Starting up: Freelancing, taxes, LLCs, and Equipment purchase

[Shane Ross]

[Alex Popowych] “Does forming an LLC alleviate some of the personal liability that comes with equipment purchase?”

How do you mean? Alleviate personal liability with equipment purchases? No…you still need to buy it, and still need the funds to do it. It doesn’t make the equipment cheaper, or suddenly make money appear. What an LLC can do is protect you from liability when it comes to being sued, or going out of business. It’s the BUSINESS at fault, not you. It’s the BUSINESS that failed, not you. Now, it might make banks a little more willing to loan you the money, if you have a company vs just being a person. But you still need a solid business plan for that to be attractive.

[Alex Popowych] “Could I potentially finance under an LLC and not mess up my personal credit as much?”

YES…that it does help with.

Shane
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[Alex Popowych]

Thanks Shane, pretty much the answer I was looking for. It’s a tough situation when you need tools for your trade and are in a tough spot to afford them. (Previously shot on my employer’s equipment). Sounds like LLC makes sense even though I’m an IC currently, if only for the (potential) additional consideration for a loan.

[Mark Suszko]

I’m strongly in favor of renting and passing the costs on to the client for this stuff. Do you think most Hollywood DP’s own all the cameras they use on movies? They might own their own PRIMES, but the cameras are generally rented or leased. Renting lets you customize the gear to the task, instead of having to accommodate your ideas to what you have on hand.
It’s not right for everyone, or in all cases, to be sure, and it can be handy to own *some* camera gear for rapid-response, spur-of-the-moment things, or in a case where the duration of usage makes owning cheaper than renting. If you’re positive you’re gonna use it at least ten times in one year, own it. If you don’t know the next time you’re gonna need it, rent. And pass the cost along, plus a small mark-up, which you put in the future equipment ownership fund.

if you’re not billing enough to cover rentals plus a profit, plus a margin put away for savings and growth, you’re doing it wrong and will not last in the long run.

If you can’t get clients to hire you on that rate, you either have the wrong clients, or you need better marketing/ salemanship, or the jobs you’re looking at are not the kind that are sustainable for you, aim higher. This is all easier to type than to implement, I know. But if you can’t stick by a rate that makes you a profit, you’re not in business, you’re in a hobby.