Incorporated or not at DVinfo.net

Go Back   DV Info Net > And Now, For Something Completely Different... > Taking Care of Business

Taking Care of Business
The pen and paper aspects of DV -- put it in writing!


Reply
 
Thread Tools Search this Thread
Old October 29th, 2008, 10:38 AM   #1
Regular Crew
 
Join Date: Jun 2005
Location: Nebo, NC
Posts: 111
Incorporated or not

I am wondering how many folks out there are incorporated. We currently are but wonder if it is worth the extra expense and reporting complexity.

We carry insurance and limit our liability in our contracts.
Janice DeMille is offline   Reply With Quote
Old October 29th, 2008, 11:11 AM   #2
Trustee
 
Join Date: Jul 2005
Location: Willmar, MN
Posts: 1,400
If you have no employees, there's no good reason to incorporate.

I'm currently operating as a sole proprietor, but have three employees. I probably should incorporate.

EDIT: I see from your profile that you are partners with your sister. Then yes, it is a good idea for you to be incorporated since it limits your liability for her actions and vice versa.
Chris Davis is offline   Reply With Quote
Old October 29th, 2008, 12:38 PM   #3
Inner Circle
 
Join Date: Jan 2003
Location: Chicago, IL
Posts: 6,609
talk to an attorney. explain the situation and see what they say. Might not hurt to check with your accountant too.

Don
Don Bloom is offline   Reply With Quote
Old October 29th, 2008, 01:56 PM   #4
Major Player
 
Join Date: Nov 2005
Location: New Jersey
Posts: 475
the way I understand it, employees or not, is incorporating can protect your personal assets if you wind up being sued etc. But the advice of an attorney is key, heck many of them have formed LLC's themselves. ;-)
Bill Mecca is offline   Reply With Quote
Old October 29th, 2008, 02:43 PM   #5
Major Player
 
Join Date: May 2007
Location: Bakersfield, CA
Posts: 307
I have a partnership setup.. it will probably stay that way until we are quite a bit larger. Whether you form a S-Corp, C-Corp, or LLC, the main benefits are going to be personal asset protection and depending on how your business is setup MAYBE some tax benefits. The trade off will be however, the cost of incorporating, and an annual fee, I guess that depends on what state you incorporate in. My last business venture it was $800 a year in California.

For me, I'm just saying "FOR ME" it's cheeper and easier to just pay for liability insurance. It's hard for me to see what possible trouble I can get into where I'm being sued to the point where my home is at risk. If you can, maybe you should talk to a attorney because it's better to be safe than sorry.
__________________
http://www.higherdefinitionmedia.com
RED One #6135 "Spartacus"
Andrew Waite is offline   Reply With Quote
Old October 29th, 2008, 02:49 PM   #6
Major Player
 
Join Date: Oct 2007
Location: Paradise, california
Posts: 353
a worse case scenario: a pregnant woman trips over a tripod leg and does permanent damage to the baby, requiring it to need lifelong care. the lawsuit could go way beyond your insurance.
__________________
"What I need is an exact list of specific unknown problems we might encounter."
Allen Plowman is offline   Reply With Quote
Old October 29th, 2008, 06:12 PM   #7
Major Player
 
Join Date: May 2007
Location: Bakersfield, CA
Posts: 307
That would be a little bit of a stretch. YES, it could happen. But, would the court find you negligent? Or just the woman clumsy? Sounds like a pretty frivolous situation to me. I'm cool with those odds, but others might not be, so like I said, better safe than sorry.
__________________
http://www.higherdefinitionmedia.com
RED One #6135 "Spartacus"
Andrew Waite is offline   Reply With Quote
Old October 29th, 2008, 07:44 PM   #8
Trustee
 
Join Date: Jul 2005
Location: Willmar, MN
Posts: 1,400
Quote:
Originally Posted by Bill Mecca View Post
the way I understand it, employees or not, is incorporating can protect your personal assets if you wind up being sued etc.
That's a common misconception. If *you* cause harm to a person or property, *you* are always liable for your own actions. It doesn't matter if your business is incorporated or not.

Using Allen's example - if that tripod was placed negligently by you, you can be certain that the plaintiff’s lawyer will sue both your company and you personally. An LLC will offer you no protection. However, if the tripod was placed by your employee, they will sue your company and the employee. In that case, having an LLC can protect your personal assets.

Either way, liability insurance is necessary.

BTW, you can ask an attorney or an accountant, but just remember that they would probably have a fiduciary interest in you forming an LLC (i.e. they would make money if you do) so take their advice with that in mind.
Chris Davis is offline   Reply With Quote
Old October 30th, 2008, 12:57 AM   #9
Inner Circle
 
Join Date: Feb 2007
Location: Apple Valley CA
Posts: 4,866
Without getting overly "legalistic"...

Keep in mind a creative attorney can pull just about anything... and sue anyone for just about anything... most are after the insurance (presuming you have it), but don't count on them stopping there if you've got assets. And even funding a legal defense if you're right and win can be prohibitive. Remember the "million dollar pants" in the news not so long ago...

So too, a creative attorney can help you protect yourself and your assets if it's done before a problem manifests itself, but it will come at a price. Proper advance planning/structuring can save your bacon if the worst case scenario happens.

Even if you incorporate, you have to follow a lot of rules and regulations (paperwork!) to maintain the protection it can offer - so be prepared, find a good advisor, and triple check everything yourself to make sure you're protected.

Hope that doesn't make you paranoid, but if you're doing business in the USA when there are so many hungry lawyers, you're better safe than sorry!
Dave Blackhurst is offline   Reply With Quote
Old October 30th, 2008, 06:24 AM   #10
Major Player
 
Join Date: Dec 2005
Posts: 848
Don's advice is right on. Only an attorney can address your specific risks and only an accountant can address your specific tax circumstances. You need to look at both before deciding on the type of business entity. While discussing with your accountant, get an overview of the reporting requirements - monthly, quarterly, annually. Also ask each about licensing issues (city, county, state), sales tax registration and reporting if applicable.
Jim Michael is offline   Reply With Quote
Old October 30th, 2008, 11:12 AM   #11
Major Player
 
Join Date: Nov 2005
Location: New Jersey
Posts: 475
FWIW I wasn't thinking personal liability I was thinking more of your company producing a video, and there being an issued and a suit being filed against the corporation. But as I said, consulting an attorney familiar with this area of law is the best way to go.
Bill Mecca is offline   Reply With Quote
Old October 30th, 2008, 11:34 AM   #12
Inner Circle
 
Join Date: Nov 2005
Location: Elk Grove CA
Posts: 6,838
As an attorney who years ago did personal injury, I can tell you that, practically speaking, attorneys actually look for the "deep pocket", before they sue. People do not realize how many suits are not even filed because attorneys cannot find someone with assets or insurance coverage.

Second, as far as a corporate shield is concerned, there are methods of breaking through that shield too. One theory is the "alter ego" theory. It consists of arguing that the corporation itself is merely maintained as a shell for the individual to conduct his life "free" of what he should be liable for in the first place. Issues like corporate under captilalization come into play.

Third, the real point is, that while you may have perfect defenses, mounting those defenses is what costs money, and that is why insurance is so important to keeping yourself protected. Understand, too, that in most situtions, recovering attorney fees is not something that is available under the American system, so an insurance policy that requires that the insurance company defend you is what is most important. And---going back to point 1--- the irony is that the mere existence of insurance actually increases the potential that you could be sued.

I've always maintained that the law in California that required all motorists in California to carry liability insurance was directly responsible for the the litigation explosion, and actually had a detrimental effect on the ability of our courts to handle the litigation.
__________________
Chris J. Barcellos
Chris Barcellos is offline   Reply With Quote
Old October 30th, 2008, 11:34 AM   #13
Trustee
 
Join Date: Jul 2005
Location: Willmar, MN
Posts: 1,400
Quote:
Originally Posted by Bill Mecca View Post
FWIW I wasn't thinking personal liability I was thinking more of your company producing a video, and there being an issued and a suit being filed against the corporation.
Same answer - if you're the only person in the office (i.e. one man show) you are personally responsible for every decision you make, even if that decision is made under the umbrella of an LLC. If you make the decision to use uncleared copyright material in a production or reveal sensitive information in a video you will be held personally responsible.
Chris Davis is offline   Reply With Quote
Old October 31st, 2008, 08:48 AM   #14
Regular Crew
 
Join Date: Jun 2005
Location: Nebo, NC
Posts: 111
Thanks everyone for your answers. I believe I will leave it incorporated based and check my insurance coverage.

As always this forum is a great learning and sharing tool.
Janice DeMille is offline   Reply With Quote
Old November 7th, 2008, 10:48 PM   #15
Regular Crew
 
Join Date: Jan 2007
Location: Phoenix Az
Posts: 69
you may want to consider switching to an LLC... in most states you do not have to file annual reports with an LLC, and you just file on your personal taxes...


just a though, if you want to be protected without the accounting hassles and expense of a C or S.
John Brinks is offline   Reply
Reply

DV Info Net refers all where-to-buy and where-to-rent questions exclusively to these trusted full line dealers and rental houses...

Professional Video
(800) 833-4801
Portland, OR

B&H Photo Video
(866) 521-7381
New York, NY

Z.G.C.
(973) 335-4460
Mountain Lakes, NJ

Abel Cine Tech
(888) 700-4416
N.Y. NY & L.A. CA

Precision Camera
(800) 677-1023
Austin, TX

DV Info Net also encourages you to support local businesses and buy from an authorized dealer in your neighborhood.
  You are here: DV Info Net > And Now, For Something Completely Different... > Taking Care of Business

Thread Tools Search this Thread
Search this Thread:

Advanced Search

 



Google
 

All times are GMT -6. The time now is 04:00 AM.


DV Info Net -- Real Names, Real People, Real Info!
1998-2017 The Digital Video Information Network