Protecting Myself as a Freelance Video Editor
I'm a freelance video editor with a growing client list and incoming work. A few questions:
1. What are the must-have legal protections I need to make sure I work legitimately? Do I need to set up a full-fledged company of some kind or are there some standard documents I can sign with clients for all work?
2. I've come across mentions of liability insurance. Where can I learn more about this?
This has yet to become my sole source of income, but I'm moving in that direction. I don't have any large corporations as clients, just artists, filmmakers, some marketing professionals, etc. Pretty low-key, but some gigs have been paying well, so I want to make sure everything is accounted for legally.
Thanks for your help. Cheers!
Hi Gabby and congrats on a growing client list. If you are to be a freelancer working towards making it your full time job, I would encourage you set up a legit business. It doesn't have to be overly complicated, but I would find an attorney you can trust (referrals from other successful freelancers you know?) and get your self set-up.
Many folks choose an S-Corp because it offers some legal protection from claims made on you personally but allows for you to pay taxes as an individual. There are other benefits that may or may not apply to your particular situation - which is why you should consult an attorney.
As for liability insurance, again consult a commercial insurance agent. Small business packages are generally not too expensive and cover you against a variety of potential claims. The scale and scope of your clients' projects (and thus potential exposure to liability) as well as how much of your assets will be at risk will inform a good agent to make recommendations about how much coverage is appropriate for you to carry. Again, talk with freelancers in your area for recommendations.
And if you don't already have one, find yourself a good CPA or bookkeeper that can help you get started on the right foot. Software like QuickBooks is quite powerful and only about $200. But depending on the size scale of your operation, you may be able to use something as simple as Quicken.
Sounds expensive, huh? Maybe a little, but think of it like this:
You're a professional and would probably scoff at a rookie shooting and editing a short film. They say, "Hey I have a camcorder and iMac with iMovie, I can do this myself and save a bunch of money." The problem is that they don't know what they don't know. Can they muddle through it? Sure. Should they? Not if they want it to look good.
Don't make the same mistake. Gather as much info as possible from great forums like the COW and you'll learn a lot from a variety of very experienced folks here. But there's no way for any of us to know the intricacies of your business situation.
At the end of the day, be prepared to get some professional help to guide you.
And no, I am not an attorney, CPA or insurance agent :)
Production is fun - but lets not forget: Nobody ever died on the video table!
When I got going I did a business name search to get the name I wanted and registered my business as a sole proprietorship with the province, which also gives me a business number and GST (Goods and Services Tax)number. I haven't had to collect GST from clients yet because I haven't reached the threshold where I would have to charge tax. That is something for sure to check on with an accountant.
I do all my own books and have my accountant that does the taxes each year.
Thats it. I do this for my full-time income, it's been supplimental for 7 years. If I was doing it full time I would probably have someone else do my books and invoices and have more interaction with my accountant.
Media Production Services
Winnipeg, Manitoba, Canada
Hey there, talk with an accountant and attorney. To protect you from liability, set up either a corporation or LLC. Depends on your state. In AZ, it costs almost nothing to set up an LLC and get a business license, but the laws in your state may be different. As a sole proprietor or just as a line professional, you expose all of your personal assets to any business liability. A corporation or LLC (limited liability company) limit your personal exposure to liability created by doing business - if someone sues you, they won't get to come after your house and car. Nothing is ironclad though and you need to talk with a lawyer for your specific situation. Trust me, the money you spend now on legal fees and articles of organization can save you 1000% in the long run. Be smart and talk to a business lawyer - many will consult with you for free knowing you will use them for something else in the future - just ask. I have actually called attorneys and gotten good info - I hire the guy later so it was good for him.
Liability insurance isn't bad to buy. I have a $1mm policy that costs about $85 a month. It covers me for all sorts of stuff like damage to a property while in a shoot. If you are going to shoot on someone else's property, which we all do, you should have it. You never know when a client will get litigious. You still need protection with releases and contracts, the liability ins just helps.
[Jonathan Ziegler] "A corporation or LLC (limited liability company) limit your personal exposure to liability created by doing business - if someone sues you, they won't get to come after your house and car. "
Well, that's its purpose.
However it's actually not nearly that simple in real life.
If you want the protection of the "corporate veil" for your personal assets, you have to be able to demonstrate that you've kept the corporation as a consistent and "active" formal business entity.
That means, at a minimum, having a formal list of officers, and regular corporate meetings - with minutes - attended by same. If you fail to do that and/or other appropriate corporate filings and procedures, anyone suing you can "pierce the corporate veil" and come right after your personal assets anyway.
I'm not giving business advice here because I'm not qualified to do so.
I'm just giving general personal advice as someone who's been in business without problems for about 30 years now.
If you want to risk not paying for and obtaining your own professional business advice - based on your particular business circumstances - that's your business. But basing any actions on newsgroup postings has never been and never will be an effective substitute for professional guidance.
Want to get a great video? Hire a video pro. Want reliable legal advice? Hire a legal pro.
"Before speaking out ask yourself whether your words are true, whether they are respectful and whether they are needed in our civil discussions."-Justice O'Connor
This is all great info and exactly what I was looking for. Thanks everyone.
Yes, I wasn't expecting to find actual legal advice here, just needed to be pointed in some kind of direction, more of a "things to keep in mind."
I appreciate the pro tips.
Bill, do you operate under an LLC or some other entity? Since you said you've been doing this about 30 years I was just wondering which route you took and why.
You might want to look into setting up your business as a limited liability corporation (LLC). It protects your personal assets if a client were to sue you, but you do not have to pay taxes twice like with a regular corporation.