Are There Benefits To Incorporating Your
Voice-Over Business? Yes! Your Options Are ...
October 30, 2018
Note: This valuable advice is reprinted with permission from excerpts from Voice Over LEGAL, the essential guide to managing voice-over business and legal issues.
By Robert J. Sciglimpaglia Jr.
Attorney, voice actor, actor, author, producer
The logic is: "Until I start to earn some money at this, what's the point of creating a formal business structure?"
However, this same logic doesn't prevent many of those same voice-over artists from doing business under a "trade" or "stage" name, like "ABC TERRIFIC VOICE," or some other catchy phrase. This is what is referred to in the legal world as a "DBA" or "doing business as."
Nor does the logic prevent voice talent from spending thousands of dollars on home studio equipment, training, production of demos and marketing efforts.
These are all expenses that the talent believes will pose no problem when it comes to deducting them from income taxes.
Even after many voice-over artists do start to earn income in the business, they still don't get around to setting up a more formal structure, and they only think about such things around tax time, or if they are ever subject to a legal action.
YOUR OPTIONS EXPLAINED
The question of whether to incorporate has been subject to much debate in the voice-over community. It is my firm belief, however, that there should be no debate about it whatsoever.
The question should not be whether to incorporate, but rather, how best to incorporate.
Just like engaging in any type of business venture, a decision needs to be made about what "form" the business will take. Your options are:
Helpful IRS Definitions:
BENEFITS OF INCORPORATING
In my opinion, the benefit of the cost of setting up a formal entity, like an LLC or corporation, far outweighs the potential cost involved in defending a lawsuit or action by the IRS.
In some cases, it will also save the voice-over artist at tax time, depending on the revenues generated from the voice-over business.
In fact, an LLC is extremely simple to set up in almost all states and, unless a voice-over artist has employees working for the LLC, it doesn't even require a separate Employer Identification Number (EIN) like a corporation would need.
FOR THE VOICE-OVER ARTIST
One of the many other advantages of setting up an LLC applying specifically to voice talent is that, in most states, it eliminates the need to file a "Trade Name Certificate" or "Fictitious Name Certificate" to use the "DBA" name (as mentioned above).
Most states require individuals who are operating as a sole proprietorship under a name other than their proper legal name to file a form with a designated governmental entity. This includes fancy names like "ABC Terrific Voice" or a "stage name" – that is, a name other than the voice-over artist's legal name.
Filing to become an LLC eliminates this requirement in most jurisdictions because the LLC paperwork is filed with the Secretary of State, and is deemed to be notice of a "trade name" in that state. This would equally apply to doing business as either an S or a C corporation.
The failure of a sole proprietor to file such a "trade name" certificate can result in punitive damages, and can even result in criminal proceedings in some jurisdictions.
PROTECT YOUR ASSETS
In short, some form of corporate structure should be the first step in protecting a voice-over artist's personal assets (in the unfortunate event that he or she issued).
It also eliminates the problems mentioned above concerning operation as a "DBA."
Which type of corporation is right for you depends on your individual legal and tax circumstances. Speak to a qualified attorney and tax advisor to decide which one will serve you best.
As a voice-over artist, I agree in theory with the statement I often hear from other voice-over artists that "this is a liability-free industry."
As an attorney, however, I know better than that! The sad fact in the United States these days is that whenever money changes hands or an injury occurs, the potential for a lawsuit exists.
Practicing law since 1991, Robert J. Sciglimpaglia Jr. is an attorney admitted to the bars of Connecticut and New York, specializing in several fields including entertainment law where he represents actors, voice-over artists, musical acts and bands on issues including representation agreements, contracts and copyrights. He is also a professional voice actor, actor, producer and coach, and author of Voice Over LEGAL, the essential guide to managing voice-over business and legal issues, published by VoiceOverXtra.
Voice Over Legal: www.VoiceOverLegal.com
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