Should I Do This, Inc.
June 22, 2009 7:31 PM Subscribe
Please help me figure out whether or not I should start a loan-out company as a working screenwriter.
Background: I've been working in LA as a screenwriter for the past few years, having moderate success and making about 70 to 100 grand a year, though some years it has been as low as 58 grand. I was just hired as a staff writer at a studio for one year, and will be getting paid 150 grand. However it's just a one year deal. They just told me that I need to let them know ASAP if I want to set up a loan out company (for tax protection purposes) for when they pay me my weekly salary.
My question is, is it worth it for me to start a loan-out company? I might not make very much money next year, or the year after that-- this business is hard to predict. My previous accountant told me I shouldn't do it unless I was making at least 200 grand a year consistently, and I don't think that will happen for a couple more years at least, (if it happens at all.) I've heard there is a lot of paperwork, fees, and hassles involved with starting a loan-out, but I am not sure what those actually are and would like to know what I'm getting myself into. I am currently "between" accountants so I'm not sure who to ask.
On the other hand, being unmarried, childless, frequently "self-employed" and not owning a house has put me in a situation where I get taxed like crazy, and I'd be very interested in knowing just how much money a loan-out could stand to save me this year. Especially because 25% of my salary goes to my lawyer/manager/agent and as it is right now, I have to wait until my tax return checks comes in order to get the taxes back that I paid on their salaries.
Can anyone shed some light on whether or not it would be in my best interest to incorporate, seeing how I don't make 200 grand a year and have no way of knowing if I'll continue getting work or not after this year? I realize you are not my lawyer/accountant so no worries. Thanks!
Background: I've been working in LA as a screenwriter for the past few years, having moderate success and making about 70 to 100 grand a year, though some years it has been as low as 58 grand. I was just hired as a staff writer at a studio for one year, and will be getting paid 150 grand. However it's just a one year deal. They just told me that I need to let them know ASAP if I want to set up a loan out company (for tax protection purposes) for when they pay me my weekly salary.
My question is, is it worth it for me to start a loan-out company? I might not make very much money next year, or the year after that-- this business is hard to predict. My previous accountant told me I shouldn't do it unless I was making at least 200 grand a year consistently, and I don't think that will happen for a couple more years at least, (if it happens at all.) I've heard there is a lot of paperwork, fees, and hassles involved with starting a loan-out, but I am not sure what those actually are and would like to know what I'm getting myself into. I am currently "between" accountants so I'm not sure who to ask.
On the other hand, being unmarried, childless, frequently "self-employed" and not owning a house has put me in a situation where I get taxed like crazy, and I'd be very interested in knowing just how much money a loan-out could stand to save me this year. Especially because 25% of my salary goes to my lawyer/manager/agent and as it is right now, I have to wait until my tax return checks comes in order to get the taxes back that I paid on their salaries.
Can anyone shed some light on whether or not it would be in my best interest to incorporate, seeing how I don't make 200 grand a year and have no way of knowing if I'll continue getting work or not after this year? I realize you are not my lawyer/accountant so no worries. Thanks!
This thread is closed to new comments.
In any case, here's a scanned PDF I have from Written By magazine called Incorpreal Concerns - Everything You Want to Know About Loan-Out Corporations (4pg, 2.5MB by Myreon Hodur). It's from 2003 so some of the tax advice is certainly out of date, but at least it's a overview of issues specific to screenwriters.
(Also: I'm not quite sure about the copyright concerns of posting the article but I believe it follows in the spirit of helping screenwriters figure out tax matters.)
posted by sharkfu at 8:21 PM on June 22, 2009