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tax ID & payment


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Ive been asked a couple times now on phone interviews if I am incorporated, have a fed tax ID #, etc. and Im starting to wonder why... I operate as a sole proprietor, so my tax ID is just my SSN, and I havnt felt the need to form an LLC or the like yet. Is hiring an LLC over an individual more attractive to line producers though? I know it can change the way they make payment... Does it just allow them to bypass a payroll company?

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5 hours ago, Graham Kicklighter said:

Ive been asked a couple times now on phone interviews if I am incorporated, have a fed tax ID #, etc. and Im starting to wonder why... I operate as a sole proprietor, so my tax ID is just my SSN, and I havnt felt the need to form an LLC or the like yet. Is hiring an LLC over an individual more attractive to line producers though? I know it can change the way they make payment... Does it just allow them to bypass a payroll company?

It's difficult to speak on behalf of the hiring company. Who the heck really knows their reasoning for some of their choices? Perhaps their accounting department can asked more light for you.

That said, they do save money by paying you through invoice or as an independent contractor, since they're no longer responsible for the employer portion of the payroll taxes they would otherwise have to pay if they were to hire you as a w-4 employee (you would be responsible for this portion instead).

I'd speak to an accountant to ascertain whether it's worth it for you to look into incorporating or forming an LLC or not. Everyone's case is different. In my case, it's saved me a few thousand dollars at the end of tax year plus many many headaches that I would otherwise have to deal with (though it's brought others, which I am more willing to put up with).

4 hours ago, ryanpeds said:

I worked on something recently that wouldn't even accept my LLC. The payroll company wouldn't pay to it. They said it was too risky or whatever so I had to redo my paperwork as an employee.

I worked a gig last year where my A2 couldn't get paid through his LLC, but I was able to get paid through my S-Corp. I have no clue why that would be, it made no sense to me, but my A2 was fine with it as long as he got paid.

I still had to show the production company why as a single owner S-Corp with no employees I was not required by law to have or provide worker's compensation insurance, as it constituted a conflict of interest. But hey, what do I know, I just have common sense.

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Over here sound mixers often work as independent contractors. And while it does save the production company some money, I'll add 20-30% to the invoice, because now I have to pay for everything, and the production company saves a lot, as Jose pointed out. This way, I can profit from those savings and the production company still saves a bit and it's much easier for them.

As a side note, it's much more difficult to claim worker's rights as an independent contractor, over here anyway

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I've been experiencing this for several years now, mostly on cable and reality shows. My LLC isn't good enough for a 1099, I have to be a corporation, so I end up being an "employee" with none of the benefits or perks that a hired employee who would work in the office.

i asked my accountant why, and his answer was that in case the recipient (me) somehow didn't pay taxes on my 1099 income, the IRS could go after the issuer. Apparently as a Corp you play by different tax rules. What I don't understand is how an "employer" can selectively offer benefits, vacation time, and other incentives to some employees, and not others. When I asked him, he didn't know why. The only real gripe I have is that after the gig, I have to copy, sign, scan, and email what seems to be a small novel of paperwork, all on my own time, and the majority of the time, I only work one gig. Frustrating for sure.

i think this is one of the many new "realities" of freelance life. I'd try to change it if I could, but I think this is the new normal.

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I'm going to refrain from offering advice on tax questions or the wisdom of working in capacities other than a regular employee. I"m inclined to think it's best to be an employee with payroll taxes withheld but there are circumstances where working within a corporate framework might be beneficial. In any event, advice on those issues is best coming from a tax professional.

Regarding just the tax ID number, you may be able to address that without the complexity of incorporation. Anyone with a Keogh retirement account is required to have a company tax ID number. One just applies to the IRS and they issue a number. There are good reasons why it might be wise to establish a retirement account to supplement whatever might be sheltered through union assignments or in a regular IRA. I would suggest talking with a representative of your bank about this. Keogh accounts (unless the rules have changed recently) can be funded as resources are available so that you aren't on the hook for a big contribution in a lean year.

Once you have all that set up, you could legitimately supply your tax ID number to anyone inquiring. That doesn't commit you to working as an independent contractor although that is probably where the production company is trying to steer you.

David

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A sole proprietor can get a Tax ID (EIN) number from the IRS in one email.  Do It.

No one can arbitrarily change your tax status as a sole-proprietor / Single Member LLC / Partnership / S-Corp etc.. as long as you are compliant with your states regulations.  

They don't want to deal with Back-Up withholding or bother with a Independant Contractor Workman's Comp Policy (which is available).

Any company can choose to treat you any way they want (I disagree) but it falls back to you saying yes or no. Either allow them to ignore your state and federally recognized business status or don't. 

I fight tooth and nail to never go through payroll (unless IATSE).  I can prove, and have done so, that I am not an employee and am in fact an independent contractor as far as the IRS is concerned (Form ss-8).  

I won't jeopardize my business and tax status by working as an employee and providing "box kit rental" (meaning personally owned equipment provided as an employee).  

And lastly and more importantly, any income you receive by some entertainment industry payroll company isn't available for you to contribute to your SEP or i401(k).  

 

 

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Tom:

All good points. As I have an EIN, I try to use it as much as possible. Unfortunately, most of the paperwork I'm given only has a provision for an SSN. I also have a Certificate of Waiver for Workman's Comp (my choice), but that doesn't hold any clout. I'll look into the SS-8 (thanks), but aside from that, I think my options are to become a Corp, or live with my present arrangement.

 

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