QUESTION
What benefits would I get from forming an LLC?
Asked on Aug 24th, 2012 on Entertainment Law - Texas
More details to this question:
I do freelance video production for a living. The money I make doing that finances my filmmaking aspirations. I write, direct, and produce short films, and am gearing up to start doing bigger productions (some as a writer, some as a director... I really don't want to produce anything big). Right now, I have a DBA, and am wondering what the benefits would be of starting an LLC and if it's necessary. Thanks!
5 ANSWERS
Personal Injury Attorney serving Beverly Hills, CA
Partner at
Engelman Law, APC
LLC's as well as corporations are typically used for tax benefits in that you could use pre-tax dollars for expenses related to your employment (I.e. Rent, equipment, etc.) If you continue as a dba, you would pay taxes on all of your earnings, then you would use post-tax dollars to pay for those expenses.
Answered on Sep 03rd, 2012 at 9:19 PM
Susan Marie Basko
The basic reason people start an LLC is to protect their personal assets from the debts or liabilities of the business. That is what "limited liability" means. For owners of an LLC, the debts and obligations of the LLC are limited to their investment. However, if an LLC has only one member, it will be disregarded as separate from its owner and will be treated as a sole proprietorship. In addition, LLCs must pay a California minimum tax of $800 per year. Many small businesses find this yearly $800 tax to be very burdensome. There are many other rules involved with a California LLC. You should read up and then discuss with a lawyer if forming a California LLC is the best move for you. Links are not allowed here, but there is great information to be found if you google the State of California Franchise Tax Board Limited Liability Company.
Answered on Sep 03rd, 2012 at 12:11 PM
2 Awards
An LLC protects your individual assets from lawsuits - that is its biggest benefit. As long as you keep your finances separate, should you get sued for whatever reason, only the assets of the LLC are at risk. Also, it can lend a small air of professionalism to your operation.
Answered on Sep 01st, 2012 at 9:22 PM
An LLC is a "limited liability company." This means that the owner of the LLC, much like a shareholder in a corporation, is not personally liable for the debts and liabilities of the LLC. For example, assume the LLC leases office space, and fails to pay rent. The landlord can sue the LLC and collect against anything that is property of the LLC, but the landlord cannot go after any of the LLC's owner's personal assets. The same is true with other contracts. Assume the LLC buys film or other supplies on credit. If the LLC does not pay for the film, the film or supply company can go after the LLC, but not the owner's personal assets. (Some landlord's or suppliers get around this rule by requiring the owner to sign a personal guaranty.) Next, assume the LLC hires an assistant for you. While making a delivery, the assistant gets in a car accident. The persons injured in the car accident can sue the assistant and the LLC, but they will not be able to sue and make a recovery against you personally. If you plan on being a single member LLC with no employees, the benefits of an LLC are less significant. However, it is usually better for a person in your position to form either a corporation or an LLC in order to limit your liabilities.
Answered on Aug 31st, 2012 at 11:30 PM
Alternative Dispute Resolution Attorney serving Austin, TX
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The main benefit of an LLC is that you limit your contractual liability. There are others in the event you need to hire employees as well.
Answered on Aug 31st, 2012 at 11:27 PM