Who owns the equipment, you or LLC/Corp?

[KrautFed]

I'm going to be forming LLC and wanted to know how the rest of you handled the ownership aspect of the equipment (bodies, lenses, stands, backdrops, studios, etc.) and furthermore how the ownership options effects taxes and insurance. Should I keep equipment mine? Should I donate equipment to LLC? Should I sell equipment to LLC? Should I lease/rent equipment to LLC?

Thanks for any insight! :)

[ebann]

Perhaps research equipment depreciation and its tax implications...

[asysin2leads]

Talk to a CPA. They will have the updated tax law.

[RDKirk]

Your options will vary by state, by whether you do LLC or incorporation and by your particular situation. You'll need to speak to a local CPA to get anything close to a reliable answer.

[tracknut]

I'll go out on a limb and guess that your CPA will tell you the gear should all be in the business, which enables you to write it off. You'd most likely do that by "giving" the equipment to the business, as part of your startup costs (you'll probably "give" the business some money too). Assuming you are the sole owner of the business, I can't really imagine a different answer (.... I'm not a cpa).

Of course I've never owned an LLC, so perhaps there's some magically different accounting that goes on, but I doubt it.

Dave

[dovaka]

were an llc and the business owns everything

[Dennis_Hammer]

Anything my business has bought it owns. Anything I had beforehand or that I buy I lease/rent to the business as all of that can be written off.

[spiralspirit]

create two corporations - a holding company and your actual business. The holding company leases the equipment to the second for very little money, while retaining the ability to write off the equipment, etc. The second gets the use of the equipment, and should the worst happen and the photography business goes bankrupt you don't lose the equipment because its all owned by the holding company.

Totally legal in canada and used in many businesses. No idea about outside of canada. Ask your accountant.

[RDKirk]

create two corporations - a holding company and your actual business. The holding company leases the equipment to the second for very little money, while retaining the ability to write off the equipment, etc. The second gets the use of the equipment, and should the worst happen and the photography business goes bankrupt you don't lose the equipment because its all owned by the holding company.

Totally legal in canada and used in many businesses. No idea about outside of canada. Ask your accountant.

In the US, unless both companies are really doing continuous business in their own rights, the bankruptcy court will see through it ("pierce the veil") in a heartbeat.

[spiralspirit]

In the US, unless both companies are really doing continuous business in their own rights, the bankruptcy court will see through it ("pierce the veil") in a heartbeat.

hmmm its not really a veil here in canada - its just legal. The property is legally owned by a seperate company - they can't confiscate it in bankruptcy proceedings of the other company because you can't confiscate another company's property. Can a bankruptcy court take away leased property from the owners if the person they lease it to goes bankrupt? seems unlikely.

[RDKirk]

hmmm its not really a veil here in canada - its just legal. The property is legally owned by a seperate company - they can't confiscate it in bankruptcy proceedings of the other company because you can't confiscate another company's property. Can a bankruptcy court take away leased property from the owners if the person they lease it to goes bankrupt? seems unlikely.

Yes. That's why in the US incorporation is not necessarily an ironclad protection against having your personal assets seized.

[dovaka]

hmmm its not really a veil here in canada - its just legal. The property is legally owned by a seperate company - they can't confiscate it in bankruptcy proceedings of the other company because you can't confiscate another company's property. Can a bankruptcy court take away leased property from the owners if the person they lease it to goes bankrupt? seems unlikely.

if the same person owns the leasing company and the only business the leasing company does is lease stuff to your other company they wouldn't event think twice about taking every bit of it

[Fernando]

An unrelated story with a very related ending.

Yesterday I had a meeting with our CPA about a tax issue. Seems I owe a pretty penny from 7 years ago.

How did I get into this mess?

For a while I was unemployed with only the occasional contract gig to get me by. At the end of the year I was wondering about my taxes and I asked the other editors how they handled their taxes. They all agreed and I followed their advice. That's right, I followed the advice of a bunch of editors on a tax question. I saved a few HUNDRED at the time that is costing me a few THOUSAND now.

This question isn't for a bunch of photographers, it's best answered by your CPA/Attorney.

-F

[KrautFed]

This question isn't for a bunch of photographers, it's best answered by your CPA/Attorney.

Thanks for everyone's help. I am definitely going to speak with CPA/Attorney as I'm relocating to a new state.

[sfaust]

Don't forget another more important question, who do you assign ownership of the copyrights to. You can go either way, and there are significant implications to each scenario. You should discuss it with a lawyer and accountant so you don't end up not owning the copyrights to your own images, or have significant value that could be taxed if transferred one way or the other.