VO-BB - 20 YEARS OLD!

samowry · Posted: Tue Mar 22, 2011 8:58 pm Post subject: Any body here an LLC?

Hi folks,
I've recently had a company ask me if I was willing to become an LLC. They say it is a great benefit to them and they were asked by a giant corporation they are just starting to work with to try to hire LLC's as vendors. Seem strange? It does to me, but the business aspect of many things escapes me on a regular basis and so my wife suggested "Why don't you ask your VOBB friends?" As usual, she is filled with understanding and wisdom, so here I am, hat in hand.

Anybody working as an LLC or know why it would be a good thing to be one? I appreciate your help in advance and thank you all for thinking on it.
Not LLCed in Portland.

Dan-O · The Gates of Troy Joined: 17 Jan 2005 Posts: 1638

cyclometh · Posted: Tue Mar 22, 2011 9:33 pm Post subject:

Funny, I was just talking to my wife about the fact that I'm going to be getting my business license as an LLC here in Washington pretty soon.

I used to own an LLC, but I'm not sure what benefit it has to customers. The way I look at it is that it's like a corporation in that liability is limited to the organization's assets, and not mine, but like a privately owned company in that it's simple to manage and run, without the overhead of an "Inc." company.

I'd be curious to know why there's a desire to hire LLCs over other types of companies too.
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cyclometh · Posted: Tue Mar 22, 2011 9:39 pm Post subject:

Addendum: I can certainly see why someone would prefer to hire an LLC over an individual, though. If they can just pay a company, their tax paperwork is much simpler.
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Jeffrey Kafer · Posted: Wed Mar 23, 2011 12:43 am Post subject:

Bailey · Posted: Wed Mar 23, 2011 1:36 am Post subject:

Bruce · Posted: Wed Mar 23, 2011 7:36 am Post subject:

There are lots of reasons not to bother going LLC and very few in favor. Maybe the biggest question is, "who on Earth is going to sue a voiceoverist for everything they've got!?" The answer is "nobody", based on the work you do.

If you work from home you have home or renter's insurance with liability coverage for anyone who might come over and get conked by the upturned rakes you leave on the floor. You'd have to maliciously club somebody with a microphone for them to come after your business assets and not you personally, anyway.

Just reading copy for hire does not put you in jeopardy. Unless you are personally involved in the creation of a fraudulent or slanderous scheme, you have no criminal or civil liability.

As far as taxes go, according to my accountant, your business would still go on Schedule C if you were an LLC. LLC makes no difference on the IRS front.

The only place it might make a difference is in utter financial collapse ending in bankruptcy, but how your LLC can go bankrupt and not you personally is almost impossible to conceive. Plus, bankruptcy judges are loathe to take away the tools of your livelihood so you're likely to keep everything you need to make money no matter if you or your LLC owns your equipment.

LLC's and incorporation do make sense when you start hiring other people, and set up shop in a building, and get into major contractual agreements with other entities. You'll want protection there. But as a gal or guy sitting alone in a room with a mic providing a simple service...my understanding is it's not worth the hassle or expense.

It sounds like a lawyer (trying to justify his existence) told your potential client that they needed the protection on their end. I don't see it.

If you can justify the hassle and extra expense this year and every tax time going forward, and they insist you do it to get work, then there's no harm in going LLC. It's just unnecessary for most of us.

B
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I'm not a Zoo, but over the years I've played one on radio/TV. .

Gregory Best · Posted: Wed Mar 23, 2011 8:40 am Post subject:

Nicely put Bruce. LLC's only offer limited personal asset protection - LIMITED Liability Corporation. You need to create a corporate entity by more than the form for your business license. Check with your state since laws and requirements do vary.

As far as less taxes, I doubt it. With a regular corporation you are taxed twice -Corp income tax and then individual income tax when you pay yourself. There are advantages and disadvantages.

I agree with Bruce. Why do it if you do not have a separate business location and employees?
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Gregory Best

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ccpetersen · Posted: Wed Mar 23, 2011 9:01 am Post subject:

We are a sub-s corp and went that way for a variety of reasons that made sense for our particular case. The question of doing your taxes as a sole-prop vs. LLC or Sub-s is fairly complex and to my POV, it is about equally complex, with a slight increase in complexity when you go Sub-s (C). In our case, it made more sense since my husband and I are both employees of our corp and before that we were running two sole props and one sole prop would be paying the other sole prop for services, etc. and it just got too complex. But, the taxes are NOT simpler simply by going LLC or sub-s.

We also have as clients various government and educational entities, and they seem to like to deal with corps better. One thing we found out is that when we incorporated, suddenly we had a D&B profile. That came in handy last year when we were asked to work on a government-funded educational project.

The liability was another issue, since we are creating and licensing content -- and some content that we license isn't ours, but material we distribute for others. We needed some ways to limit our liability if an end-user did something bad to or with the content. So, partly we handle that with a user agreement that spells out rights and responsibilities, but it also works that being a Sub-S, we can use that as a shield.

It's not likely that somebody would sue you over a voice-over issue, unless it was someone suing EVERYONE in connection to a given project, but that's pretty rare. If you became a content producer, then you would be getting into other areas -- and you can feel free to PM me for more info on that.

As for business insurance -- we had business insurance when we were sole props, too. It made sense because we DID have people come to our place of business in our home, and the liability on the business insurance helped us make a clear delineation about what was business related and what wasn't.

For example, SOME homeowners' policies do not fully cover business equipment in the same way that a business policy does. For us, since we had a lot of equipment (office stuff, recording studio, photography studio, etc.), it was necessary. Plus, the business insurance was a business deductible expense. Not sure that homeowners' insurance would be a business deductible expense (YMMV).

Which brings me to business expense and deductible costs: from my POV the same legitimate business expenses that were deductible for us under sole prop are still deductible under Sub-s (and would be under LLC). How some expenses get handled on the tax forms are a bit different -- such as the business use of home. Your tax person can help with that -- in fact, talking to a tax person BEFORE you go LLC or Sub-s is a very good idea and well worth a small consulting fee to help you decide.
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ccpetersen · Posted: Wed Mar 23, 2011 9:09 am Post subject:

Oh, another comment. That business about wanting to work with LLCs as vendors may be as someone else has mentioned, the company urging you to do this doesn't want to deal with 1099-MISC forms at the end of the year. However, unless the law gets changed, all businesses are currently required to fill such forms out for anyone we spent more than $600 (I think) with each year, LLC, Corp, or whatever. It's a real burden of paperwork and I cannot imagine why our elected reps thought it would be a good idea, but that's a topic for another forum.

As it is, even as a CORP, we still get some government entities (school districts, usually) that feel it necessary to send us PERSONAL 1099-MISC forms to our corporation for products they buy from our company (or services it delivers).

Don't even get me started on bureacracies with too many people doing make-work.

Angry

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samowry · Posted: Wed Mar 23, 2011 9:43 am Post subject:

Thank you all. I'll get this to my wife to peruse. I appreciate all your information and opinions. VOBB rules.

But you knew that already.

Jeffrey Kafer · Posted: Wed Mar 23, 2011 10:08 am Post subject:

I just read an article yesterday that said unless you have non-spouse partner in your LLC, the actual protection gained is drastically reduced. In essence, courts have become wise to the fact that other than title, there's not much real difference between a sole prop and a single-member LLC in terms of the way business is conducted.

If I can find that article, I'll dig it up. Also James Alburger's latest version of his book has an article by Rob Scimpaglia about going LLC.

CYA note: I ain't no lawyer, so this is not legal advice.
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Jeff
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Eddie Eagle · M&M Joined: 23 Apr 2008 Posts: 2393

One thing that may be helpful is having a FEIN.
Corp clients seem to ask for that more than a SS.
I use it on my W9s

Dan-O · The Gates of Troy Joined: 17 Jan 2005 Posts: 1638

cyclometh · Posted: Wed Mar 23, 2011 11:08 am Post subject:

Interesting info. I ran an LLC for about 10 years with a partner and it was pretty simple overall. I'm definitely going to be setting up some form of business for my VO work, and an LLC seemed the most logical (and I had experience with one). Going to have to tallk with my accountant and attorney about the ins and outs of which direction to go based on my current needs.
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