in the jurisdiction in which that business is created.
But I think you’re asking about something a little bit bigger than just that. And I always say, treat your channel like a business from the very beginning. If your end goal right now is to grow this into something that could be a full time income for you, then you need to start treating it like a business that will give you a full time income right now. If you treat it the way I treated my blog years ago, and then try just growing it, and then later trying to make the switch, it is really difficult to do that. And it is way easier if you just start with the end goal, and then just go towards that goal from the very beginning.
So i would say start learning as much about business as you can now. Start doing your best to craft a business model around that channel. It’ll change. You might tweak it going forward in the future. That’s OK. Do the best with what you know right now.
I would also say maybe start making investments into your channel, just like someone would invest into a business or into a company to really start growing that. Be smart about it. That could be different for everyone. Like maybe for some people it means going to VidCon and trying to make some connections with people. Maybe an investment is upgrading some of your camera or audio equipment or lighting equipment. Maybe that means getting an Audible.com subscription like I did. Or maybe that means investing into a one on one consultation with me.
Be mindful of where and when you invest into your business
There’s a lot of different ways you can invest into your channel, with time money, whatever. But the one thing though is just don’t waste your money. Just don’t keep pumping money into it without any plan of how you’re going to get the money back. I’ve made a lot of investments like that here into Video Creators. About six years ago I took $800 out of our personal checking account and bought a DSLR, used on Craigslist. And that camera lasted me for like six years, just up until a few weeks ago actually. I’ve invested into paying business consultants to help me work through problems and roadblocks that I’m bumping into. And it helped me grow this business. I’ve invested into making trips to various YouTube events and conferences to, one, learn more, but also network with other people and meet people and lots of different things.
In fact, one of the biggest investments I made is actually when I set aside a few thousand dollars to make my very first hire, so that that person could edit some videos for me, and I could free up my time to start working on my business, rather than just working in the business. Just start small, whatever that is for you, and then just grow from there.
I would love to hear from you guys in the comments below, other creators, how would you answer some of these questions as far as forming an LLC, getting an accountant, investing into your channel, and really growing it to be a legitimate business? I’d really love to hear your advice. And Sunny and all the rest of you who are in this position, read the comments down there. You will learn a ton from these people, this awesome community like I always do.
LINKS MENTIONED IN THIS VIDEO
- How to make money as a small YouTube creator
- 7 Books that Helped Me Grow my YouTube Business
- Free audio book from Audible (affiliate)
- The Best Business Structure for YouTuber
- My accountants: email@example.com
- Schedule a one-on-one consultation with me