I am editing a self-shot feature I made during lockdown. The goal is to sell it to a streaming distributor/service. Do I need to set up a business or LLC formation to do that? What's the best practice?
Producing : Do I need an LLC set up to sell a film? by Buck Estes
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No, you don't NEED to set up a LLC but it's highly recommended if you intend to enter the professional filmmaking world. You can run it as a sole premiership and handle the tax issues using form C for your fed & state taxes. The loss you incur can be to use to reduce your tax liability. That's just my opinion - I'm not advising you at all. Check it out at your local IRS office or attorney.
What Dan MaxXx and Doug Nelson said. It's important to note that most feature films will create their own LLC just for that film. That way you don't have to worry about maintaining the LLC for any other productions and you can isolate your project's expenses.
Even with the LLC, you can still report it on your taxes as a Schedule C (as Doug mentions), meaning not as a business but an extension of your own personal income, but confirm with your tax consultant that that is the best option for you.
Also, you can consult a lawyer about this and probably should, lest you be left with liability against your personal finances.
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Wow! Thank you all for your responses. I really don't know much about this part of the business and your input has opened my eyes. I need to talk to my accountant this week. Thanks!