Texas small business

[James Sudik]

Hey folks, I was looking for some info about small videography buisness req's in the great state of Texas. I spoke with my local comptroller by phone, and received some forms, but I think the comptroller misunderstood what type of buisness I am trying to start. I have been looking at different websites (state & federal) but some confusion about exactly what I need to look at is making this a fruitless process. I understand about filing a "DBA", and the naming process, but getting a tax number, what taxes apply to this line of work, and just what forms I need to submit are unclear to me. If any one can help out, I would appreciate it.

[Dan Brown]

Your business could be a:

Sole Proprietorship -- SS# is Tax ID
S-Corp - Federal EIN is tax ID
C-Corp - Federal EIN is tax ID
Partnership - SS# is tax ID (assume you are the only partner)
Limited Partnership - Doesn't make much sense unless you have a behind the scenes "money-man"
Limited Liability Company - Probably a federal EIN as taxpayer ID

The corporations and LLC allow you to shield your personal assets from company liabiabilities. The partnerships and sole proprietorship do not.

For federal tax, the S-corp, sole prop., and partnerships pass income straight through to you, taxable as personal income. The corps and LLC allow you to take out dividends as capital gains, as well as regular income like a paycheck.

State tax treatment (no state personal income tax) is the Texas franchise tax. Sole Propr. has none, pretty sure the partnerships don't either. Corps pay state franchise tax, the LLC may or may not depending on how it's structured. If the entity you chose has to pay state franchise tax, then you will be filling out periodic forms and sending them to Austin. Don't forget sales tax collection and payment if you sell anything besides services.

The Texas Secretary of State does corp name clearance checks, take a look at their web site.

Presonally, unless I had a great deal of assets to protect, I'd do a sole proprietorship, and file an assumed name certificate (aka 'dba') in your home county. That will let you have the name you want, and be able to get a bank account in that name so your clients can pay the "company". Sole Propr has no state forms to fill and files (unless you have sales tax collections).

This does not constitute legal advice.

If you want the full monty, in terms of protection and tax treatment, consult a Texas corporate and tax attornney, who will almost certainly device a Texas L.L.C. according to your wants, needs and assets.

Good luck.

[James Sudik]

Hey, thanks a ton Dan! I knew a good-hearted Texan would pass me some knowledge. If I could bother you for one clarification; If I do go the "sole proprietorship" (that seemed most appropriate, although it is technicaly 'joint' venture with my wife) and I only deal with videography and related services (duplication, events, etc) will I be subject to any state tax? Just not clear on this issue, and if I need to do something to make my SS# my tax ID number officialy. Again, thanks.

[Don Parrish]

I only know Florida but this may help. If you sell a tangible product (something you can touch ) or in some cases provide a particular service you must charge tax and must pay tax. I shot news and transferred my video electronically therefore I sold no tangible product. You must still register for this tax (in Florida ) and send in quarterly statements on what you made and that you sold no tangible products and collected no tax.. Now, a lot of people say, well I will just have the customer bring in there own DVD etc. Doesn't work, you will get caught and pay fines and penalties. My suggestion to you would be to contact the state taxing agency, make sure you right down the date, time and persons name you talked to and ask them about taxes on the product you intend to sell. Complying is a lot less money and resources than attempting to circumvent. Hope this helped

[Luis Caffesse]

James,

Check out this link explaining sales tax in Texas in regards to video production:

http://www.governor.state.tx.us/divisions/film/incentives/salestax_html/view


Essentially you don't have to pay sales tax (or charge sales tax) on anything when you are doing NON-event type shooting.
It all depends on what kind of video production you are doing.

The rule of thumb is - if you can yell "Cut" in the middle of it...you don't have to pay sales tax on anything that 'aided in the production.'
(i.e. gear rental, props, tape stock etc).

Certain items, such as food for the crew, are still taxable.

However, if you are doing event shooting, like a wedding or a live conference, you have to pay sales tax on everything (and charge sales tax to the client).

But, I'm no lawyer, check out the link to the Texas Film Commission.

Good Luck!

-Luis
Studio 3 Productions, Inc.
Austin, Texas