Advantages/Questions about forming LLC

[Taylor Genovese]

I was just wondering if anyone else here had an experience with making your production company an LLC. What are the benefits? Are there taxes?

 

I don't know a whole lot, but I would like to hear any input that anyone can provide.

 

Thanks!

[Kevin Zanit]

Forming an LLC is good if you have several people involved with the company and want more of the liability protections that an LLC provides that a partnership does not.

 

If you have more than two people involved, then you don't have many choices other than forming some form of corporate structure.

 

An LLC is a relatively new business entity and is really easy to put together. The benefits of having an LLC rather than an S-Corp or C-Corp is primarily a simpler tax structure. Most LLCs are taxed as a "pass through" entity where the members of the LLC just list the income from the company on their individual tax returns. You can structure an LLC to be taxed as a partnership or as a corporation. It is most common to set one up as a partnership tax model.

 

Another advantage to an LLC over a S or C corp is simpler book keeping; you don't need to hold minutes or need to fill as many job positions. With an LLC there are only members and managers. Members hold a financial interest in the company and managers can run the company but don't hold any percentage in the company. Members can also be managers.

 

If you are by yourself, don't need corporate liability protection or some of the tax advantages of an LLC or a traditional corporation, form a sole proprietorship. This would still allow you to have a bank account for your company.

 

This should be true for most states, but I am mostly speaking for CA, every state is different. Also, in CA, there is a minimum corporate annual tax of $800 + a filling fee of $20. In addition, there is another fee for filling with the Secretary of State and the legal fees of getting all the paperwork drawn up.

 

Kevin Zanit

Battle Rattle LLC