forming an llc

chris f

chris f

Veteran
I imagine that this has already been covered somewhere in the site, but the search function won't come up with any results for "llc" or "limited liability corporation". Anyways, I've been working freelance throughout college, and just graduated 6 months ago. I'd like to keep working freelance to allow me the freedom to make films on the side until something hopefully happens with that. However, it's bill paying time (student loans, rent, etc.) so I'm hoping to get work from higher profile clients (not just friends, family, etc.) and am trying to research how to go about doing the business side of things legit (taxes, insurance, etc.). I know there are people on here that are established in the video business and was wondering if someone could point out the pros and cons of forming a LLC, what you would need to do it for, how much it costs, how to take out taxes etc.

I'm sure all that information would be very helpful to several other members on the board as well as myself. For my particular case I'm not looking to build a big production business with several employess, I just want to be able to do business under a company name so I can approach potential clients as "production company name LLC" and have all the proper insurance and taxes, etc. in place instead of approaching clients as just a freelance videographer.
 
I only wish I had incorporated myself as an LLC sooner. It was a no-brainer and has made a huge difference come tax time. i.e. - A gear expense can become a business loss or expenditure rather than a questionable red-flag personal write-off.

You could do it yourself but I paid an attorney because I needed it done FAST to get paid for a big gig. They'd paid me as a sole-proprietor in the past but wanted this deal done differently. Again - I wish I'd done it sooner.

So, best of luck, and by all means, incorporate! Soon!
 
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The particulars of forming an LLC are going to vary from state to state - so I don't want to get too specific here as Texas might be different than Indiana.
LLCs are not available in all states (they are available in Indiana though).

First thing is - get familiar with the different types of businesses you can have, and the process by which to form one. Usually this is done through your Secretary of State.

Here is a quick link to get you on the right track:
An Entrepreneur's Guide to Starting A Business in Indiana

GENERALLY - the steps are as follows:

1. File articles with your Secretary of State.
2. Request an EIN (employer identification number) from the IRS for the newly formed business. This is a businesses equivalent of a Social Security Number.
3. With an LLC you then file a form with the IRS to elect how the IRS will treat you, either as a Corporation or a Sole Proprietorship.
4. Once you have an EIN number for your business, you can take that and your filing paperwork to the bank and open a business acount in the company name.


Once you get a bit familiar with what is needed, you may want to consider getting an attorney and and CPA to help you with the paperwork.
An attorney can help you with any legal issues in so far as liability concerns with different business structures, while a CPA can help you wiht the financial concerns in so far as the different tax advantages and disadvantages of business structures.

I wound up filing myself for my businnes formation, but I do have a CPA who helps me with all my IRS and Texas workforce commission filings.

I can't stress this enough - a good CPA is worth his or her weight in gold when you are starting out! They can definitely help you keep organized and have a better understand of what you need to do. I would highly recommend looking for a CPA - you may want to start by asking around to other people doing similar business as yours and see if you can get a referral. That's how I found mine.

This should get you on the right track hopefully.

The most important pieces of advice I can give you are:

1. Get referalls for any legal/financial help. Don't pick someone out of the phonebook.
2. Get yourself a copy of quicken and keep organized.
3. Get receipts for everything and develop a good filing system

And while it may seem to be a big mystery alot of the time, just do what I do and remind yourself of what my dad said to me while I was stressing out over buying my first house recently....

"Dumber people than you do this everyday"

Good luck!
 
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I used www.mycorporation.com to file my llc for me... everything was fine... went through well...

All you have to do is pay them and wait... Takes most of the hassle out of doing it yourself if you don't have many special requirements, etc.

And, it's cheaper than paying a lawyer to do it also.

Then, you will be legal, and when you need to change things, or expand or whatever, you can do that at a later date to suit your demands/needs as your business grows.

Worth a look anyways.
Jason
 
hey chris,

I formed a few S-corp in the past. and I got to tell you. it was more of a headache than anything. An LLC is different but not much. Here in CA you have to pay a minimum $800 tax if you incorporate, so I'd advice against it. and Just do it when you definitely have to. (ie. get employees and such or are required by a client)

As for deductions, I've been my own boss for years. (freelance and such) and have put tons of deductibles on my personal taxes. even 1/2 my rent. with no problems or red flags. you need to go to a good tax person to do your taxes (who has software for it) and they should be able to tell you what is a red flag and what is not.

What I suggest is just a DBA (doing business as) with a DBA you can get a bank account under the name of your business.
I used www.legalzoom.com not sure if they deal with every state, but in CA they are great. (you can use the word vandals on the cupon code to get a discount.)

I think they do LLCs also, but not sure.

I always wanted to get incorporated to look more the part, but I feel like I always jumped the gun. Frankly, I have never been turned down for a job because I wasn't an LLC or anything like that.

If you have a huge project, then you might want to form an LLC or a Corporation for that project only. So if the project losses money, you are protected. (many production companies do this for each film they produce. to cover their asses. so the newly form llc can file for bankrupcy without their mainn company suffering from it)

you can also get insurance without an LLC. So think it over.
 
You might consider an S-Corp over an LLC. It's pretty straightforward, though I did have a CPA do it for me. Never spoke to a lawyer... no need for one. A CPA can give you all the ins and outs. An S-corp has one thing an LLC does not: an instant 15% tax break. (An S-corp owner can generally take half of his income from the company as a dividend instead of salary. Dividends are not subject to that 15% Social Security tax... until, of course, Hillary takes the throne...)
I do agree with Siniarch above about CA. In VA it cost $100 and was little more than a few simple forms. But CA does everything silly (Lived in LA 1961 - 1981) If you're smart, you'll heed the advice of Gollum: "Leave now... and NEVER come back!"
 
I agree with Siniarch about the red flags. As long as you keep careful track of your deductions (meaning you can back up your claims with proof if necessary), you are fine as a sole proprietor with regards to that.

I have been freelance for a long time, but decided to form an LLC a few years back. The process was very easy - got a book or two from NOLO (starting your own LLC or something like that) and used the Secretary of State website. Califiornia's SS has a great Business Portal website that has some good information and all the forms necessary to file. Going through the process is actually a good thing, because it forces you to answer questions about your business ( much like creating a biz plan), and it is a good exercise in setting up your organization - especially if you have partners.

Why LLC or Corp? As stated above, it offers protection (liability and bankruptcy) to a certain extent. I guess it also offers some legitimacy - sometimes helpful with corporate clients. And there are definite tax benefits as stated in another post (depending on if you elect to be taxed as sole proprietor or corp).

Which brings me to my next point. I am going through a reorg right now because I'm bringing on a partner and we have been working with our CPA to set it up the best way for us. I highly recommend a good CPA - so wonderful to have a professional answer questions and help you set up your business the best way for you. And there are many tax implications depending on the current state of your business. One of the reasons LLCs are so great is that they offer quite a bit of flexibility on how they are organized, AND you also have the choice of being taxed as a sole proprietor or corporation. The basic difference there being that as a sole proprietor, all the money that runs through the LLC is considered "personal income" - all the money you make, your deductions, and what's left over is treated and taxed as personal income (which has the potential to be taxed at high rate). With a corporation, the money that stays in the business is taxed at a 15 percent rate. Then, you must pay yourself a salary, and that money is taxed as personal income. Whatever you decide to do will depend on the current state of your biz and your future goals.

the best part of all this is that you can amend or change the type of business entity you are, as your needs change and grow.


But after all this, as Siniarch says, a "DBA" with a bank account allows you to accept checks written out to your business name, and since you can get insurance as a sole prop, you may want to think about starting this way.
 
Hey guys,

I just started talking w/ an art lawyer about actually getting my company all taken care of and legal... so for someone like me, who is a pretty small fish, a sole-prop LLC is pretty much what I'm looking for? I have a partner who runs the projects with me, does a sole-prop mean that she can't be on this as well, or does it just means we would both own it?

Although I'm interested in the DBA thing and taking checks to my company name, I think I would much rather focus on going fully legitimate so I can use the company to produce short & longer films and insure all of my equipment so I'm not *totally* screwed if I get robbed or into an accident.
 
You don;t need to be a corp or a LLC to insure your gear. Before I became a LLC I had all my gear under a commercial policy.

And a DBA is just as legit as a corp or LLC. I still have a business that's a DBA as well as one that's a LLC. Both make money, both have the gear insured and both are legit.
 
mrWr0ng said:
. so for someone like me, who is a pretty small fish, a sole-prop LLC is pretty much what I'm looking for? I have a partner who runs the projects with me, does a sole-prop mean that she can't be on this as well, or does it just means we would both own it?
Click to expand...
If you list your business as a sole proprietor you can't have a business partner. You could form an LLC or an S-Corp. if you intend on running the business under a parntership agreement. These kinds of decisions mandate advice from attorney's and CPA's that you trust.

Note- Do not enter into a business partnership casually. It's difficult, ugly and expensive to break up a partnership once it's in place.
 
I've got a lawyer that I trust, just trying to figure out which is the best direction.

Right now I make all my money through freelancing, it's my entire income. However, I've started building an actual business (got the website, invoices, letterheads, but can't use them until I get this set up). I plan on using the company to produce features and documentaries and even my music as I go along.

I have no problem with setting up an LLC if that's the best way to go about it. My partner and I are very serious about this, I would just prefer to get the biggest stuff out of the way now and just focus on my income.
 
Follow the advice - get a CPA or Lawyer an plan out the structure of your idea.

Always allow for growth, but plan how additional relationships will be treated.
There is no-way around taxes, a CPA has to be part of your plan. Fortune is what you KEEP, not what you have.
 
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Luis Caffesse said:
The particulars of forming an LLC are going to vary from state to state - so I don't want to get too specific here as Texas might be different than Indiana.
LLCs are not available in all states (they are available in Indiana though).

First thing is - get familiar with the different types of businesses you can have, and the process by which to form one. Usually this is done through your Secretary of State.

Here is a quick link to get you on the right track:
An Entrepreneur's Guide to Starting A Business in Indiana

GENERALLY - the steps are as follows:

1. File articles with your Secretary of State.
2. Request an EIN (employer identification number) from the IRS for the newly formed business. This is a businesses equivalent of a Social Security Number.
3. With an LLC you then file a form with the IRS to elect how the IRS will treat you, either as a Corporation or a Sole Proprietorship.
4. Once you have an EIN number for your business, you can take that and your filing paperwork to the bank and open a business acount in the company name.


Once you get a bit familiar with what is needed, you may want to consider getting an attorney and and CPA to help you with the paperwork.
An attorney can help you with any legal issues in so far as liability concerns with different business structures, while a CPA can help you wiht the financial concerns in so far as the different tax advantages and disadvantages of business structures.

I wound up filing myself for my businnes formation, but I do have a CPA who helps me with all my IRS and Texas workforce commission filings.

I can't stress this enough - a good CPA is worth his or her weight in gold when you are starting out! They can definitely help you keep organized and have a better understand of what you need to do. I would highly recommend looking for a CPA - you may want to start by asking around to other people doing similar business as yours and see if you can get a referral. That's how I found mine.

This should get you on the right track hopefully.

The most important pieces of advice I can give you are:

1. Get referalls for any legal/financial help. Don't pick someone out of the phonebook.
2. Get yourself a copy of quicken and keep organized.
3. Get receipts for everything and develop a good filing system

And while it may seem to be a big mystery alot of the time, just do what I do and remind yourself of what my dad said to me while I was stressing out over buying my first house recently....

"Dumber people than you do this everyday"

Good luck!
Click to expand...


Hey Luis I just moved to Austin and I was planning on forming an LLC by the end of the year before I buy my HVX and gear, can you recommend a CPA in the city?
 
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