Starting a theater company is an exciting venture. You can create a way to reach people with creativity, fun, and thought-provoking plays and musicals.
You may strive to be one of the top regional theatre companies in the country. You may be content to be a cool little community theater that produces original works.
Whatever your vision is, there are business decisions to be made. One of those decisions is what type of entity your company will be.
Read on to learn what your options are and how you can decide which one is right for you.
A sole proprietor is the most commonly used business entity. The reason why is easy to figure out. It’s the easiest to do and the least expensive.
There is a potential price to pay for that kind of ease to start a business. Your business taxes and personal taxes are filed on the same return.
The real downside to being a sole proprietorship is exposure. You and your theater company are the same entity. From a legal standpoint lawsuits and debts related to the theater would leave your personal assets exposed.
One option is to file as a 501c3 nonprofit status with the IRS and form it with your state. This option allows your theater company to be exempt from paying federal taxes.
Nonprofits have to file a lot more paperwork in order to prove that they are serving the public. If you decide on this business entity, you’ll be relying on donations and fundraising events to keep the theater going.
Limited Liability Corporation
One option is to file as a corporation. This option isn’t for just big businesses. You can be a single-member limited liability corporation.
Legally, you and your theater company are separate entities. Should your theater company face a lawsuit, your personal assets wouldn’t be exposed.
You will have the liability protections of a corporation. Depending on how you structure your theatre company, you may be able to file your taxes as part of your personal tax return.
You can also decide to be taxed as an S-Corp. This is when your corporation is taxed separately from your personal taxes. The business has its tax return. You have yours. You’ll want to compare the advantages of an LLC vs S Corp before you decide.
Starting a Theater Company with the Right Structure
When you’re starting a theater company, there is so much you need to think about. You need to decide your location, the types of works you’ll produce, and how you’ll market the company.
One of the other important decisions you have to make is the business entity of the theater company. You can file as a nonprofit or LLC. It’s not a decision that should be taken lightly. You may need to consult with an attorney before you make your decision official.
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