LLC or what? creating the biz side...
 

not sure if this is the right forum but i am curious on creating an LLC. i was wondering what others did to protect themselves against the LAW. i heard that for film and LLC is the best to protect you company name and such from getting stolen and it allows you to claim equipment on taxes and such. any opinions would be great. i want to get and idea before i start shelling out money for lawyer consultation's.
mike

IANAL

LLC is just one of several forms a business can take. You don't need to be an LLC to take tax deductions on your equipment and other expenses - that only requires that it is a real business intended to generate income and not considered a hobby. Nor does it "protect you from the law." What it does there is shield your personal assets from risk if the business goes bust, is sued, etc. Protecting your business name from being stolen (is that such a problem)?? Registering your business name usually takes care of that, whether you're a sole proprietorship, an LLC, or a corporation. The details of all this are so variable from one jurisdiction to another that your best bet is to talk to your accountant familiar with your specific situation and the laws of your area.

Steve is right on the money. Wether you form an LLC or a corporation is up to you. State laws vary from state to state, so depending on what state you live in may help you decide. If you have an accountant speak with them. They can break down the benefits based on your situation. I went with an LLC based on meeting with my accountant and going over my business needs.

An LLC will not protect you from getting sued personally if you are the person doing the work. An LLC provides very little protection if you are a one person shop.

An LLC may provide some tax advantages, but writing off equipment is not one of them. You don't need an LLC to do that.

You also don't need a lawyer to form an LLC.

i understand you don't need a lawyer to form an LLC i just figured they would know more about it. i am currently reading a book called, "the pocket lawyer for the filmmaker". good book about the business side of film. in this book it explains that an LLC is usually best for a small group.

what would you suggest? i am mostly a single person, possibly one or two others. i mostly want to do films but i also do the occasional wedding video or commercial video(under the table...shhhh).

That's not what I have learned. Can you please explain what you mean? By that?

Thanks,
Martin

Michael,

is the decision between an LLC and a corporation, or is it whether to do one of them at all? I can't tell from your post.

Having just gone through the same decision process myself, I would suggest to study books and material on the Internet (maybe from the website run by your Secretary of State), and come up with a plan and with questions. Then meet with your accountant and with an attorney. A half hour with a competent attorney can be extremely valuable if you are well prepared and know what questions you have. I got a referral through our bar association, and a very affordable consultation. Now I have piece of mind, having gotten confirmation from a legal expert that I am on the right track, and if I need more help there's an attorney out there that already knows my case and my company.

To start, can you answer the following questions?

- Will you have a business partner or investor?
- Will the partner/investor situation likely change over time?
- Will your business post a loss or a profit initially?
- When it posts a profit, do you intend to keep the profit mostly in the business (to prepare it for growth) or pay it to yourself (and other investors, if applicable)?
- How much additional administrative effort are you willing to go through for the form of business you end up with?

The answers to these questions have allowed me to zero-in on my business form (and I'm still in the process of implementing it). I hope they can help you, too!

- Martin

LLC and Loans
 

This might be vague, since I don't exactly know what I'm talking about:

If my friends and I have an LLC together, what kind of position does that put us in with respect to getting a loan? I'm thinking specifically of taking out a loan to pay for equipment costs, but I worry about what may happen should we have to default on the loan.

Really, I'm wondering if anyone else on the board here has formed an LLC, why they decided to do that, what benefits it's offered, and whether they've had any experience with business loans.

Thanks.

guessing ... your LLC will not get a loan in it's name alone if it has no income or it's a new business ... more then likely they would love to give YOU & partners loans if you all sign on the dotted line as being personally responsible for the loan ( provided you have good credit and some assets )so if the LLC goes under then YOU & Partners still owe the $$ ...
you might be able to do a lease to own type financing ) again if no track record it would be individuals on the line for $$ and not just the LLC ) ? or you buy it and lease/rent it to the LLC ...

LLC are good ... you can get partners and you can decide what percent they own of the LLC and that percent is not dependent on how much they invested ... so a person could put up 90% of the $$$ and own 10% of the LLC or a person could put up 10% and own 90% of the LLC ...
also every year the LLC can decide to be Taxed as a corporation or let the income pass thru to the members ( becomes ordinary income ) .. so you choose which ever works out BEST for LLC/you in the current year ...

LLC - bottom line is you are protecting your (& members/partners) ASSets ..
in Calif ( & other states) you can be the only member ... you can have active or silent members ... nolo press has a few books ( some with software to set up a LLC)

http://www.nolo.com/article.cfm/obje...1/182/245/ART/

Here's a hypothetical situation: You are a one-man shop shooting a wedding video. During the resessional, you are walking backwards in front of the B&G when you bump into the grandmother of the bride, sending her down the steps and breaking her hip.

Her lawyer looks at you and your company. Yes, you've got an LLC, but your business is worth a grand total of $30k in equipment and other assets. However, your personal assets are far greater. The lawyer will advise his client to sue BOTH your company and you personally. The LLC has given you no protection.

Now if you have a couple employees, and your 18 year old 2nd cameraman knocks down Grandma, then the LLC will protect your personal assets, because you personally were not liable for the injury. Your business is wiped out, but your personal assets are safe. In this instance the LLC has protected you.

For a sole-proprietor with no employees, an LLC may give you a small tax benefit, but not much else. It does enable you to build credit in the businesses name, and it does give your business a certain amount of credibility.

Instead of talking to a lawyer, you'd probably get better advice talking to a CPA about an LLC.

... about Grandma taking a hit on her hip from the owner of the company, whether LLC or Sole Proprietor... is this why wedding videographers should really have liability insurance no matter if they are incorporated or not?

"and your 18 year old 2nd cameraman knocks down Grandma, then the LLC will protect your personal assets, because you personally were not liable for the injury. "

BUT !!! if you knew that your 2nd cameraperson had knocked down 5 grandma's in the past and you hired him anyway - could be a grey area?? or say -you needed a permit to shoot on public street but you wanted to save $$ & the AD who was concerned broought it to your attention and you said don't worry the LCC will protect your ASSets ... i don't think a LLC will protect you from negligence on your part ...

Guys,

I don't think anyone here has suggested that forming an LLC or Corporation is a substitute for getting liability insurance, or did I miss that post?

- Martin

I also do not think anyone expects an L.L.C. to cover them from gross negligence.

That's just it, incorporating or forming an LLC, is not the same as having insurance, not only for your gear, but liability as well. If you have questions, find a CPA and figure out what works best for your needs.