S-CORP vs Payroll past trump tax cut edition

[RadoStefanov]

We have discussed this before but lets refresh.

What is the benefit of S-corp vs payroll after the maximum deduction was raised?

What deductions do you get with S-corp that you can not do as single proprietor?

WHat is the benefit? 

Are you asked to have your own production insurance? Cost?

[codyman]

My accountant has advised me NOT to do an S Corp / LLC etc at this time as I'd just end up paying more taxes than I already am here in California.

[PMC]

I agree with Codyman. I have been told by my accountant that some income gets taxed twice under an S Corp as it makes it's way to my pocket.

 

With an LLC, I dont think this is the case. In Iowa you can be an LLC and still be a sole proprietor within that structure. The reason for doing this is isolating company liability from personal liability. You use an EIN for your business instead of a SS number.

 

Since 1998 I have been a sole proprietor. And yes, I have gobbs of insurance; company vehicle 1 million liability, company 1 million liability with a 1 million umbrella and at one time, for a particular client, completion insurance. Which was stupid expensive but I amortized that expense on HIS incoices.

[RadoStefanov]

Funny story.

I am renting gear for a long show.

Production asked me and the grip company “ who are also just renting” to provide our own production insurance and to free them of liability if somebody gets hurt.

 

[codyman]

1 minute ago, RadoStefanov said:

Funny story.

I am renting gear for a long show.

Production asked me and the grip company “ who are also just renting” to provide our own production insurance and to free them of liability if somebody gets hurt.

 

I'd tell them to pound sand then.  What's next, you need to pay them for the catering too?  If production doesn't want liability, then they shouldn't be creating a production.

[RadoStefanov]

12 minutes ago, codyman said:

I'd tell them to pound sand then.  What's next, you need to pay them for the catering too?  If production doesn't want liability, then they shouldn't be creating a production.

What I said. I have been asked to carry my own insurance if loan out “and I become employee”  but asking for me not even being there is hilarious..

[PMC]

3 hours ago, RadoStefanov said:

Funny story.

I am renting gear for a long show.

Production asked me and the grip company “ who are also just renting” to provide our own production insurance and to free them of liability if somebody gets hurt.

 

 

When companies have asked me to indemnify them from loss and harm or carry additional liability insurance on THEIR project I tell them THEY are the employer. THEY need to offer ME an inland marine policy for my gear and be liable for on-set accidents.

 

I have the liability insurance I have because my wife and I produce soup to nuts projects of our own while hiring freelancers to fill rolls.

 

I have turned down plenty of jobs from national producers who require me to sign waivers of their liability. Yes, sand pounding is in order for these people.

[The Documentary Sound Guy]

I'd love to have a bigger conversation about how to deal with indemnity clauses as an industry.  They are getting out of hand.  But it feels a bit off-topic for this particular thread.

The worst for me are the deal memo clauses I've been seeing asking for power of attorney and / or guaranteeing that you will sign whatever further paperwork they require for unspecified purposes.

Seriously folks, read your contracts and push back if you have any power at all.

The electronic deal memos we are dealing with are making it that much worse because you can't just cross out lines when you sign them.

I was recently (in the last month) presented with a deal memo that said I wouldn't show up on set if I'd ever had COVID without getting clearance from the BC Centre for Disease Control.  The producer had no idea the clause was there.

[RadoStefanov]

If the contract is not explained to you it is not as binding. 

[PMC]

29 minutes ago, The Documentary Sound Guy said:

I'd love to have a bigger conversation about how to deal with indemnity clauses as an industry.  They are getting out of hand.  But it feels a bit off-topic for this particular thread.

The worst for me are the deal memo clauses I've been seeing asking for power of attorney and / or guaranteeing that you will sign whatever further paperwork they require for unspecified purposes.

Seriously folks, read your contracts and push back if you have any power at all.

The electronic deal memos we are dealing with are making it that much worse because you can't just cross out lines when you sign them.

I was recently (in the last month) presented with a deal memo that said I wouldn't show up on set if I'd ever had COVID without getting clearance from the BC Centre for Disease Control.  The producer had no idea the clause was there.

 

Absolutly, read the contracts.

 

To get around THEIR ridiculous contract language, several times, i have  downloaded their PDF deal memo, brought it into Acrobat, chosen Export Copy, brought it back into Acrobat (it is now an editable file), chosen, Edit, make my changes, affix my png signature, save it and send it back.

 

The three or four times I have done this I have never been called on it. Apperently, they don't read it or the producer doesn't care.

 

7 hours ago, RadoStefanov said:

Funny story.

I am renting gear for a long show.

Production asked me and the grip company “ who are also just renting” to provide our own production insurance and to free them of liability if somebody gets hurt.

 

 

When companies have asked me to indemnify them from loss and harm or carry additional liability insurance on THEIR project I tell them THEY are the employer. THEY need to offer ME an inland marine policy for my gear and be liable for on-set accidents.

 

I have the liability insurance I have because my wife and I produce soup to nuts projects of our own while hiring freelancers to fill rolls.

 

I have turned down plenty of jobs from national producers who require me to sign waivers of their liability. Yes, sand pounding is in order for these people.

[Philip Perkins]

I have lost jobs due to not being willing to provide insurance for the production company.  All of these companies were very big on telling me that "this is just how the industry works".  I replied that in nearly 50 years in production I had never provided insurance for a client and would not be starting now.   And yes, feel free to download any contract and cross out anything you don't like and add anything you want.  That's the way lawyers do it.  If they don't like your changes then can push back.  Mostly they hope that you either won't notice what a fuck their contract is or will be too intimidated or desperate to push back on it.

[RadoStefanov]

2 hours ago, Philip Perkins said:

I have lost jobs due to not being willing to provide insurance for the production company.  All of these companies were very big on telling me that "this is just how the industry works".  I replied that in nearly 50 years in production I had never provided insurance for a client and would not be starting now.   And yes, feel free to download any contract and cross out anything you don't like and add anything you want.  That's the way lawyers do it.  If they don't like your changes then can push back.  Mostly they hope that you either won't notice what a fuck their contract is or will be too intimidated or desperate to push back on it.

Every time I did not loose the job. Just became an employe. Gear on an invoice 

[Wandering Ear]

This convo sidetracked into another good area of discussion, but not related to S corp vs Sole Proprietor. 
All of the savings of an S Corp come in the form or Self Employment/ Payroll tax.  The income is passed through to you personally and is taxed the same, and itemized or standard deductions are applied the same regardless of what your entity type is.  So the new tax laws don’t really have any effect on which structure you choose. 

The benefit of an S corp only comes in at higher income levels.  Where the savings in an s corp come into play are the social security etc (employment / payroll taxes). Since with a s corp you become an employee of your company, your company pays half the employment taxes, and you pay half up to your set salary. All income above that gets passed through to you and those taxes are not levied. This means you pay 15.3% employment tax on income up to your salary level. 
As a sole proprietor, instead of splitting the 15.3 % employment taxes with your employer, you pay Self Employment tax on Schedule SE. This tax gets levied on all the income you bring in through your business. 
With an S Corp you effectively save 15.3% on all income above your set salary, which is why the savings only kick in above a certain income threshold.  I’ve had accountants tell me it’s not worth considering if you make under $100,000 a year.   There are of course a few minor expenses associated with running an S Corp, so those have to be factored in as well. 

 

[Johnny Karlsson]

Any remotely legit production should definitely have production insurance that covers both people and equipment. If they don’t, that would be a major red flag. Ask them for a COI that lists you as a loss payee. Should be a matter of getting it emailed within the same day.

- Anyone renting anything from a rental house needs to have insurance coverage from production. 

 

As for S Corp, I was told it only makes sense if you’re making over $150K per year. Went to a “class” specifically focused on what we do, but I haven’t really looked into it too closely after that. 
One thing that made me appreciate payroll jobs was when the pandemic lockdowns happened - having done enough of them to be able to get unemployment was a life saver …

 

[RadoStefanov]

3 hours ago, Johnny Karlsson said:

Any remotely legit production should definitely have production insurance that covers both people and equipment. If they don’t, that would be a major red flag. Ask them for a COI that lists you as a loss payee. Should be a matter of getting it emailed within the same day.

- Anyone renting anything from a rental house needs to have insurance coverage from production. 

 

As for S Corp, I was told it only makes sense if you’re making over $150K per year. Went to a “class” specifically focused on what we do, but I haven’t really looked into it too closely after that. 
One thing that made me appreciate payroll jobs was when the pandemic lockdowns happened - having done enough of them to be able to get unemployment was a life saver …

 

The biggest Reality production company in the world just asked my buddy who was renting a grip truck “just the truck” to carry insurance on set of somebody gets hurt by his grip gear that he does not operate.  He said no.