If we are a group of young adults looking to start a small film company, do we need an LLC or DBA?
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If we are a group of young adults looking to start a small film company, do we need an LLC or DBA?
We want to have a small production company, obviously with it’s own name, and to be able to put our films up on-line. Do we truly need an LLC or DAB as we are such a small companyor are we clear while its in its infancy? Or is it required, just in case say we started selling merchandise or put stuff up on youtube and was making money off of advertising? I would like to stay on the cheapest side of things but still know that everything we’re doing is in the free and clear.
Asked on May 16, 2011 under Business Law, California
Answers:
Shawn Jackson / The Jackson Law Firm, P.C.
Answered 12 years ago | Contributor
Thare are a variety of factors and indicators as to which legal entity you may select to operate; There are a variety of tax, liability and management reasons for selecting one over the other. If you would like a FREE memorandum on the advantages and disadvantages of legal entities in California, juse send us an email.
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Shawn Jackson ESQ. (707) 584-4529
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SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
You definitely want to set up an LLC or a corporation and NOT have a partnership or D/B/A. The reason is that if you incur liability from the business--whether that liability is from a debt your business takes out, from breaching a contract, from product liability for something you make or sell, from infrining someone's intellectual property, or from simply hitting a pedestrian while driving to a meeting or make a delivery--you want your personal assets to be insulated; you don't want to lose your own home(s), saving(s), etc. because of business liability. That's what LLCs and corporations do; they insulate the owner from personal liabilty, so the most you can lose is what you've put into the business itself. As to which is the better choice for you--while you should consult with an attorney who can evaluate your specific needs, an LLC is probably the better choice; it is more flexible and easier to administrate for most purposes for small businesses. You'd probably elect pass through taxation, so you are taxed as individuals (no double taxation of first corporate profit, then of individual distributions). If you don't want to use an attorney--though one is recommended--you can find information and forms online and probably set an LLC up for a few hundred dollars. It's a good investment for the safety and peace of mind.
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