January 5, 2017 at 10:36AM
Do we need to incorporate an LLC if we get Fiscal Sponsorship?
We (3 people) are creating an independent documentary and we are planning to launch a combined crowdsourcing fundraiser, and most of the things I've read recommended creating an LLC for the film to make taxes/finances easier and to protect us.
Someone else, however, suggested that we get fiscal sponsorship through a nonprofit. Which also sounds like a good idea so that we can receive other donations as gifts, just like other 501c3s. I read articles about the advantages of LLCs and Fiscal sponsors, but I haven't found information on whether we should aim to have both, or having a fiscal sponsor would be enough. If the LLC is not necessary, it would be helpful since the annual franchise tax in California is $800 and we are not necessarily looking to continuously earn that much from the film years after its creation since our main goal for the documentary is to inform. So here are our options:
1. Should we form an LLC AND get fiscal sponsorship?
2. Should we just get a fiscal sponsor and not necessarily an LLC? What are the implications/risks?
3. Should we form an LLC, fiscal sponsorship, and then close down the LLC after a couple of years, when we are no longer making substantial earnings? What are the implications of this as well?
Please let me know if you have ideas or references we look into. Thank you for your help!