Should I Start an LLC for My Screenwriting Business?

Starting a limited liability company (LLC) for your screenwriting business can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a screenwriting business, lawsuits can arise from things like not delivering a completed script to a client by the agreed-upon date or an employee passing off a copyrighted script as their own.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your screenwriting business seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Screenwriting Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Screenwriting Business

By starting an LLC for your screenwriting business, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Screenwriting businesses will benefit from liability protection because of the risk of copyright infringement and general business risks.

Example 1: A screenwriting business is sued by a film production company for failure to deliver a completed script on time. Since the business is formed as an LLC, this ensures that the owner's personal assets are not at risk, even if the business is found to be liable for the missed deadline.

Example 2: A screenwriting business is sued by a former employee for breach of contract, claiming that they were terminated unfairly. With limited liability, the owner's personal assets are not at risk, even if the business is found to be liable for the breach.

Example 3: A screenwriting business is hired by a film production company to write a script for a movie. If the script is found to be plagiarized, the film production company may decide to sue the screenwriting business for damages. In this scenario, limited liability protection will ensure that the owner's personal assets remain protected, even if the business is found to be liable.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Screenwriting Business

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a screenwriting business owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Screenwriting businesses rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Screenwriting businesses need insurance to cover expenses related to accidents or injuries on business property, damages to equipment or materials, theft or vandalism, and copyright infringement claims.

Common Situations Business Insurance May Cover for a Screenwriting Business

Example 1: A client is visiting you to discuss an upcoming script you are going to write. On her way into the restroom, she slips on wet flooring and breaks her arm. She sues your company. Your general liability insurance policy will pay for your legal defense costs, including hiring a lawyer.

Example 2: A competing screenwriting business has filed a lawsuit against your business for libel. The general liability insurance policy you have will cover legal defense costs against libel accusations. It will pay for your attorney and for a settlement if necessary.

Example 3: You are at the place of business of a client to talk about the script you wrote when you trip and fall into his large television, smashing it. Your general liability insurance policy covers damage to customer property. You can file a claim to get money to replace the television.

Other Types of Coverage Screenwriting Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all screenwriting businesses should obtain:

Professional Liability Insurance

If a client sues you for making a mistake or failing to perform your professional screenwriting duties, you will need to hire an attorney to defend your business. Professional liability insurance will cover your legal fees in such situations. It will pay for your attorney and for a settlement if needed.

Product Liability Insurance

You want your products—the screenplays you write—to satisfy your clients. But there is always a chance that they could decide that your product caused them injury and sue your business. Product liability insurance will pay for your legal defense costs if you get sued in such a manner, including paying for your attorney.

Workers’ Compensation Insurance

If you have employees in your business, you are likely required by state law to have workers’ compensation coverage. Your policy will pay for your employees to get medical care if they get injured performing job-related duties. It will also help pay for their lost wages while they are away from work.

Commercial Umbrella Insurance

Your general liability insurance policy will cover you in most general liability situations, but it is possible that you'll exceed your policy limits to—like if you lose a costly lawsuit. An umbrella policy will start paying when the general liability insurance policy stops. It will help you avoid needing to pay damages out of pocket.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance.

Read our Business Insurance article for more info.

To get started as a screenwriter, all you really need is a computer and your ideas. Some screenwriters choose to pay professionals for advice on how to make their writing more attractive to studio executives, but this is a personal decision.

Visit our How to Start a Screenwriting Business guide to learn more about the costs of starting and maintaining this business.

The ongoing expenses of running a screenwriting business include professional association fees, marketing, skill development, and insurance.

Learn more about running a screenwriting business.

Screenwriting businesses make money by selling their scripts to producers. They can also make money by producing the scripts themselves.

Learn more about starting a screenwriting business.

Screenwriters write content for visual mediums. They work in television, film, advertising, and video games.

Screenwriting can be very profitable, with screenwriters making an average of 2.5% to 5% of the total production budget for a film project, for instance, in addition to a percentage of net profits from the film.

Learn more about starting a screenwriting business.