to incorporate or not to incorporate...that is the question

**gaybucks_chip** · 05-26-2006, 09:48 PM

I think people are confused. Several people have mentioned that you must incorporate to be shielded from liability, but this isn't true. An LLC provides the same liability protection that a corporation does... that's why the LLC was created in the 80s, to provide the liability shielding without the tax burden of a corporation. Hence the name "LIMITED LIABILITY company."

abostonboy · 05-27-2006, 12:16 AM

What I meant is you need something besides a sole prop.

I personally DO NOT like LLC for various reasons, which is WAY beyond the scope of this thread as I am not going that deep into my financials.

There is a really god book for like $15 that goes into each and the advantages and disadvantages of each.

Another thing you want to consider besides the liabilty factor is:

1. What happens if you become very successful and someone wants to buy your business. Depending on what TYPE of company you set up, it is easier to sell.

A LLC for me is too closely tied to a sole prop. IF the time comes to sell. Even though it is easier than a sole prop to sell, but not as easy as if you INC.

Just my thoughts.

**gaybucks_chip** · 05-28-2006, 04:37 AM

Originally Posted by abostonboy

1. What happens if you become very successful and someone wants to buy your business. Depending on what TYPE of company you set up, it is easier to sell.

I am not an accountant, nor do I play one on TV. However, I have been told that if you have a business that creates a lot of assets that are likely to increase in value (such as, for example, content that you shoot), there are very significant tax advantages to having that company (or at least those assets) owned by an LLC, *particularly* when you go to sell the company.

And, realistically, anyone who knows anything about buying an existing company knows the standard procedure is to purchase the assets without the liabilities anyway, so whether it's a proprietorship, LLC, or corporation really makes no difference in that regard, other than the tax ramifications to the seller, which are decidedly *not* advantageous for a corporation.

That said, MRC (the company that owns Gaybucks and 18West among our other properties) is a corporation. We are in the process of creating multiple entities to better manage our tax liabilities and better protect our assets. And we're using people far more qualified than just about anyone here to help us.

Honestly, I would suggest that anyone who is deciding what sort of entity to form find a CPA or tax planner who is well versed and experienced with the adult industry (or at least the mainstream entertainment industry) and rely on his or her advice. The nuances of the different structures (not to mention C vs S corps, various LLC structures, etc.) are way beyond my knowledge, or perhaps any of the regulars here with the possible exception of Chad.

abostonboy · 05-29-2006, 05:00 PM

All I can say is that I sold a LLC and wish I had not created the company that way. Part had to do with the recors keeping requirements and the reports you have to file. Corps require more, but they also show the value much more. And when other partners are involed, well thats a whole other issue.

I wouldnt talk to a CPA, I would talk to a corporate lawyer. That is the only way to go.