Many YouTubers find themselves caught off-guard by the realities of their success. It is one thing to get millions of views on a viral video and achieve a brief moment of Internet fame, but it is quite another to start making good money as a result of that success.
As much as people in certain parts of the political spectrum may be unhappy about it, we each live in a society that requires certain things of us, namely contributions to that society in the form of taxes. In an ideal world, we would all voluntarily contribute, but the reality of human nature means that governments have to take steps to make sure we all do our part, and business licenses are part of that system.
What is a Business License?
Before we get into this, we should point out that business licences are primarily a United States thing, with India also using them. We will do our best to explain the purpose of a business licence, and for those of you living in countries or regions that don’t use them, you should be able to identify the equivalent systems where you are.
Business licences are required for any… well… business. The precise nature of these licences will vary from jurisdiction to jurisdiction, as well as depending on what the business actually does.
Businesses are required to pay business taxes, and licences—which are essentially permits—are part of establishing what taxes that business should pay.
Do YouTubers Need a Business License?
There are three answers to this question; yes, no, and yes with an asterisk. Let’s start with the easiest one of these to answer.
If your YouTube channel does not make any money, you are not required to have a business licence for it. There may be some uncommon situations where this is not the case, however.
For example, if your YouTube channel involves owning or renting premises, or any kind of disruption to the local area, you will almost certainly need a business licence regardless of whether you make any money.
The chances of any of that being the case for a YouTube channel that is not already established and profitable, however, are very slim. For most people if, their channel is not making money, they won’t need a licence.
Now, onto the definite yes.
If your channel is making a lot of money, you almost certainly will need a business licence if you are in a part of the world where business licences apply.
But what about that yes with an asterisk?
Now, let’s be absolutely clear; this is not a business advice blog.
You should absolutely check the laws in your locality before making any decisions about things like business licences. That being said, it is worth noting that there has to be a reason for a government agency to come after you. If you make enough without paying taxes, they will notice. If you cause disruptions for your neighbours, and they report you to the authorities, you may bring attention to your YouTube shenanigans. In most laws, if you have a venture that makes any money at all, you should be getting a business licence for it, but the reality is that it is unlikely you will get in trouble if you are only making pennies.
But just to reiterate, the law typically doesn’t deal in likelihoods. If you get caught making pennies that the authorities don’t know about, you will still get in trouble.
Other Systems
There are, of course, many different systems in place across the world—the United States alone has different rules from state to state—so naturally, we can’t cover them all. One particularly relevant example for an English-speaking YouTube audience is the United Kingdom. Here there are no business licences, but you would be expected to declare yourself as a sole trader if you are making money, and become VAT registered if you are making a lot of money.
What Counts as Making Money on YouTube?
This may seem like a bit of a silly section to include, but it is worth pointing that government organisations do not let you off if you play dumb or claim that you have only committed a minor crime.
All of the money you make is, legally speaking, supposed to be declared to your government. It doesn’t matter to them whether that money came as result of the YouTube Partner Programme, Super Chats, merchandise, Patreon, or anything else.
In other words, if you get a business licence for your YouTube channel, you can’t just declare the earnings that come directly from YouTube and hope to play ignorant if the government finds out about your Patreon.
Should I Apply For a Business Licence Straight Away
If you are not making money or doing anything that would warrant being classified as a business, there is no sense in rushing to getting a business licence. They are not prohibitively expensive, but they do cost money. And the process of getting one is rarely long or complicated. After all, business licences are essentially a means for taxing you, and governments aren’t in the habit of making it harder for them to get your money.
How Do I Make Money on YouTube?
All of the above may feel a little like getting ahead of yourself if you’re not sure how to make money on YouTube in the first place. Broadly speaking, it is a case of more views equals more money, but there are a few steps along the way to making that happen.
YouTube Partner Programme
Unless you have a compelling reason not to, your first goal should be to become part of the YouTube Partner Programme. There some requirements for doing this, but one of the advantages is that qualifying for the Partner Programme means you have reached certain milestones that show you are on the right path. Those requirements are;
- Adhere to YouTube monetisation policies
- Be in a region where the Partner Programme is available
- Have at least 4,000 hours of valid public watch time over the last year
- Have at least 1,000 subscribers
- Have a linked AdSense account
Once you meet that criteria, you will be able to apply to the Partner Programme and, in the vast majority of cases, you will be accepted. From then on, YouTube will begin showing ads on eligible videos, and splitting the revenue generated from those ads with you.
Memberships
If and when you manage to build up a loyal audience, you can start to look at memberships as an option. If you are eligible, you can use YouTube’s built-in membership platform to do this, but there are also services like Patreon that can enable you to do this as well.
The premise is simple enough; users contribute a recurring amount to you to support your content, and as an added sweetener, you can offer exclusive content and other perks to encourage viewers to become members.
Merchandise
Merchandise isn’t for every channel, but for those that it is a good fit for, there are plenty of third party options, as well as YouTube’s own partnership for eligible channels. On-demand services mean you can offer merchandise without having to buy the stock in advance yourself, which significantly reduces the barrier to entry.
Affiliate Marketing
Affiliate marketing is a way in which you can leverage your existing content by providing links and offers to your viewers which you get commission for. The most commonly used example of this is Amazon, where channels that review products or talk about new tech or similar can link off to those products through their Amazon affiliate links and earn a little money any time someone buys something through those links.
Affiliate links are handy because they can be used in a range of situations by a variety of channels. For example, a channel about improving your YouTube content might not have anything to sell, but they can leave a list of the equipment they use as affiliate links for people who are interested in using the same gear.
Final Thoughts
Business licences (or the equivalent for your jurisdiction) are the kind of thing that, practically speaking, won’t apply to most YouTubers. Sadly, the vast majority of YouTubers either don’t make any money from their channel, or they make so little that they’re probably never going to have to worry about the IRS paying them a visit.
That being said, if you earn any money from your YouTube channel, you will almost certainly be expected to declare that money to the government. While it’s true that you probably won’t have to worry if you are only making a few dollars here and there, you are still technically obliged to declare that money, and as such, legally in the wrong if you don’t.
Given the reach of YouTube and the many differences between states and countries, it is impossible for us to fit all of the relevant laws and regulations into one post. Always check your local laws and make sure you adhere to them. If you take your chances by not getting a business licence when you should, you do so at your own risk.
Top 5 Tools To Get You Started on YouTube
Very quickly before you go here are 5 amazing tools I have used every day to grow my YouTube channel from 0 to 30K subscribers in the last 12 months that I could not live without.
1. VidIQ helps boost my views and get found in search
I almost exclusively switched to VidIQ from a rival in 2020.
Within 12 months I tripled the size of my channel and very quickly learnt the power of thumbnails, click through rate and proper search optimization. Best of all, they are FREE!
2. Adobe Creative Suite helps me craft amazing looking thumbnails and eye-catching videos
I have been making youtube videos on and off since 2013.
When I first started I threw things together in Window Movie Maker, cringed at how it looked but thought “that’s the best I can do so it’ll have to do”.
Big mistake!
I soon realized the move time you put into your editing and the more engaging your thumbnails are the more views you will get and the more people will trust you enough to subscribe.
That is why I took the plunge and invested in my editing and design process with Adobe Creative Suite. They offer a WIDE range of tools to help make amazing videos, simple to use tools for overlays, graphics, one click tools to fix your audio and the very powerful Photoshop graphics program to make eye-catching thumbnails.
Best of all you can get a free trial for 30 days on their website, a discount if you are a student and if you are a regular human being it starts from as little as £9 per month if you want to commit to a plan.
3. Rev.com helps people read my videos
You can’t always listen to a video.
Maybe you’re on a bus, a train or sat in a living room with a 5 year old singing baby shark on loop… for HOURS. Or, you are trying to make as little noise as possible while your new born is FINALLY sleeping.
This is where Rev can help you or your audience consume your content on the go, in silence or in a language not native to the video.
Rev.com can help you translate your videos, transcribe your videos, add subtitles and even convert those subtitles into other languages – all from just $1.50 per minute.
A GREAT way to find an audience and keep them hooked no matter where they are watching your content.
4. Learn new skills for FREE with Skillshare
I SUCK reading books to learn, but I LOVE online video courses.
Every month I learn something new. Editing, writing, video skills, how to cook, how to run a business – even how to meditate to calm a busy mind.
I find all of these for FREE with Skillshare – Sign up, pick all the courses you want and cancel anytime you need.
5. Shutterstock helps me add amazing video b-roll cutaways
I mainly make tutorials and talking head videos.
And in this modern world this can be a little boring if you don’t see something funky every once in a while.
I try with overlays, jump cuts and being funny but my secret weapon is b-roll overlay content.
I can talk about skydiving, food, money, kids, cats – ANYTHING I WANT – with a quick search on the Shutterstock website I can find a great looking clip to overlay on my videos, keeping them entertained and watching for longer.
They have a wide library of videos, graphics, images and even a video maker tool and it wont break the bank with plans starting from as little as £8.25 ($9) per month.
