Terminology Tuesday – Loan-Out

A loan-out is a personal company & legal business entity. ⁠

The individual, YOU, are technically employed by your own loan-out company. ⁠

Loan-out companies can take many different forms such as an LLC, an S-Corporation, or a C-Corporation. ⁠

ᴡʜʏ ʙᴇᴄᴏᴍᴇ ɪɴᴄᴏʀᴘᴏʀᴀᴛᴇᴅ?⁠

There are a few benefits:⁠

💰 Lower tax rates. While individuals are taxed on a sliding scale according to their earnings, corps are usually taxed a flat fee. The savings can be significant. This is because after the company pays taxes on everything it took in, then the employee must pay on whatever it was paid.⁠

💰 Loan-out companies allow you to select a fiscal year. As a freelance individual, you’re taxed on the income you’ve made between January 1st and December 31st of any given year. A well-chosen fiscal year may stabilize your income and expenses by spreading a portion of them out over time.⁠

ᴡʜᴇɴ ꜱʜᴏᴜʟᴅ ʏᴏᴜ ʙᴇ ɪɴᴄᴏʀᴘᴏʀᴀᴛᴇᴅ?⁠

Once you start making between $50,000 – $75,000 in gross earnings, the advantages of having a loan-out could kick in. Anything below that and the fees associated with starting your loan out may not be worth the added benefits. ⁠

ʜᴏᴡ ᴅᴏ ɪ ꜱᴛᴀʀᴛ ᴀ ʟᴏᴀɴ-ᴏᴜᴛ?

1. Get your EIN number by filling out an application on the IRS website.⁠
2. File Your Fictitious Name Statement by mailing it to your local county registrar.⁠
3. File your Articles of Incorporation through your state (online).⁠

Just make sure you do plenty of research first to decide if a sole proprietorship, joint venture, LLC, S-Corp, or C-Corp is the right choice for you. ⁠

Now for the fun part… what would your corp name be? 🤔⁠

#themoreyouknow#TheCastingDirectorsCut#terminologytuesday #actorlife

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