Four things to consider when you have a Loan Out or Solo S-Corp are a Savings account, bookkeeping, signing the deal correctly, and a Retirement account for your investments.

TRANSCRIPT:

Hi Greg Vojtanek here of Fade In Financial. For other free educational materials please visit fadeinfinancial.com. Today I want to talk a little bit about S-Corps or LLCs. For many of my clients if you're a screenwriter, director, or artist, you may have your own S-Corp that you've established. There are a whole bunch of tips and reasons of why you should, or should not, establish your own S-Corp. I'm just going to cover four basic ones here today.

First one: open a business checking and a business savings account. Why savings? Because it is now your responsibility to withhold payroll taxes. That was always being done for you in the past if you had a regular paycheck. Do you know all those deductions that were taken out of your paycheck? Right, they were doing that for you. Well now if you have your own S-Corp you're solely responsible for doing that. So what I recommend doing is when the money comes into your business checking account, take a percentage of that and transfer it to that business savings. You can’t touch that savings. That's not your money. That's the IRS’s money or that's the state’s money for the payroll taxes and income taxes. So transfer it out of that business checking account into another account that you don't touch. What's the percentage? It depends on what tax bracket you're in.

Another thing that I think you should do is get bookkeeping for mainly tax purposes. Now I've seen bookkeeping for screenwriters and directors, and I've seen bookkeeping for someone who owns an auto body shop as an example. The screenwriters and directors usually don't need to look at their books on a monthly basis. Someone who has a brick and mortar store or business usually it's incredibly helpful and vital to their business and their budget. Unless that's what you're doing; unless you're looking at your books and bookkeeping on a monthly basis as a screenwriter, director, or artist, I don't necessarily think that you need to have the bookkeeping done on a monthly basis. It's mainly for tax purposes, which means you only really have to have them done quarterly or annually.

Third reason: Don't forget to sign your deal with the studio using your company as the entity getting paid, not you. I've seen this goes sideways. The deal was signed with the screenwriter’s name. It should have been that person's S-Corp and the S-Corp should have been getting paid. But that's not how the deal was signed and unfortunately the studios do not backpedal. So if you sign the deal and sign the paperwork saying that you as an individual will get paid, they're not going to reverse it after the fact. They're going to pay you as an individual. So double, triple check that the deal is signed and how you are getting paid is your entity, not you as a person.

Another final tip: Establish your own 401(k) or SEP IRA through your S-Corp. You can do that. There are tax advantages for you and it's a great investment tool for you for later on down the road. You can contribute way more as a business owner than you can as an individual with just a Traditional or Roth IRA for example.

So those are four tips that I have if you have your own S-Corp. or LLC and you're the individual owner of it. I hope you found this helpful. Again, please visit fadeinfinancial.com for more information. Thanks again for watching.