I need pros and cons. Let me give you some background. This will be strictly part time as I already have a full time job. Was looking for sole for ease of setup and able to just use personal tax forms. It is only me so if I did a LLC it would just be me and I don't think the IRS would recognize me as a true LLC anyways. Anyone else just you and no employees? How do you do it? I have been working for another DJ company as a contractor but want my own events to be legitimate. Thanks for any help.
Sole or LLC
- Thread starter dapperdan
- Start date
I'm no tax expert but I fail to see any way that an LLC is going to benefit you. In order to be recognized, and gain the expected protections, you're required to hold corporate meetings, conduct financial transactions completely out of the corporate funds (no mixing bank accounts), etc. Just make sure you have an insurance policy in place to protect you in case of accidents.
"LLC" can benefit you...even if you have good insurance.
The LLC protects your personal assets from being included in a lawsuit of your business.
So they can't take your home or belongings.
I am going to talk to an accountant but a sole LLC can still be sued from what I can see. Its a LLC with different members that has more protection.
Ding ding ding! Mike is spot on. If a guest is hurt at an event - even if you were in no way involved - an attorney WILL obtain lawsuits to ALL vendors present - caterer, photographer, DJ, florist, etc.. It's the "throw enough stuff at the wall and some if it is bound to stick" mentality.
And if the DJ WAS directly involved, they will go after everything you own - business and personal.
Having your DJ business registered as an LLC will protect your personal assets.
Guys, you might want to read up on LLCs a bit more. Just filing yourself as one does NOT automatically protect you. The corporate veil can easily be pierced if you don't follow all the rules involved, after the LLC is setup. This includes filing minutes from required corporate meetings, etc. which most of us probably would not be doing, even with an LLC.
My sisters is a accountant, like Rick said there is constant recurring paperwork required. Best to talk to your tax accountant & legal advisor to get the best advice as it pertains to your company. With my wife's spending there is nothing left. I was thinking about auditioning to be the new "Bones" on Star Trek. Like in original "all she left me with was my Bones"
One of the things that has always been in my mind when thinking about this is to think of an event that would cause me to actually get sued. I can't come up with a situation that would be lawsuit worthy, where I wouldn't also be named personally as negligent. If you poorly set something up, working for a business, and someone gets hurt... the business may be at fault as the contractor, but the individual that caused the incident also has personal risk. So, to act as if my personal assets are sheltered hasn't ever felt real to me.
True, but you would be working for the LLC,
which means the LLC would pay any restitution.
They'd be suing Ross the employee of the business...
and not Ross, the guy with the house and the car and the personal bank account.
Actually, they'd probably sue both .. winning is one thing, but it's going to cost you either way.
In theory, it sounds nice. Get an LLC and suddenly you're shielded. The problem though, is that protection only works if the LLC is an actual corporation and not just a sole proprietor who filed some paperwork but still runs things like a sole proprietor. If they come back and can prove you haven't been running your LLC, exactly as it says a corporation must be operated, then the shield drops down and you're back on the hook.
No, sorry it won't do jack s@@@
See, you f@@@ up and say you burn down the hotel cause your gear shorted out.
OK, they do what? Sue the biz..duh, of course. BUT they will also sue YOU..peronally. so the LLC doesn't protect diddly squat.
Saw your driving and your cargo trailer comes off and and goes thru teh people in line out front of the rave - same thing - they'll sue YOU personally as YOU were the one that 'did it'.
LLC is great if you have EMPLOYEES - then if they screw up THEY get sued and your COMPANY gets sued, your personal assetts are free and clear.
The GOTCHAS in this -
as mentioned, more bookkeeping requirements, meetings, officers, etc. Not much for an LLC , more for s corp, etc.
If you classify yourself as an employee of said 'company' then you must get (in PA if not all states) workers comp insurance for employees..more costs. Do payroll..more costs.
You MIGHT save on the FICA/Self employment tax..MAYBE. The IRS is on to this idea that you pay yourself $500 a year in payroll (subject to fica) and $20,000 profit sharing/dividends which are not subject to fica - saves you 15% on that income. The IRS now looks at what a 'typical' person with that job earns and yo ubetter be paying yourself that or close to it or else they'll call you on it.
Also consider the new LLC/S-corp has no assetts, no credit, etc. So you have to PERSONALLY sign for it...now you've just peirced the veil so to speak and put yourself personally at risk.
get insurance and don't be stupid and screw up. And no judge is gonna take your house because you didn't play all the 'must play' songs at an event and get sued for it.
See, you f@@@ up and say you burn down the hotel cause your gear shorted out.
OK, they do what? Sue the biz..duh, of course. BUT they will also sue YOU..peronally. so the LLC doesn't protect diddly squat.
Saw your driving and your cargo trailer comes off and and goes thru teh people in line out front of the rave - same thing - they'll sue YOU personally as YOU were the one that 'did it'.
LLC is great if you have EMPLOYEES - then if they screw up THEY get sued and your COMPANY gets sued, your personal assetts are free and clear.
The GOTCHAS in this -
as mentioned, more bookkeeping requirements, meetings, officers, etc. Not much for an LLC , more for s corp, etc.
If you classify yourself as an employee of said 'company' then you must get (in PA if not all states) workers comp insurance for employees..more costs. Do payroll..more costs.
You MIGHT save on the FICA/Self employment tax..MAYBE. The IRS is on to this idea that you pay yourself $500 a year in payroll (subject to fica) and $20,000 profit sharing/dividends which are not subject to fica - saves you 15% on that income. The IRS now looks at what a 'typical' person with that job earns and yo ubetter be paying yourself that or close to it or else they'll call you on it.
Also consider the new LLC/S-corp has no assetts, no credit, etc. So you have to PERSONALLY sign for it...now you've just peirced the veil so to speak and put yourself personally at risk.
get insurance and don't be stupid and screw up. And no judge is gonna take your house because you didn't play all the 'must play' songs at an event and get sued for it.
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It depends how the money is earned. If it's purely your gigs, and there is no real separation between what the company is making and you are producing they will disallow all of that. If you are running a profitable multi-op, you've got a better shot at making an S Corp distribution in the form of a profit share versus as compensation. Most DJs can't get around FICA with this method.
Watch the language boys and girls I hate editing on tapatalk it makes me cranky and I'll have to hand out vacations
Iceburg. You are just wrong. I have shown my attorney and account this and the whole point of having LLC or Scorp is so they cannot personally sue you no matter of the situation. I suggest each person here to contact their attorney and or accountant.
Google it. From what I've read, it sounds like your attorney is the one who is wrong. There are lots of ways that creditors can pierce the corporate veil, especially when it's a solo operator. If you miss filing meeting minutes, or mix personal/biz funds, etc. then then the veil can be pierced.
I don't need to google it. I trust my attorney and accountant. I also personally know about 10 business owners in the event industry who all do the same thing. Filing meeting minutes is super easy and worth the small amount of extra work compared to llc. The tax incentives are well worth the cost per year you pay for s corp.
I'm not an attorney nor do I play one on tv, but from all I've heard, I agree with what I have seen. They come after the business first, then they come after you. If your attorney says they can't, then he better put his a$$ on the line if they do. Just because a group of people do it, doesn't mean it's right - they may not know any better.
Can I Be Sued Personally if I Am an S Corporation?
'You can still be sued personally, even if you operate as an S corporation.'
LLC:
'Incorporating your business creates a limited liability shield; your employees and shareholders will be considered agents of the corporation, not you personally. This means that your personal assets are generally protected from their wrongdoing.'
Incorporation Facts: Protecting Your Personal Assets
'They might sue your corporation and you, personally, as the creator of the ad. While you would not be liable for any settlement the corporation has to pay as a result of the suit, your personal assets could be attached to pay off any judgment the competitor won in its case against you the individual.'
Can I Be Sued Personally if I Am an S Corporation?
'You can still be sued personally, even if you operate as an S corporation.'
LLC:
'Incorporating your business creates a limited liability shield; your employees and shareholders will be considered agents of the corporation, not you personally. This means that your personal assets are generally protected from their wrongdoing.'
Incorporation Facts: Protecting Your Personal Assets
'They might sue your corporation and you, personally, as the creator of the ad. While you would not be liable for any settlement the corporation has to pay as a result of the suit, your personal assets could be attached to pay off any judgment the competitor won in its case against you the individual.'
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