“Should I be incorporating my voice over business? What about an LLC or S Corp?”
This is a question I get asked a lot, and admittedly, it goes beyond my brain capacity. Add to that, the rules are different in Canada and the US and probably most other countries in the world. So there likely isn’t a one size fits all (or most) answer to the question.
As with anything else in life, when you don’t know the answer, ask someone smarter than you who does! And with that, I give you this very insightful guest post from Rob Sciglimpaglia.
Do I Need To Incorporate Or Form An LLC For My Voice Over Business
Many voice over artists ask me whether they should start some corporate entity to operate their voice over businesses, or if should they operate as a sole proprietor. Although there is no standard answer for everyone since everyone’s situation is different, there are some generalities that apply to all.
Firstly I must say that I see this question posed a LOT on the various social media websites, and I see the answer “stay a sole proprietor until you make enough money and then worry about forming an entity.” I find this very amusing. Think if someone was going to start a pizza parlor, and they said “let’s wait to see how many pies we sell before we decide to incorporate.” With that approach, how many slices do you think they are going to sell?
Starting a business takes a commitment. A commitment to succeed. So there is no “wait and see” about it. It’s either commit to be successful business, or do it as a hobby. Hobbyists are not businesses.
Secondly, I see voice over artists say on these sites, “We don’t operate a brick and mortar business so our liabilities are less and you don’t need to incorporate. No clients are visiting your studio.” Well, Google, Amazon, even Apple Computer started out in someone’s basement or garage, so that logic is flawed also.
The question should not be SHOULD I form an LLC, or S or C Corp. That answer is a resounding YES. It should be what entity is the right one to form. Why should everyone form some entity? Simply because you can! It only takes one disgruntled client, student, producer, ad agency, agent, or any other person VO Artists deal with on a daily basis to sue you. If you don’t have that legal protection, then you are risking your personal assets. If you have an LLC or Corporation, then only those assets are at risk.
Most people starting out in VO have another source of income. A job, retirement income; or assets; a house, a collector car, a bank account. Why put that other income or assets at risk? If someone is just starting out, right out of school, with no assets, then I would say that maybe Sole Proprietorship is OK for a short period of time.
Tax issues are a completely separate consideration, but that is another one that should be taken into account when deciding which entity to form. For instance, if you have a paying job, and you just cut your demo and bought your studio gear, if you had an LLC set up prior, you could have an accountant “depreciate” those “assets” over a period of years so that you can write them off over the years you will be making income, thus saving taxes.
There are many other considerations when starting a business, like what State should you form your Corporation or LLC? Should you form it yourself or hire an attorney to do it? In my opinion it is worth the extra upfront expense a corporate entity will cost because over time, it will save you a great deal of expense, and may even save your ass(ets).
I will be doing a webinar for Global Voice Acting Academy on September 26, 2017 at 8:30 eastern; 5:30 pacific to more fully discuss these issues. Click for Details
Rob Sciglimpaglia practices in Entertainment including trademarks and copyrights, as well as workers compensation, personal injury and real estate. robscigesq.com
Rob is also the author of the Amazon best-selling book, “Voice Over Legal.” Get your copy at voiceoverlegal.com