Should You Inc or LLC?



by Kate McClanaghan, www.voiceoverinfo.com

Often I am asked, “Should I incorporate? Or maybe I should LLC?”

Good question.

At SOUND ADVICE, we recommend you LLC, rather than INC, if you do either one. The object behind doing either is to legitimize your expenses and write-offs for your small business as a
professional talent.

A Limited Liability Corporation (LLC) may costs a little more up front, but it’s not as costly at tax time as an INC (S-Corporation, for our purposes) incurs corporate taxes.

We recommend you check out LegalZoom.com to learn more and whether this may be something you could benefit from. http://www.legalzoom.com/llc-guide/limited-liability-company-edu-ce...

Also, an LLC may be infinitely more valuable to you in the long run because there’s less maintenance throughout the year and less paperwork to set it up.

So, even though incorporating (as an ‘S’ Corp or Sole Corporation, also known as a Sole Proprietorship) may only cost about $150 to establish, and you can operate multiple businesses through dba-ing
(doing business as) under either LLC or Inc.

You can set either up by downloading the paperwork from your local Secretary of State’s site on-line as well.

According to notorious ‘Sound Advicer’ and now Ace-Voice-over, Kimberley Reid, “Had I to do it all over again, I would have LLC’d, rather than Inc,” she told me.

Certainly either way you legitimize your expenses in this business, including workshops, coaching, demo production, promotional mailings, headshots and the like.

The next question is your corporate name. We suggest you establish your own legal name as your corporation, such as ‘Joe Talent, LLC’ or ‘Joe Talent, Inc’, as the case may be. Here’s why: if you call yourself ‘Excalibur, Inc’ it
may conflict with some unrelated business that may already be in
operation and may even link you to some inference you may not want any
association with, such as Excalibur brassieres or Excalibur escort
service. (Yikes.) That would be rather awkward, now wouldn’t it?
Additionally, it’s likely to pose a problem when it comes to depositing
payments made out to your name alone if your Corporation is in your
name. Can you imagine insisting at each session your checks be made
out to ‘Lady HOTnTOTS, LLC’? It may take repeated attempts to get that
billing straight and only slow up the process of getting you paid which
is counter-productive. Why? Because it’s ultimately something of a non
sequitur when you mix businesses. Besides you may find explaining the
origin of your corporate name to the next producer that hires you may
prove to be a bit more confusing than you had initially anticipated.

So, study up for yourself on legalzoom.com, and if you find this is the way you want to go… you can make it legal right then and there!

Here’s to the future success of your small business—YOU!

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Comment by Robert Sciglimpaglia on March 16, 2010 at 11:43pm
Hi Kirk. I think you misunderstood because the only time I ever advise an S-Corp would be for high revenue vo businesses with employees where deductions for the Corp would make tax sense. For the everyday VO venture, I always recommend LLC's. You may have seen something where I was answering a specific question of someone as to which is better. And actually, legally speaking, they are both the same as far as shielding liability. The only difference is tax and record keeping between the two entities.
Rob
Comment by Kirk Kinsinger on March 16, 2010 at 3:08pm
Hi Rob,

After reading an earlier article you wrote, I thought you preferred the S-Corp over the LLC. Could you tell me if I misunderstood the article or what changed your opinion. I really appreciate your thoughts and hope all is going well for you.

Kirk
Comment by Robert Sciglimpaglia on March 16, 2010 at 11:59am
Thank you for this post. I totally agree about the LLC vs S Corp issue, and totally agree with doing an LLC over a sole proprietorship. For those that say they are going to stick with a SP instead of going LLC because "there really are no risks in the VO biz", I invite you to join my Group, "ASK A VOICE OVER ATTORNEY" where we talk about the LLC vs. S Corp issue, and many other issues like this. For those who would like an article I wrote for VOICE 2008 about LLC vs. Corp and a summary of many liability issues that face VO artists and producers, just send me a message and I will forward it to you. It is MUCH cheaper setting up an LLC to PREVENT problems than it will be to SOLVE any problems that come up along the way and put your personal assets at risk.

Rob Sciglimpaglia
Comment by Sound Advice on March 16, 2010 at 10:51am
Thanks guys! Glad you enjoyed it. There's more where that came from. You can order my book online at http://voiceoverinfo.com/encyclopedia.html. Or give us a call in the studio if you need a jump start in your career!
Comment by Arno Lubbinge on March 16, 2010 at 3:19am
Another reason to use your own name for your business; this is how everybody KNOWS you (already). Nobody says 'DutchVoice.com did a great job this morning' nor will they show it in the credits - they call me by my real name, Arno Lubbinge. Besides it sounds stupid...
I allways advise my students to claim their own name as a domainname, for this reason.

Take care,
Arno
Comment by Roy P. Cunningham on March 16, 2010 at 12:41am
I've been using Christopher's reasoning the whole time I've been in business... the LLC is a ploy I want to take when I find the right person to fulfill sales duties... My one experience with employees / contractors left me thinking I don't want to be liable for situations I cannot control. I've been a one man show for so long, the last phase maybe a little longer in coming. For now I remain an SP.Still the article was darn well timed!!!
Comment by Christopher Caldwell on March 15, 2010 at 10:48pm
I'm staying sole proprietor. I am with financial genius Dave Ramsey on this issue:

Incorporate a business when it becomes large enough that liability and lawsuits are a concern, especially if you're in a business that is litigious in nature. (Generally, the VO business isn’t rife with lawsuits.)

If you have a business of several employees, and see the potential for bad things to happen, change to a Sub-S.

Incorporating is good if you're worth a few million and decide to open a business and are worried about protecting your personal assets.

There is no tax advantage to incorporating.  The only thing it will do for you is it will create a stand-alone entity that is liable for its own actions.  The only reasons you’d want to do that are: if you can’t insure through your own sole proprietorship, you have substantial assets back home that you want to insure, or if the business reaches a good size with several employees.
Comment by Mara Junot on March 15, 2010 at 9:07pm
Wonderful! I was literally mulling this issue over this morning. I've been leaning toward an S Corporation but after reading this, I'll be giving serious reconsideration to the LLC! Thanks a million!
Comment by Peter K. O'Connell audio'connell on March 15, 2010 at 8:12pm
Hi Kate,

I like the way you think.

And having heard the demo video on your site, I like the way you sound too.

Well done.

Best always,
- Peter

O'Connell Communications, LLC
d/b/a audio'connell Voice Over Talent
Comment by Cliff Zellman on March 15, 2010 at 8:12pm
Simple, clear and just what was needed for a lot of folks to get that ball rolling.

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