The Complete Legal Setup for Influencers: A Practical Guide

The creator economy has become a global industry worth more than 250 billion dollars. What began as people posting content for fun has turned into a business ecosystem with serious money, formal contracts, and real legal risk.

Many creators still work without basic protections. They sign brand deals without reading the details, avoid forming a business entity because it feels overwhelming, and think about taxes only when deadlines arrive. This works for a while, until it does not.

This guide covers the essential legal foundation every influencer needs. Whether you are just beginning to monetize or running a growing creator business, these fundamentals will protect your income, your assets, and your brand.

Choosing the Right Business Entity

One of the first structural decisions creators face is whether to form a legal entity and which type to choose.

Why You Need a Business Entity

When you operate as an individual, you’re technically a sole proprietor. That’s the default. That requires no filings, but it gives you no liability protection. If you get sued, your personal assets are on the line. This includes your savings, your car, and your home.

Influencers face real risk. You can be sued for defamation over a harsh review, copyright infringement for using unlicensed music, FTC issues for improper disclosures, or even product liability claims if something you promote harms someone. In 2023, YouTuber Dan Gryder was ordered to pay over one million dollars in a defamation case tied to his videos. Without entity protection, judgments like that can be financially devastating.

Beyond liability, an entity signals professionalism. Many brands prefer to work with formal business entities because it simplifies their processes and gives them a clear legal counterparty.

LLC: The Default Choice for Most Influencers

The Limited Liability Company (LLC) has become the standard structure for influencers, and for good reason. It combines the liability protection of a corporation with the tax simplicity of a sole proprietorship.

Key benefits include liability protection, pass-through taxation, minimal administrative formalities, and increased credibility with brands. For most creators, a single-member LLC formed in your home state is sufficient. There’s no tax advantage to forming in Delaware or Wyoming unless you actually operate there, and doing so creates additional filing requirements. The right time to form an LLC is when you are earning consistent income, usually $15,000 to $20,000 a year, or when you start signing higher-value brand deals.

For more details on setting up an LLC, you can learn here.

S-Corp Election: When It Makes Sense

An S-Corporation is not a separate entity. It is a tax election available to LLCs and corporations that can reduce self-employment taxes once your income reaches a certain level.

Self-employed creators pay 15.3% in self-employment taxes on net earnings. With an S-Corp election, you pay yourself a reasonable salary that is subject to payroll taxes, while additional profits can be taken as distributions that are not subject to self-employment tax.

Most tax advisors recommend considering S-Corp status once your net income exceeds about $50,000 per year. Below that point, the administrative burden and compliance requirements often outweigh the benefits.

Essential Legal Templates and Contracts

Influencers need several key agreements to protect their business interests.

Influencer Marketing Agreements

This is the core contract governing brand deals. Every sponsorship, product placement, or paid collaboration should be documented in writing. A proper influencer marketing agreement covers:

Scope and Deliverables: Exactly what you’ re creating — number of posts, formats (Reel, Story, carousel), platforms, required hashtags, and posting timeline.

Compensation: Payment amount, timing (before or after posting), and structure (flat fee, pay-per-post, affiliate commission).

Content Rights: Who owns the content, how long the brand can use it, whether they can modify it or use it in paid ads.

Approval Process: How many revision rounds, turnaround times for feedback, what happens if parties can’t agree.

Exclusivity: Whether you’re restricted from promoting competitors and for how long.

FTC Compliance: Clear requirements for disclosure language and placement.

Termination: How either party can exit and what happens to completed work.

Never rely on a brand’s verbal promises or casual DMs. If a dispute arises, the written agreement is what matters. Our Influencer Marketing Agreement template can help you lock in the essentials and is designed to work smoothly for influencers across global markets.

Non-Disclosure Agreements (NDAs)

Brands often share confidential information before campaigns launch — upcoming product details, marketing strategies, pricing information. An NDA protects this information and establishes clear boundaries.

You may receive NDAs from brands, but you should also have your own NDA template for situations where you’re sharing confidential information with collaborators, editors, or potential business partners. Skala offers both Mutual and Unilateral NDA templates, so you can choose the one that works best for your situation. You can learn more about the difference between them here.

Talent Management Agreements

If you work with a manager or agency, this agreement governs the relationship. Key provisions include the manager’s commission percentage (typically 10-20%), what income streams are commissionable, contract duration, exclusivity, and termination rights.

Be cautious about sunset clauses — provisions that entitle the manager to commissions on deals initiated during the contract term, even after the relationship ends. These can extend your payment obligations for years.

Independent Contractor Agreements

If you hire editors, photographers, virtual assistants, or other help, you need written agreements clarifying the work relationship. These protect you from worker misclassification issues and establish clear ownership of any work product they create.

Feel free to use our Independent Contractor Agreement template to formalize the relationship and protect your ownership of the work.

Model and Appearance Releases

If your content features other people, get signed releases authorizing their appearance. This is especially important for content that may be repurposed by brands in advertising.

Intellectual Property Protection

Your brand, content, and personal identity are valuable assets. Protecting them requires a multi-layered approach.

Trademark Your Brand

Your name, stage name, logo, and signature catchphrases may be eligible for trademark protection. Trademark registration provides nationwide legal protection and helps prevent others from profiting off your reputation.

In July 2024, the U.S. Trademark Trial and Appeal Board clarified in In re Gail Weiss that influencers who merely provide affiliate links don’t qualify as providing “retail services” for trademark purposes. This means influencers should file trademark applications for their core services (blogging, entertainment, content production) rather than trying to claim retail categories.

File your trademark application early. Delays create gaps that bad actors may exploit. The application process takes several months to a year, so don’t wait until you have a problem. Skala’s trademark service can help you get it done without the hassle.

Copyright Your Content

Copyright protection begins the moment you create original content. However, registering your copyrights with the U.S. Copyright Office provides significant advantages: the ability to sue for statutory damages (up to $150,000 per willful infringement) and recovery of attorney’s fees.

The 2025 “sad beige lawsuit” between Sydney Nicole Gifford and Alyssa Sheil shows the limits of copyright in the influencer space. Copyright protects specific expressions, not general aesthetics or tones. Registering specific photos and videos is far more effective than claiming rights in a style.

Protect Your Likeness

Your name, image, and persona are protected under right of publicity laws. With AI tools making imitation easier, this protection matters more than ever.

Influencer marketing agreements should clearly define how your likeness can be used and for how long. Be wary of broad, perpetual licenses that allow brands to use your image indefinitely.

Insurance Coverage

As your business grows, insurance becomes increasingly important. Brand partners may require proof of coverage before signing contracts.

Professional Liability (E&O) Insurance

This protects you from claims related to professional mistakes, such as promoting a harmful product or failing to meet contractual obligations. Basic premiums often start around $750 a year.

General Liability Insurance

General liability covers third-party bodily injury and property damage claims. It also includes personal and advertising injury coverage, which addresses allegations of defamation or slander, important for influencers who create opinion-based content. Basic coverage runs around $350 annually.

Media Liability Insurance

This specialized coverage addresses risks unique to content creators: defamation, invasion of privacy, copyright infringement, and intellectual property disputes. It’s particularly important for influencers creating original content at scale.

Cyber Liability Insurance

If you collect personal information from followers, run email lists, or store payment data, cyber liability coverage protects against data breaches and related claims. Some policies also cover targeted hacking, account takeovers, and ransomware.

When Insurance Becomes Essential

Insurance moves from “nice to have” to “essential” when you’re generating significant revenue (generally $50,000+), working with major brand partners (who often require proof of coverage), hiring employees or contractors, or creating content in high-risk categories like health, finance, or products for children.

FTC Compliance and Disclosure Requirements

The Federal Trade Commission’s Endorsement Guides govern how influencers must disclose material connections with brands. Non-compliance creates serious legal exposure, for both influencers and the brands that work with them.

What Requires Disclosure

Any material connection that might affect the weight or credibility consumers give to your endorsement must be disclosed. This includes paid sponsorships, free products, affiliate relationships, family or employment connections with the brand, and even gifts with no explicit work requirement if they influence your content.

How to Disclose Properly

The FTC requires disclosures to be “clear and conspicuous,” difficult to miss and easily understandable. In practice, this means disclosures at the beginning of posts (not buried at the end), using unambiguous language like “#Ad” or “#Sponsored” (not vague terms like “#partner”), for video content, spoken disclosure in the audio track, and for audio content, audio disclosure.

Platform-specific tools like Instagram’s “Paid Partnership” label help but may not be sufficient on their own. The FTC’s 2023 updated Endorsement Guides emphasized that influencers shouldn't rely solely on these built-in tools.

Enforcement Is Real

In November 2023, the FTC sent warning letters to 12 health influencers for Instagram and TikTok posts promoting aspartame and sugar products without adequate disclosures. The letters noted that future violations could trigger civil penalties of up to $50, 120 per violation.

Beyond FTC enforcement, private class actions are emerging as a new risk. In early 2025, lawsuits were filed against Shein, Celsius, and other brands (along with the influencers who promoted them) alleging that undisclosed sponsored content constituted consumer fraud. The Shein case seeks over $500 million in damages. For more details about these lawsuits, check out this article.

While these cases are still developing, they signal that compliance failures can create liability beyond just regulatory fines.

Tax Obligations

All influencer income is taxable, whether or not you receive a 1099.

Self-Employment Tax

As a self-employed individual, you pay both the employer and employee portions of Social Security and Medicare taxes, currently 15.3% on net earnings. This is in addition to regular income tax. If you’re coming from traditional employment where employers withhold taxes, this can be a shock.

Quarterly Estimated Payments

Unlike employees who have taxes withheld from paychecks, self-employed influencers must make quarterly estimated tax payments if they expect to owe more than $1,000 in taxes. These payments are due April 15, June 15, September 15, and January 15.

Failing to make estimated payments results in penalties and interest. A common rule of thumb: set aside 25-30% of your income for taxes.

What’s Taxable

Beyond cash payments, the fair market value of free products, trips, and services received in exchange for promotional content is generally taxable income. If a brand sends you a $500 skincare kit expecting you to feature it in content, that’s $500 of taxable income.

Exceptions exist for genuine gifts with no strings attached and products under $100 in total value with no expectation of return service.

Deductible Business Expenses

The upside of self-employment is that legitimate business expenses reduce your taxable income. Common deductions for influencers include camera and lighting equipment, editing software subscriptions, portion of phone and internet costs used for business, home office expenses (if you have dedicated space used exclusively for work), travel expenses for content creation or brand meetings, professional services (accounting, legal), and props, wardrobe, and products used exclusively for content.

Keep detailed records and receipts. The IRS requires documentation of amount, time, place, and business purpose for each expense.

Form 1099s and Reporting

You should receive Form 1099-NEC from any company that paid you $600 or more during the year. But you’re required to report all income regardless of whether you receive a 1099. Platforms like YouTube AdSense, affiliate networks, and brands all issue 1099s for qualifying payments.

Report income and expenses on Schedule C of your Form 1040. If you have an S-Corp election, additional forms (1120-S, W-2s) are required.

Liability Considerations

Content creation carries inherent legal risks that every influencer should understand.

Defamation

Publishing false statements that damage someone’s reputation can trigger defamation claims. This applies to negative reviews, commentary on competitors, and statements about brands or individuals. The 2023 Gryder case mentioned earlier resulted in a million-dollar judgment for defamatory statements made in YouTube videos about another person.

Best practices: stick to factual, verifiable statements; clearly label opinions as opinions; avoid personal attacks; and maintain documentation supporting any factual claims.

Copyright Infringement

Using someone else’s content (music, images, video clips) without permission can result in copyright infringement claims. Platforms’ content identification systems may catch violations and remove content, but that doesn’t eliminate potential liability.

Always license music and stock assets properly, get permission for user-generated content you want to repost, and be cautious about “fair use” claims — the doctrine is narrower than many believe.

Product Liability

If you promote a product that injures consumers, you could potentially face claims alongside the manufacturer. While most liability would rest with the product maker, influencers have been named in product liability lawsuits.

Stick to products you genuinely believe are safe, avoid making claims beyond what the manufacturer supports, and include appropriate disclaimers for categories like health, fitness, or financial products.

Platform Terms of Service

Violating platform terms can result in account suspension or termination — devastating for creators whose income depends on social media presence. Understand the rules of each platform you use and stay current on policy changes.

Building Your Legal Infrastructure: A Practical Checklist

The specific legal setup you need depends on your income level, content category, and business complexity. Here’s a general framework:

Under $15,000 annual income: Focus on basic FTC compliance and documenting any brand deals in writing. Consider forming an LLC if you’re creating content in higher-risk categories (health, finance, products for children).

$15,000-$50,000 annual income: Form an LLC, set up a separate business bank account, implement quarterly estimated tax payments, get professional liability insurance, and trademark your core brand name.

$50,000-$150,000 annual income: Evaluate S-Corp election with a tax professional, expand insurance coverage (general liability, media liability), implement standardized contract templates, and register copyrights for high-value content.

$150,000+ annual income: Work with dedicated entertainment or influencer attorneys, consider umbrella insurance policies, implement formal record-keeping systems, and evaluate additional entity structures for different income streams.

Final Thoughts

The legal side of influencing is not glamorous, but it is part of running a real business. You do not need to know everything, but you do need the basics in place. Start with an LLC, clear contracts, FTC-compliant disclosures, and proper taxes. As you grow, add insurance, trademarks, and other protections. With the right structure, you can stay focused on creating.

At Skala, we help creators and startups navigate the legal foundations of their businesses: from entity formation and trademark registration to legal templates that actually work. Check out our Influencer Marketing Agreement template and explore our full suite of legal templates.