LOAN-OUT COMPANY

 

What is a Loan-Out Company?

A loan-out company is a separate legal entity through which entertainers may offer their services.  The term "loan-out" is used because the company loans out the services of the entertainer.   

Potential Benefits of a Loan-Out Company

The potential benefits of utilizing a loan-out company include:

  • Limiting liability to corporate assets
  • Minimizing taxes through the deferral of income and maximization of deductions.  Indeed, with the suspension of unreimbursed employee expense deductions under the recent tax act, a loan-out company may provide an important means through which to deduct business expenses such as manager, agent and attorneys' fees. 

Burdens of a Loan-Out Company

The burdens of operating through a loan-out company should also be considered and include, but are not limited to:

  • Maintaining corporate formalities and good records
  • Ensuring compliance with various regulatory and tax filing obligations
  • Maintaining adequate business and workers' compensation insurance
  • Hiring professionals such as lawyers and accountants

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What's Included in the Firm's Loan-Out Company Formation Package

P. Taylor Legal charges a flat fee for a loan-out company formation, which includes the following services:

  • Initial consultation to help determine an appropriate entity type
  • Registration of the business with the State
    • includes a certified copy of the initial governance document
    • expedited registrations are an additional expense according to the State's fees
  • Governance documents
    • In the case of a corporation
      • certificate of incorporation
      • by-laws
      • organizational consents of the board of directors and shareholder
      • stock certificates
      • any necessary banking resolutions
    • In the case of an LLC
      • certificate of formation
      • operating agreement
      • any necessary banking resolutions
  • An employment agreement with the loan-out company
  • Registered Agent service for one-year, including corporate compliance tools through the registered agent
  • Company kit
    • Company binder and slipcase in which to store important company documents
    • Company seal
  • Closing consultation during which we will discuss your responsibilities going forward

 

 

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