making the business official.... at DVinfo.net

Dan Farzad · February 13th, 2006, 08:50 PM

I am starting to work with number of different organizations and companies however I have not made MY company official yet.
I have been in the business for about 8 month now and I was wondering what would u guys recommend as far a safe way to set up my business as a videographer for tax purposes and to be able to receive business checks?

i have been introduced to a couple of ways.
1.DBA (doing bus. as)

2. going to city hall and make a business name that includes my personal name and stating that i am the sole participant.

after all is done what will happent to probably the huge amount of tax that i will be liable for? (I live in LA)

I have been told that since i am offering a service i can not charge tax on it either but i am liable to pay tax.
could you guys get me out of darkness and guide me?
I have 3 big checks for the past 4 month of work that need to be issued what should i do ?

Adam Bray · February 13th, 2006, 09:08 PM

A DBA is a sole proprietorship

You would be "Dan Farzad d.b.a. Farzad Productions" or whatever the name of your business is.

If you already have 3 big checks made out to Dan Farzad, you would just pay income tax on them at tax time. I would contact an accountant about charging tax. I would say you can't.

The tax you would charge people is sales tax. But you don't sell product, so you can't collect that. You won't pay sales tax, cause you don't collect it. You will pay income tax.

This all should be verified with an accountant. I used to own a tanning salon. I never charged sales tax for tanning sessions because it's a service, just for product.

Greg Boston · February 13th, 2006, 09:27 PM

Quote:

Originally Posted by Adam Bray

A DBA is a sole proprietorship

You would be "Dan Farzad d.b.a. Farzad Productions" or whatever the name of your business is.

If you already have 3 big checks made out to Dan Farzad, you would just pay income tax on them at tax time. I would contact an accountant about charging tax. I would say you can't.

The tax you would charge people is sales tax. But you don't sell product, so you can't collect that. You won't pay sales tax, cause you don't collect it. You will pay income tax.

This all should be verified with an accountant. I used to own a tanning salon. I never charged sales tax for tanning sessions because it's a service, just for product.

That's kind of how Texas looks at it. Sales tax is charged on 'tangible property' like something you can physically hold, including rentals. Oddly enough, if you ship a DVD to the customer, you have to charge tax on shipping as well. Seems stupid, but that's Texas law. The laws of other states are probably similar, but you have to check with an accountant.

-gb-

Travis Cossel · February 13th, 2006, 09:34 PM

I would seriously look into making your company an LLC (limited liability company). You will still file your taxes with your personal taxes, but it gives you a little more personal protection from possible business issues. At least that's what an accountant told me when I started my business years ago.

Bottom line: I would talk to a business accountant and get their advice and opinion.

Glenn Davidson · February 13th, 2006, 10:16 PM

Some states require sales tax to be collected for the entire cost of certain video productions. The DVD master is the tangable part, but it exsists as a result of the production. There are numerous lawsuits and written opinions, however I think it is wise to check with your state rules and see if they require sales tax collected on video production.

Travis Cossel · February 13th, 2006, 10:24 PM

That's the battle I'm fighting to figure out right now here in Idaho. I had an audit official tell me that I have to charge sales tax on the entire amount of a project that is delivered on DVD. Yet, if I go to a lawyer and have him draft a letter for me and he bills me $500, he doesn't charge me sales tax. That seems way out of wack.

The way I see it, we both invest our time and deliver a tangible product, so we should both have to abide by the same rules.

I agree that you should consult with someone who knows the system, like a business accountant. For example, here in Idaho I have to file a sales tax statement EVERY month, even if I don't have anything I charged sales tax on. Failure to do so can lead to fines and penalties. You don't want to risk that.

Peter Wiley · February 14th, 2006, 07:47 AM

Dan you need to talk to an good small business attorney and/or accountant, or failing that go to the bookstore or library and pick up a book with a title like "Starting a Business in California." Here is a link to one such book: http://www.nolo.com/product.cfm/Obje...5E2E12F1D/111/

The laws in every state differ and they can be complex and nothing substitutes for the advise of someone who has been down the road a few times before.

One thing you want to avoid, for sure, is to build up a tax liability and not know what it is. If you ever draw an audit from the feds or from the state they will find your records and they will hold you responsible for taxes . . . and that can be a real drag.

Nick Hiltgen · February 14th, 2006, 09:52 AM

I here that legalzoom.com has a lot of the papers that you need for filing a DBA and what not, and it's cheaper then a lawyer.

Reid Bailey · February 14th, 2006, 01:00 PM

I also recommend asking a pro about an LLC or S-corp arrangement. It's just a little more of a hassle then a sole-proprietor setup and it does afford a greater degree of protection.

Also, sole pro's are normally required to file self employment tax. With an llc or an s-corp there are ways to have yourself work for the corp. It's all very legal but you will have to keep track of things like payroll. There are other ramifactions involving social security etc.

Talk to an accountant who deals with small businesses. Some of them will do all the paperwork for you and not charge a fee over the filing fees just to get your accounting business.

Dan Farzad · February 15th, 2006, 01:40 AM

wow,
thanx a lot guys i will try to get a hold of an accountant tommorow and see what will happen. what i'm afraid of is the fact that i am single and dont own a home or have college loans so my tax in CA should be a heck a lot. considering the fact i'm working day and night to built this business, it really hurts to have to give away 25% of your income :(
but i guess we are all in the same boat.

thanx again

February 13th, 2006, 08:50 PM	#1
Dan Farzad Regular Crew Join Date: May 2005 Posts: 107	making the business official.... I am starting to work with number of different organizations and companies however I have not made MY company official yet. I have been in the business for about 8 month now and I was wondering what would u guys recommend as far a safe way to set up my business as a videographer for tax purposes and to be able to receive business checks? i have been introduced to a couple of ways. 1.DBA (doing bus. as) 2. going to city hall and make a business name that includes my personal name and stating that i am the sole participant. after all is done what will happent to probably the huge amount of tax that i will be liable for? (I live in LA) I have been told that since i am offering a service i can not charge tax on it either but i am liable to pay tax. could you guys get me out of darkness and guide me? I have 3 big checks for the past 4 month of work that need to be issued what should i do ?

February 13th, 2006, 09:34 PM	#4
Travis Cossel Inner Circle Join Date: Jan 2004 Location: Miami, FL Posts: 2,933	I would seriously look into making your company an LLC (limited liability company). You will still file your taxes with your personal taxes, but it gives you a little more personal protection from possible business issues. At least that's what an accountant told me when I started my business years ago. Bottom line: I would talk to a business accountant and get their advice and opinion. __________________ Black Label Films www.blacklabelweddingfilms.com

February 13th, 2006, 10:24 PM	#6
Travis Cossel Inner Circle Join Date: Jan 2004 Location: Miami, FL Posts: 2,933	That's the battle I'm fighting to figure out right now here in Idaho. I had an audit official tell me that I have to charge sales tax on the entire amount of a project that is delivered on DVD. Yet, if I go to a lawyer and have him draft a letter for me and he bills me $500, he doesn't charge me sales tax. That seems way out of wack. The way I see it, we both invest our time and deliver a tangible product, so we should both have to abide by the same rules. I agree that you should consult with someone who knows the system, like a business accountant. For example, here in Idaho I have to file a sales tax statement EVERY month, even if I don't have anything I charged sales tax on. Failure to do so can lead to fines and penalties. You don't want to risk that. __________________ Black Label Films www.blacklabelweddingfilms.com

February 14th, 2006, 09:52 AM	#8
Nick Hiltgen Trustee Join Date: May 2003 Location: Atlanta GA Posts: 1,427	I here that legalzoom.com has a lot of the papers that you need for filing a DBA and what not, and it's cheaper then a lawyer. __________________ I have a dream that one day canon will release a 35mm ef to xl adapter and I'll have iris control and a 35mm dof of all my ef lenses, and it will be awesome...

February 13th, 2006, 09:08 PM	#2
Adam Bray Major Player Join Date: Sep 2004 Location: Houston/Austin Posts: 394	A DBA is a sole proprietorship You would be "Dan Farzad d.b.a. Farzad Productions" or whatever the name of your business is. If you already have 3 big checks made out to Dan Farzad, you would just pay income tax on them at tax time. I would contact an accountant about charging tax. I would say you can't. The tax you would charge people is sales tax. But you don't sell product, so you can't collect that. You won't pay sales tax, cause you don't collect it. You will pay income tax. This all should be verified with an accountant. I used to own a tanning salon. I never charged sales tax for tanning sessions because it's a service, just for product.

February 13th, 2006, 10:16 PM	#5
Glenn Davidson Major Player Join Date: Dec 2005 Location: Nevada City, California Posts: 499	Some states require sales tax to be collected for the entire cost of certain video productions. The DVD master is the tangable part, but it exsists as a result of the production. There are numerous lawsuits and written opinions, however I think it is wise to check with your state rules and see if they require sales tax collected on video production.

February 14th, 2006, 07:47 AM	#7
Peter Wiley Major Player Join Date: Apr 2002 Location: Lewisburg PA Posts: 752	Dan you need to talk to an good small business attorney and/or accountant, or failing that go to the bookstore or library and pick up a book with a title like "Starting a Business in California." Here is a link to one such book: http://www.nolo.com/product.cfm/Obje...5E2E12F1D/111/ The laws in every state differ and they can be complex and nothing substitutes for the advise of someone who has been down the road a few times before. One thing you want to avoid, for sure, is to build up a tax liability and not know what it is. If you ever draw an audit from the feds or from the state they will find your records and they will hold you responsible for taxes . . . and that can be a real drag.

February 14th, 2006, 01:00 PM	#9
Reid Bailey Major Player Join Date: Jul 2004 Location: Fredericksburg, Va Posts: 220	I also recommend asking a pro about an LLC or S-corp arrangement. It's just a little more of a hassle then a sole-proprietor setup and it does afford a greater degree of protection. Also, sole pro's are normally required to file self employment tax. With an llc or an s-corp there are ways to have yourself work for the corp. It's all very legal but you will have to keep track of things like payroll. There are other ramifactions involving social security etc. Talk to an accountant who deals with small businesses. Some of them will do all the paperwork for you and not charge a fee over the filing fees just to get your accounting business.

February 15th, 2006, 01:40 AM	#10
Dan Farzad Regular Crew Join Date: May 2005 Posts: 107	wow, thanx a lot guys i will try to get a hold of an accountant tommorow and see what will happen. what i'm afraid of is the fact that i am single and dont own a home or have college loans so my tax in CA should be a heck a lot. considering the fact i'm working day and night to built this business, it really hurts to have to give away 25% of your income :( but i guess we are all in the same boat. thanx again