California Performers: SAG-AFTRA Says Don’t Worry About Your Loan-Out Corp

hey there hero it’s David H Lawrence the
17th and you may be aware that a couple
of recent events revolving around people
who have been labeled as independent
contractors by companies people like
companies like uber and lyft and
doordash and other members of the gig
economy have caused some real issues one
case going to Circuit Court and a state
Supreme Court called the Dynomax
decision and it prompted a law to be
passed here in California and others to
be considered similarly in in other
jurisdictions here in California it’s a
b5 Assembly Bill v both the Dynomax
decision which was all about their
workers claiming that even though the
company called them independent
contractors they were actually employees
because they failed a whole bunch of
tests with the IRS in terms of
independent contractors are 20 tests
that you have to pass to be an actual
independent contractor things like
working for other companies and setting
your own rates and you know doing things
on your schedule at your pace for the
company otherwise if you’re scheduled if
you’re working on an hourly basis if
you’re not doing these things for the
companies you’re considered an employee
but this has been stretched a little bit
and played with now what I’m gonna talk
to you about in this video is a little
bit technical and it’s not for everybody
because not everybody uses the mechanism
that I’m about to share with you but it
has caused some questions and some
concerns by the people that do use this
mechanism and the mechanism is called a
loan-out Corporation or a loan-out
company so hmm let me um let me explain
what this is when as an actor and you
may know already but just bear with me
so that I can help people who don’t
understand this
when you’re an actor working for a
studio or a network or a production
company or a commercial
action house you have two options for
how you want to get paid for how you’d
like to be paid number one you can be
paid as an employee with taxes taken out
directly to you personally so I would
get the check made out to David H
Lawrence a 17th or or you can choose to
create a company a corporation here in
California and in New York State not an
LLC but a corporation of type C or a
type s that company employs you and you
bill
the production house for the full gross
amount of your pay without taxes taken
out paid to your loan out company and
then your loan out companies called a
loan out company because your company
your personal one-man band local company
loans you out to the production entity
as a performer now the advantage is
there is that you’re running your own
business and so you have some advantages
in terms of deductions and expenses that
you can claim on your taxes as a company
that you can’t claim if you’re just
getting paid directly if you’re just a
person you know being paid directly as
an individual so these what does have to
do with dynamics and a b5 well if you’re
going to reek reclassify somebody from
independent contractor to employee and
there’s a law that says you have to well
what happens if you don’t want to be
reclassified from an independent
contractor to an employee of your
production partner you know you can
understand why at least I try to
understand because there’s a part of me
that wants to remind people who work in
the gig economy that that was their
choice that they chose to be an
entrepreneur and maybe it wasn’t always
cracked up to be but that’s not
necessarily the fault of the company or
something that they have to render help
with but that’s another video for
another day
but you can understand the logic of hey
we’re working our butt off here we’re
not getting what we thought well thought
we’re gonna get we can’t afford some of
the benefits that employees are getting
or employees of the companies that
employ us as as quote independent
contractors but in terms of actors in
terms of people who are union actors
people who are getting paid you know
either
either scale rates or above scale rates
to do the work I’m not at all interested
in being reclassified as an employee
because that would take away some of the
benefits of being a corporation and
having myself loaned out by my
corporation to the production so a lot
of people used every a-lister every
celebrity everybody has a production
loan-out company everybody when you get
down to the working actors that aren’t
necessarily well-known names people like
me you know some of us have loan-out
companies and some of us don’t but the
ones that do were very concerned that a
b5 would mean they’d have to give up
their loan-out company and the good news
that I want to share with you is that
the Union sag AFTRA issued a notice
recently that said don’t worry about a
b5 or the Dynomax decision and reminded
actors that they are employees if
they’re using a loan-out company they’re
employees of the loan-out company so
they’re already employees because you
yes you get the gross to your loan-out
company but then you have to pay your
taxes and do all the things and pay
yourself as an employee eventually so
they sent out a note to all the union
members saying look there’s been an
awful lot of worry about this you don’t
have to worry about it our position is
and it’s been backed up by lawyers and
we worked very hard with the state
legislature and have reviewed you know
over 85 and have reviewed the Dynomax
decision and we’re very confident that
nothing will change for actors and
performers and other creative types who
use a loan-out Corporation so my point
here is to sort of ease your mind if you
do use Alona corporation if you don’t I
also wanted to introduce that
as a possibility to you it might be
something you might be at that point in
your journey where a loan-out
Corporation makes sense don’t know if
you have questions about this I’m not a
lawyer I’m not an accountant I have
lawyers and I have accountants I have a
business manager we’ve done a lot of
discussion on it
I’ll answer what I can if you have
questions about it but I might end up
saying you know I don’t know I I’m not
I’m not well-versed in that area I don’t
know but ask your questions below and in
the comments box if you’re watching on V
o heroes about this and hopefully we can
help you or I can send you in the
direction towards somebody who has more
knowledge about it or more expertise
about it than I do but let me know your
comments below also let me know if you
just don’t give a rat about this if this
is like something that’s like you know
for me it was a goal of mine I wanted to
be working enough that having a loan-out
Corporation made sense and you know
thankfully I am so let me know what your
thoughts are and if you want to join my
list you want to get on the list so you
know when these videos are coming out I
would love to have you there’s a box
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know when these videos come out I’m
David H Lawrence 217th I thank you so
much for watching and I will talk to you
tomorrow.