sign up for our
NEWSLETTER

Home Shop Subscribe Advertise Articles Directories Classifieds Calendar FAQs Contact Us Login

BUSINESS
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:
  • sole proprietorship
  • Limited Liability Company (LLC)
  • C Corporation
  • S Corporation
Helpful IRS Definitions:
  • Sole Proprietor: "Someone who owns an unincorporated business by himself or herself."
  • Limited Liability Company (LLC): "A business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC."
  • Corporation: "In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. For federal income tax purposes, a C Corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders. The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation."
  • S Corporation: "An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation. Generally, an S corporation is exempt from federal income tax other than tax on certain capital gains and passive income. On their tax returns, the S corporation's shareholders include their share of the corporation's separately stated items of income, deductions, loss and credit, and their share of nonseparately stated income or loss."
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.
-------------------------
ABOUT ROBERT
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

Your Daily Resource For Voice-Over Success
Tell Us What YOU Think!
Please Note: Since we check for spam, there will be a slight delay in the actual posting of your comment.
Your Name:
Your Email Address (will not be published):
Your Comment:
Your Comment:
Security code:     
Comments (1)
~joleene
10/30/2018 at 12:09 PM
Rob, I greatly appreciate this information and... your constant willingness to share your expertise with us. I had some concerns about the affects of the new 2018 tax laws on an LLC. However, you've made it easy to understand. Thank you!
Back to Articles
Terry Daniel and gang - lotsa info and laughs!
Scoop up this money-making advice from John Melley...
With Sean Daeley and Paul Stefano - check it out!
On Michael Langsner's Voice-Over Roadmap Podcast