In Los Angeles, I received conflicting advice about LLC or S-Corp, however, the S-Corp won favor because it was a better deal for me. The problem with a DBA is that you’re still taxed the outrageous rate (51%, right guys?) on ALL untaxed income that you make, after deductions. If you incorporate, you’ll want to set yourself up with a payroll company like Paychex (they’re in Culver City, but are national). Paychex will take out all taxes and direct deposit however much you want to pay yourself as presidnt/ceo of your company. Whatever is left in the Company account after you’re paid is taxable, but you get some great breaks like a 3 percent gross manufacturing deduction because you make a physical product, like DVD’s, or tapes. That’s sort of a loophole as the deduction was meant for industrial companies, however it applies and is used by lots and lots of California video/dvd production companies.
As a company, you can also write off one vehicle, deduct many trips (always travel with a video camera for your b-roll shoots), rent an office in your home, and it’s dealt with before taxes. Clientwise, if you’re a company it’s easier to get larger budgets. Rather than being day-rate, you can cash in on your production speed and creative expertise by working on a lump-sum basis.
One thing to consider is that it’s not completely worthwile to incorporate unless you’re making upwards of 100k freelance. There are associated once a year fees ($800) that are involved, you have to file two tax returns, etc, so that can become more of a hassle than it’s worth.
Each person is different, so as the other guy stated, it’s difficult to give you advice without knowing your exact situation. Search the boards, this topic comes up from time to time.
Since you’re in LA, drop me an email and I’ll give you the name of my contact at Paychex, and my Tax Preparer (she’s the one that set me up with the S-Corp). Both are in LA on the West Side.
Good Luck!
-neo