Anyone who has operated a small business knows how challenging it can be to get everything organized and running smoothly. First, you’ll need to choose between doing voiceover as a hobby or committing to running a business. If you are ready to own and operate your own show, it makes sense to form an entity for your voiceover business. The next step is to decide if that entity will be an LLC, an S or C Corp, or a sole proprietorship. An independent contractor delivers a specific task for a set fee. A sole proprietor provides a task or service but may sell products or have other revenue streams.
A sole proprietor can be one person, while an LLC can have one or more members. At first, operating a voiceover business as an LLC may require more extensive planning than running a traditional small business. However, it is simply another way that individual freelancers can structure their businesses and ensure their liability protection and tax savings while continuing to work on projects independently.
If you’re going to operate a voiceover business, it’s vital to take the necessary steps to protect yourself from personal liability and ensure your autonomy. One of the best ways to do this is to form an LLC. However, if you decide not to form an LLC, you can still operate your business as an independent contractor by following specific guidelines outlined in IRS Publication 587.
When is a Business Ready to Form an LLC?
Whether and when to form an LLC will have different answers for different businesses. If you have assets that could be at risk or need to save on taxes, it’s time to set up your voiceover business entity. If you want to operate your voiceover business as an independent contractor, the question becomes how best to file (e.g., forming an LLC vs. incorporating).
Technically, LLCs are formed, while corporations (S corporation or C corporation) are incorporated. There are many benefits to forming an LLC rather than incorporating your voiceover business because the process is much easier and less costly. Forming an LLC for your voiceover business can:
- Protect assets from any third-party claims by using a personal liability protection clause
- Provide tax benefits and options
- Increase the credibility of your voiceover business
LLC Options for Your Voiceover Business
Although it’s not necessary to form an LLC if you plan to operate your voiceover business as an independent contractor, there are many reasons to structure your business this way. You can choose an LLC if you want complete liability protection for yourself and your business. This allows freelancers to have the same liability benefits they would have if they filed as a corporation.
Alternatively, you can go with a sole proprietorship if you’re just starting and don’t have the time or money to file an LLC. Finally, if you want to expand your business as simple as possible and save time and money, then a C Corporation is a viable option. The C Corporation minimizes complications by allowing owners to control the company while maintaining limited liability through this specific legal structure.
Benefits of Forming an LLC
When you file the LLC formation documents, you will need to give your voice-over service a unique name. This name will also serve branding purposes, so you won’t need to file and purchase a DBA (Doing Business As). Credibility and trust are significant benefits of forming an LLC as a voiceover artist, and you will have personal liability protection.
Many voice over artists are registered as sole proprietors, which means they are subject to self-employment taxes on their earnings. The LLC ownership structure helps you save money at tax time because it keeps all your earnings in one place. The net income of a voiceover business is passed to the owner and taxed through an individual income tax code rather than a corporate tax code.
How to Form Your LLC
To form an LLC, you must file paperwork with your secretary of state and pay a small fee to incorporate your business. Fortunately, the paperwork involved in forming and maintaining an LLC is significantly less than an S or C corp. The filing fee ranges from $40 to $500, depending on your state. You may hire a professional to help you, or you can do it yourself.
Importance of Protecting Your Assets
As a freelancer, it is essential to protect yourself. You may need to form an LLC if you cannot afford to hire an attorney to protect your assets and limit liability. Not only are your assets protected, but you’ll also have a safety net. LLCs are legal business structures that offer liability protection, credibility, branding, and privacy.
The purpose behind operating as an LLC rather than a sole proprietor or another entity is the flexibility and independence when setting up projects with clients and demonstrating credibility. Choosing the right business structure depends on your business’s unique circumstances and needs. However, an LLC is likely the better option unless your business is very low-risk (like a hobby).