Robert Sciglimpaglia is a practicing attorney, an accomplished actor and voiceover artist. This puts him in a unique position to be able to provide both beginners and experienced voiceover actors the essentials in advancing in the industry, not just in terms of developing their skills behind the microphone, but understanding their voiceover business.
Robert is also the author of Voice Over Legal – an all-important book for the serious freelance voice artist about managing the business and understanding legal issues. Robert shares with you some of the essentials before starting your Voiceover Business.
Formal Business Structure
The logic is “Until I start to earn some money at this, what’s the point of creating a formal business structure?” However, this same logic doesn’t prevent many of those same voice over artists from doing business under a “trade” or “stage” name, like “ABC TERRIFIC VOICE,” or some other catchy phrase. This is what is referred to in the legal world as a “DBA” or “doing business as.” Nor does the logic prevent voice talent from spending thousands of dollars on home studio equipment, training, production of demos and marketing efforts. These are all expenses that the talent believes will pose no problem when it comes to deducting them from income taxes.
Even after many voice over artists do start to earn income in the business, they still don’t get around to setting up a more formal structure, and they only think about such things around tax time, or if they are ever subject to a legal action.
Your Options Explained
The question of whether or not to incorporate has been subject to much debate in the voice over community. It is my firm belief however, that there should be no debate about it whatsoever. The question should not be whether to incorporate, but rather should be how best to incorporate.
Just like engaging in any type of business venture, a decision needs to be made about what “form” the business will take. Will it be
a sole proprietorship?
a Limited Liability Company (LLC)?
a C Corporation?
or an S Corporation?
Planning to Succeed
Normally, voice over artists don’t even consider their business formation, and commence operating as what I term “a sole proprietorship by default.” They just jump into the business, willy nilly, without a plan. They start sending out their wonderful professionally produced demos as soon as they receive them, set up their websites and social media pages, sign up for one of the many online audition sites to commence auditions, etc. — without even giving a second thought as to how their business is structured. This may be because some people getting into voice over treat it as more of a hobby than a business.
Are You a Business? Or Just a Hobby?
The factors that the IRS says you should weigh to decide if your voice over activities are a business or hobby are summarized below.
- Do you run the activity in a businesslike manner?
- Does the time and effort you put into the activity indicate an intention to make a profit?
- Do you depend on income from the activity?
- If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?
- Have you changed methods of operation to improve profitability?
- Do you or your advisors have the knowledge needed to carry on the activity as a successful business?
- Have you made a profit from similar activities in the past?
- Does the activity make a profit in some years?
- Can you expect to make a profit in the future from the appreciation of assets used in the activity?
Tax Tips & Considerations
A voice talent should be sure that they are operating their voice over business as a business and not a hobby. The quicker voice talent treat voice over as a money-making venture, the better off they will be, in my opinion, not only for tax purposes, but also in obtaining clientele and increasing income. If the IRS determines that an activity is a hobby and not a legitimate business, it will not allow any deductions for any expenses of the “business.”
Also, a voice talent, in treating the business as a business, must keep detailed records for all income and expenses, including receipts.
- Create a separate checking account for your voice over activities.
- NEVER co-mingle fees received from voice over with your personal funds
In general, you are allowed to deduct “ordinary and necessary” expenses related to your voice over business. For instance, this can include expenses for advertising and marketing, travel and meals education Deductible advertising and marketing expenses can include such items as home studio equipment and your “home office” studio costs to create and maintain your website, memberships to online audition/casting websites, the printing of business cards, and production of your demos.
Learn more essential information you need to successfully manage your voice over business and legal issues… Get your copy of Voice Over Legal here and type in the code VOH to get a discount. Visit Robert Sciglimpaglia’s website at: www.robscigesq.com