I am an actor. Should I incorporate myself and will that help with writeoffs?

I am an actor and keep diligent records of all my expenses for tax purposes. I am being audited this year because of this. Would incorperating myself be beneficial? My agent said I should and for Social security reasons as well. My accountant is still in the process of trying to have the audit end in my favor!

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I am an actor. Should I incorporate myself and will that help with writeoffs?

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Dec 07, 2008
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Been there, done that- Incorporated Actor
by: Anonymous

After several years of making approximately $150,000 and also keeping diligent records, several accountants recommended to me that I incorporate. Last year I did. Here's what I did not know:

1) The amount of time I would need keeping my books would at least double.

2) I would be filing two tax returns- one for corporate, one for personal- and paying for both.

3) Your accounts will need to be totally separate- credit cards, checking accounts, etc. for your corporation.

4) My accountant would need profit and loss statements (good luck with that) that she wanted ME to prepare. After fighting her on this (already being stuck to my computer), each month I gave her my credit card bills, bank statements (reconciled) and a Quicken breakdown. Naturally, I am paying her bookkeeping to record this in the way that they need.

5) Each time I pick up the phone or inquire by email (You'll need to), I am being charged. Understandably but it adds up.

6) The meticulousness with which I have to now do my bookkeeping as easily doubled. If time is money, I'm losing.

7) My accounting fees will go from approximately $500 a year to $6,000.

8) Keep in mind, you will now be running a corporation- and you are it's employee. Take a few moments to wrap your brain around that- ALL details must be kept separate. In my case, I'm terrified to make a mistake for fear of being audited.

9) If you want to hand your stuff over to a bookkeeping to simplify, it will cost you extra. A considerable amount extra

10) You will lose any interest you would have made in a personal savings account. In my case, this equals the amount I'm paying on accounting fees this year. Nice trade off, huh?

11) The tax break you will get is approximately 2-3%. If you are making over $250,000 this may be worth it. In my tax bracket, the money I'm spending on accounting fees as well as time I'm at the desk is not worth it- My time is money too.This year, the money I've lost in interest along w/ the extra accounting fees almost cancels out the benefits.

12) Biggest reason I am sorry I incorporated- In case you can't tell- TIME INVESTMENT. Again, if you can afford to hand over all your stuff to a professinal bookkeeper or don't mind paying your accountant to do this for you, go for it. Otherwise, you may be wasting your time and money and the benefits may not exceed the aggravation.

Ask your accountant these questions:

What is the cost of incorporating?
What will my monthly fees be?
What documents will you need on a monthly basis from me?
Based on my current earnings, how much can I expect to save?
What are the pros and cons?

Don't expect to hear the cons. It finally occurred to me that (duh) my accountant is running a business... And this is one of the ways she makes HER money.

Good luck!

Jul 18, 2008
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Tax Audit and the LLC
by: Simon Maher

Incorporating or forming an LLC now won't help you with your past (or ongoing) tax audit.

Once they have flagged your for audit, the audit is going to carry through.

However, there is some evidence from looking at audit rates that LLCs and corporations are audited less frequently than people who run sole proprietorships and use only a Schedule C.

Therefore, in addition to the other advantages of an LLC such as pass-through taxation, limited liability, and more deductions, it is possible that you would also reduce your chance of an audit.

That said, there is nothing you can do to prevent an audit--only lessen the possibility of one.

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