# PERSONAL BRAND MONETIZE — US VARIANT (Tax & Legal)

> **Region:** United States (50 states + DC), with Canada notes
> **Currency:** USD
> **Tax authority:** IRS (federal) + state tax agencies + local sales tax authorities
> **Year covered:** 2025 tax year filing in 2026 (laws verified for 2025-2026)

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## Self-employed entity choices

### Side-by-side comparison

| Entity | Setup cost | Liability protection | Tax treatment | Best for |
|--------|-----------|---------------------|---------------|----------|
| **Sole Proprietor** | $0 (no formation) | None — personal liability | Schedule C on Form 1040 | Side gig, first $10K, no employees |
| **Single-member LLC** | $50-500 (state-dependent) | Limited liability | Disregarded entity — Schedule C by default; can elect S-Corp | Most solo personal brands above $40K revenue |
| **S-Corp (or LLC taxed as S-Corp)** | $500-2,500 (setup + payroll) | Limited liability | Reasonable salary (W-2) + distributions (no SE tax) | $80K+ self-employment net income |
| **C-Corp** | $500-2,500 | Limited liability | Double taxation (corp + dividend) | Raising VC, equity employees, IP holding |
| **Partnership / Multi-member LLC** | $200-1,000 | Limited liability | Pass-through (Form 1065 + K-1s) | Co-founders, business partners |

### LLC formation cost by state (sample)

| State | Filing fee | Annual fee |
|-------|------------|-----------|
| Delaware | $90 | $300 (franchise) |
| Wyoming | $100 | $60 |
| Nevada | $425 | $350 |
| California | $70 | $800 (annual minimum tax) |
| Texas | $300 | $0 (no franchise tax under $1.23M revenue) |
| Florida | $125 | $138.75 |
| New York | $200 + publication ($1K+) | $9 biennial |

> **Cheapest LLC for solo:** Wyoming ($100 + $60/year). **Most expensive:** California ($70 + $800/year minimum).

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## Federal income tax 2025-2026

### 2025 marginal rates (single filer)

| Income range | Rate |
|--------------|------|
| $0 - $11,925 | 10% |
| $11,926 - $48,475 | 12% |
| $48,476 - $103,350 | 22% |
| $103,351 - $197,300 | 24% |
| $197,301 - $250,525 | 32% |
| $250,526 - $626,350 | 35% |
| Above $626,350 | 37% |

### Self-employment tax (15.3%)

If filing Schedule C (Sole Prop / single-member LLC), you pay:
- 12.4% Social Security on first $168,600 (2025 cap, ~$176,100 for 2026)
- 2.9% Medicare on ALL self-employment income
- Additional 0.9% Medicare on income above $200K (single)

**You can deduct 50% of SE tax** as an adjustment to AGI.

### S-Corp election — when it pays off

S-Corp lets you split income into:
- Reasonable salary (subject to FICA / FUTA / Medicare ~ 15.3% combined)
- Distributions (NOT subject to SE tax)

Example: $150K net income
- Sole Prop: 15.3% x $150K = $22,950 SE tax
- S-Corp with $70K salary + $80K distribution: 15.3% x $70K = $10,710 SE tax
- Savings: ~$12,000/year

> **Rule of thumb:** S-Corp election pays off above ~$80K net SE income. Below, the payroll complexity isn't worth it.

---

## State income tax

State income tax varies wildly. As of 2025:

### Zero state income tax (9 states)

Alaska, Florida, Nevada, New Hampshire (NH taxes interest/dividends), South Dakota, Tennessee, Texas, Washington, Wyoming

### Flat-rate states (sample)

| State | Flat rate |
|-------|-----------|
| Arizona | 2.5% |
| Colorado | 4.4% |
| Illinois | 4.95% |
| Indiana | 3.0% |
| Kentucky | 4.0% |
| Massachusetts | 5.0% (9% surcharge above $1M) |
| Michigan | 4.25% |
| North Carolina | 4.5% |
| Pennsylvania | 3.07% |
| Utah | 4.55% |

### Progressive states (top rates)

| State | Top rate | Top bracket |
|-------|----------|-------------|
| California | 13.3% | $1M+ (plus 1% mental health surcharge) |
| New York | 10.9% | $25M+ |
| Hawaii | 11.0% | $200K+ |
| New Jersey | 10.75% | $1M+ |
| Oregon | 9.9% | $125K+ |

> **Practical tip:** Personal brand creators with location flexibility often establish residency in FL, TX, WY, or TN to skip state income tax.

---

## Sales tax — for course / digital product sellers

### Wayfair (2018) impact

Since South Dakota v. Wayfair, states can require sales tax collection from out-of-state sellers crossing **economic nexus thresholds** (typically $100K revenue OR 200 transactions per state per year).

### Digital product taxability

- **Some states tax digital products:** PA, TX, WA, SC, etc.
- **Most don't tax courses if "service" classified:** but rules differ
- **SaaS:** Increasingly taxed (NY, TX, OH, WA)

### Practical approach

For courses / SaaS under $100K revenue per state: monitor and skip collection until threshold hit. Tools:
- TaxJar / Anrok / Stripe Tax / Avalara — handle multi-state filing

---

## 1099 forms for contractors

### When you hire contractors (any country)

- **1099-NEC:** Issue to US-based contractor receiving $600+ in a year
- **W-9:** Collect tax info before paying
- **1099-K:** Platforms (Stripe, PayPal) issue if processing $5,000+ (2024 threshold), $2,500 (2025 threshold), $600 (2026 threshold)
- **For non-US contractors:** W-8BEN (individual) or W-8BEN-E (entity) — no withholding if treaty applies; otherwise 30%

### Deadlines

- **1099-NEC to recipient:** January 31
- **1099-NEC to IRS:** January 31 (paper or e-file)
- **W-2 to employees:** January 31

---

## Retirement accounts for self-employed

### Side-by-side

| Account | 2025 contribution limit | Best for |
|---------|------------------------|----------|
| **Solo 401(k)** | $70,000 ($77,500 if 50+) | High earners; loans allowed |
| **SEP-IRA** | 25% of net SE income, max $70,000 | Simple, employee contributions only |
| **SIMPLE IRA** | $16,500 ($20,000 if 50+) | Side businesses with 1-100 employees |
| **Backdoor Roth IRA** | $7,000 ($8,000 if 50+) | Income above Roth phase-out |
| **Mega Backdoor Roth (Solo 401k)** | Up to $70K via after-tax + Roth conversion | High-income solo |

> Solo 401(k) is the king for personal brand creators with $100K+ net SE income.

---

## Healthcare — self-employed

- **ACA Marketplace:** Healthcare.gov; premium tax credits up to 400% FPL
- **Self-employed health insurance deduction:** Premiums deductible above-the-line (Schedule 1)
- **HSA (Health Savings Account):** $4,300 (single) / $8,550 (family) 2025; triple tax advantage
- **Spouse-from-W-2:** If spouse has employer healthcare, often best

---

## Deductible business expenses

Common deductible expenses for personal brand creators:

| Category | Examples |
|----------|----------|
| Home office | 300 sq ft x $5 simplified = $1,500/year (or actual %) |
| Software / SaaS | Notion, Canva, ConvertKit, Calendly, Zoom |
| Education | Courses, books, conferences (Skill-building) |
| Equipment | Camera, mic, lighting, laptop (Sec 179 or depreciation) |
| Travel | Conferences, client meetings (50% meals) |
| Marketing / ads | Meta / Google ads spent |
| Professional services | Accountant, lawyer, contractor 1099s |
| Phone / internet | Business-use percentage |
| Health insurance | Self-employed health premiums |

---

## Quarterly estimated taxes

Self-employed must pay quarterly estimates if owing $1,000+ at year-end:

| Quarter | Due date |
|---------|----------|
| Q1 | April 15 |
| Q2 | June 15 |
| Q3 | September 15 |
| Q4 | January 15 (next year) |

**Safe harbor:** Pay 100% of prior year tax (110% if AGI above $150K) to avoid penalties.

---

## Payment processing for digital products

| Processor | Fee | Best for |
|-----------|-----|----------|
| **Stripe** | 2.9% + $0.30 | SaaS, courses, services |
| **PayPal** | 2.99% + $0.49 | Global familiarity, B2C |
| **Square** | 2.9% + $0.30 | In-person + online combo |
| **Lemon Squeezy** | 5% + $0.50 | Merchant of record (handles VAT/sales tax) |
| **Paddle** | 5% + $0.50 | Merchant of record alternative |
| **Gumroad** | 10% (high) | Quick course launch, simple |

> **MoR (Merchant of Record) services** (Lemon Squeezy, Paddle) handle multi-jurisdiction sales tax automatically. Worth the higher fee if selling globally.

---

## Canada notes (parallel structure)

For Canadian personal brand operators:

| Element | Canada equivalent |
|---------|-------------------|
| LLC | Sole Proprietor or Corporation (federal or provincial) |
| Federal income tax | 15-33% progressive (2025) |
| Provincial tax | 5-25% (varies by province) |
| Self-employment tax | CPP contributions (~ 11.9% on income up to ~$71,300) |
| Sales tax | GST/HST 5-15% (varies by province) |
| Equivalent to LLC | Federal Corporation or Provincial Corporation |

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## Anti-patterns (US personal brand tax)

1. **Mixing personal and business banking** -> nightmare bookkeeping + IRS audit risk
2. **Not paying quarterly estimates** -> penalties and interest at year-end
3. **No S-Corp election above $100K SE income** -> overpaying SE tax
4. **Missing the home office deduction** -> $1,500-5,000+ left on the table
5. **Cash-only or off-the-books revenue** -> can't prove income for mortgage / loan / visa

---

## US-specific checklist

- [ ] Entity formed (LLC minimum recommended above $40K revenue)
- [ ] EIN obtained from IRS (free at irs.gov)
- [ ] Separate business bank account
- [ ] Bookkeeping software (QuickBooks, Wave, FreshBooks, Xero)
- [ ] Sales tax registration if crossing nexus thresholds
- [ ] S-Corp election filed if SE income above $80K (Form 2553)
- [ ] Quarterly estimated tax payments scheduled
- [ ] Retirement account opened (Solo 401k or SEP-IRA)
- [ ] Health insurance plan (ACA marketplace or spouse plan)
- [ ] 1099-NEC issued to contractors by Jan 31
- [ ] CPA engaged for year-end filing (worth $500-2K to save 5-10x in deductions)

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## References

- IRS Publication 334 — Tax Guide for Small Business
- IRS Publication 583 — Starting a Business and Keeping Records
- IRS Publication 535 — Business Expenses
- IRS Form 2553 — S-Corp Election
- IRS Form 1099-NEC instructions (2025)
- State tax authority websites (e.g. FTB California, DOR Texas)
- ACA Marketplace at healthcare.gov

> **DISCLAIMER:** This is general information, not tax advice. Consult a licensed CPA or tax attorney for your specific situation.

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*US Variant | Skill 27 (Personal Brand Monetize Global) | v1.0.0*
