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Studio Owners: How is your business structured?

 
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crandallwarren
gettin' sounds


Joined: 06 Jun 2011
Posts: 140

PostPosted: Tue Feb 10, 2015 6:27 pm    Post subject: Studio Owners: How is your business structured? Reply with quote

Hi All,

I wasn't sure where to post this, but I thought this was the best bet. I have a small mobile recording business that has picked up a lot in this past year. I'm doing a lot more gigs out and about in the world and having more and more clients into my home office to go over things. As the business grows, my wife and I are becoming more and more concerned about the liability of our personal assets. Thus, I've been looking heavily into possibly changing my sole proprietorship to an LLC.

I'm curious to know what other people have done with their business structures? It's a pretty daunting cudelsac of legalize-- so any tips/horror stories/ lessons learned would be greatly appreciated. Thanks so much!

C.
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vvv
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Joined: 13 May 2003
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Location: Chi

PostPosted: Tue Feb 10, 2015 8:19 pm    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

What state are you in?

That can be important, but generally, a limited liability corporation may not be the whole solution, but can be a good part of it.

My best advice is, contact a local attorney with small business experience. FWIW, keep in mind that there are yearly filings, a registered agent requirement, tax ramifications, etc., as well as liability consequences.

An attorney who agrees to be the agent, do the filings, etc., can be a big time-saver and "insurance policy" all on their own. And they can advise you on stuff, like insurance, like how to amortize assets, what expenses are acceptable (a home office? vehicle?) as well as be a resource for debt collection and even loan structuring if that stuff becomes necessary.

FWIW, a decent CPA can do a lot of the above, also - I have a PC and my accountant does the paperwork, gives tax advice, etc.

But my strongest advice is to consult a pro, at least to get started.
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crandallwarren
gettin' sounds


Joined: 06 Jun 2011
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PostPosted: Tue Feb 10, 2015 8:25 pm    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

Right on. Thanks very much for the advice. I'm in DC. I've been operating a sole proprietorship for a while now and have a good relationship with my tax guy.
But he isn't a full on accountant for me.

I'd love to here if their are folks who've gone the LLC way and why. Or folks who feel their business is fine as a sole proprietor.
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A.David.MacKinnon
mixes from purgatory


Joined: 07 May 2003
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Location: Toronto

PostPosted: Tue Feb 10, 2015 10:06 pm    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

My experience is somewhat subjective (being in Canada and not having a great handle on the US version of the terms) but that said I have been a self employed sole proprietor and part of an incorporated company and I'm happy to be a self employed sole proprietor again.
Incorporating gave me piece of mind about liability but taxes were a massive pain in the ass and the accountant bill quadrupled (even though the cash flow and nature of the business was virtually the same).
What specifically are your concerns about liability? Are you concerned about being sued for something related to the work? Personal injury while people are at your office? Concerned about having people in and out of your home?

Good, clear contracts, insurance and maybe moving the office out of your home can address all those concerns and might be a cheaper option.
Again, I'm no expert and I'm in Canada. Your results may vary.
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crandallwarren
gettin' sounds


Joined: 06 Jun 2011
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PostPosted: Wed Feb 11, 2015 10:30 am    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

Awesome, thanks again for your thoughts. I would be looking at forming a single member LLC. So, as far as my research shows-- that shouldn't impact my accounting to much, as I will still be the sole member of the company and any tax obligations will pass straight to me (the LLC will not have to pay any taxes of its own). But that's a good thing to note.

The large majority of my business is mobile recording-- so I'm frequently going out into someone else's business, where the client has contracted with me, but not neccesarily the venue. And then I'm often running cables, etc. where audience members walk-- that sort of thing. So, my main concern is liability-- someone tripping over something of mine. A venue saying that I damaged equipment of theirs in some way, etc.
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Waltz Mastering
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Joined: 18 Jan 2009
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PostPosted: Tue Feb 17, 2015 12:20 am    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

It'd be good to look into getting liability insurance that will help protect you and any business property. There's companies that specialize in this type of insurance where the yearly premium can usually start around $500 and go up depending on your deductible and the amount of coverage you choose. The liability insurance isn't really effected by whether you're set up as an LLC or SP. Calling a local agent might be the easiest way to go. gl
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cgarges
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PostPosted: Tue Feb 17, 2015 3:55 pm    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

In NC, it's not difficult AT ALL to register a business without a lawyer. It just takes a lot of wading through stuff to really find that out. Not using a lawyer saved me about $800 and there's really NOTHING different about how I do my taxes, now that I have a registered LLC. I just have to pay the state a fee for my LLC every April.

Chris Garges
Charlotte, NC
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vvv
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Joined: 13 May 2003
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PostPosted: Tue Feb 17, 2015 5:06 pm    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

Interesting.

Does NC require keeping minutes like here in The People's Republic of IL? Are you required to have an agent designated to receive process? We also have a fee, but it's due on January 1 and state taxes are due on March 15. I think we are also s'posed to vote Democrat or sompin'. Twisted Evil
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cgarges
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PostPosted: Tue Feb 17, 2015 5:19 pm    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

Nope. Just filing the proper renewal paper by April 15th. I did talk to an attorney about it early on, who recommended having a lawyer structure the whole thing so my business was legit, but another lawyer told me that none of that was really necessary, since my business has basically been legit since I was 16. For me, this isn't a hobby and I've been paying taxes on music income since I was in high school, so it wouldn't really take much convincing if anyone ever challenged me on it. But I do have the business registered as an LLC to protect my personal interests. I also have substantial liability coverage on my studio insurance policy.

Chris Garges
Charlotte, NC
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vvv
zen recordist


Joined: 13 May 2003
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Location: Chi

PostPosted: Wed Feb 18, 2015 8:24 am    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

Good onya, then! Cool

I'm a PC but more for professional liability than anything else.

I will say, as one of the perpetually semi-disorganized, having a corp. account actually makes book keeping easier.
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oneflightup
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Joined: 10 Sep 2015
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Location: Sydney, Australia

PostPosted: Tue Sep 29, 2015 4:21 am    Post subject: Re: Studio Owners: How is your business structured? Reply with quote

I reckon Insurance is the way to go.
I'm a sole trader (in Sydney Australia).
Business insurance covers me for $20 million public liability. So if anyone injures them self, I don't have to worry. It also covers fire and theft to a certain amount.

Best of luck!
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