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An Indie Producer`s catch 22 (Operating on a shoestring)

    • 2 posts
    December 1, 2007 8:14 AM EST
    In a nutshell . . .

    I`m on a shoe string budget, but I want to:

    1. Legally separate myself from my business entity and thus significantly reduce my personal financial, legal and tax liability.

    3. Avoid excessively complicated tax paper work. (Hopefully only doing this annually, rather than quarterly).

    4. Reduce taxes as much as possible.


    I am a California resident and I have considered starting an LLC in Delaware; thread:

    http://www.startupnation.com/forums/8976/1/1#PID79871

    But I wouldn`t want to do this if it`s going to make my tax situation ridiculously complicated. (I will likely be doing my own taxes for the first two years that my LLC is in operation.)

    What would you experienced and knowledgeable folks recommend that I do?

    Best,

    Quickfoot2

    quickfoot212/1/2007 5:05 PM
    • 2 posts
    December 5, 2007 6:25 AM EST
    Hi Gina,

    Thanks for your reply. I think you`re right regarding remaining a sole proprietorship. I was actually going through a Nolo Press book on contract law. A well written contract goes a long way toward limiting many types of liability. Of course, it won`t eliminate all liability, and it won`t replace liability insurance, but it goes a long way.

    Thanks for the advice!

    Quickfoot2

    • 59 posts
    December 2, 2007 3:23 AM EST
    Until you`re profitable it is rarely adventageous to form a separate legal entity as far as taxes are concerned. 

    For most people they are able to obtain large enough umbrella policies (in the millions) to protect them from liability.  In addition, even after you incorporate, it is highly advisable to have a very good umbrella policy because your legal entity (does really matter which one you choose) will not cover every legal concern you may encounter.

    So, operating on a shoestring budget, I`d definitely say stay a sole proprietor.

    Doing your own taxes - please do a lot of reading first.  The IRS has a lot of great information on their website, for free, take advantage of it.  If you change your mind and would like some help with your taxes, please email me.



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    Gina L. Gwozdz, CPA
    http://GLGcpa.com
    http://TaxTreasures.com

    • 434 posts
    November 12, 2008 4:35 PM EST
    Re California - It doesn`t matter where you incorporate, the state will get theirs.  If you incorporate in another state, then California charges a "foreign corporation" tax.  $800 a year the last time I looked.

    The paperwork to form an LLC is pretty simple, but you should be talking to a tax expert.

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    Steve Mann
    Internet Videographer
    MannMade Digital Video
    My Email