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communick@indiehackers.space

Sole Proprietorship or LLC for a small film/media production company (alien.top)

submitted 1 year ago by jujube_803@alien.top to c/entrepreneur@indiehackers.space

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I am a filmmaker hoping to register my film production business into a proper company. I am aware that, at some point, it will change into an LLC or some other type that is more suitable for me in the future. But for now, with my name already registered under a sole proprietoship, is it worth it to cancel what I have right now to re-register it into an LLC?

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[–] pixelrow@alien.top 1 points 1 year ago

You might want to consider a "Close Corporation" where you receive corporate tax treatment rather than a LLC which simply combines with personal income and taxes. LLC's are fine for lawyers and doctors with consistently high annual income, but for a business with irregular income and losses year to year, a corporation is much better imho. A corporation can accrue earnings in good years so you don't have to push all the profits onto your personal tax return and pay the income tax. The corporation can hold the cash to cover losses in future years. The best solution depends on the business, it just seems most people don't consider the tax implications and setup an LLC because they think it is easier. That is true compared to a normal C Corp, but Close Corporations are easy to operate since you are limited to 30 shareholders, but you receive corporate tax treatment. You need to see if your State has them. In States with no corporate income tax the benefits are even better.