Thinking About a Loan-Out or S Corp? What Every Actor Needs to Know Before Making the Leap.

If you’re an actor who’s booking more consistently (yay!) and starting to see those 1099s and W2s stack up — you’ve probably heard whispers about setting up a loan-out company or S Corp.

But what exactly does that mean? Will it actually save you money? Is it worth the extra work? And how do you know when it’s the right time?

As an entertainment accountant who works with creatives like you all year long, let’s break this down in a way that actually makes sense. Here’s what changes when you go from being a solo freelancer to running your own S Corp — and how to decide if it’s right for you.

1. What Actually Changes When You Set Up an S Corp or Loan-Out?

Let’s start with the basics. A “loan-out” is just a fancy term for a corporation that you (the actor) own and operate. Instead of you getting paid directly for your acting work, your company gets paid — and then pays you.

What changes:

• You’ll now be an employee of your own company. That means payroll, pay stubs, and W-2s at the end of the year.

• You’ll also be the owner of that company — so you can still take business deductions and pay yourself a “reasonable salary” + distributions.

• You’ll need to keep separate books for the company (and file a separate tax return for it).

• You can potentially save thousands in self-employment tax once your income hits a certain level — more on that in a bit.

2. W-2 vs. 1099: What Actors Really Need to Understand About Tax Deductions

Here’s something a lot of actors don’t realize until tax season hits them hard:

If you’re paid on a W-2, the IRS considers you an employee — and as of now, employees can’t write off business expenses on their personal taxes.

Which means:

• That $400 on headshots? Not deductible.

• Acting classes? Not deductible.

• Travel to auditions, subscriptions to casting sites, coaching, self-tape equipment? Still not deductible... unless...

Unless you have 1099 income — or a loan-out/S Corp — that allows you to claim legitimate business expenses. (But again, you can only deduct expenses that relate to the income earned on those 1099s.

Actors often invest heavily in their careers. If you’re being paid mostly W-2, those write-offs could get left on the table… and that adds up fast.

With a loan-out or S Corp:

• Your company is hired instead of you personally.

• That income can be classified as business income.

• And you can deduct necessary and ordinary expenses related to your acting work — even if you're also paid W-2 elsewhere.

So if you're trying to make the most of your investments in your career, this structure could give you back some of that power.

3. What Does It Cost to Set It Up and Maintain?

This isn’t a free move — but it can more than pay for itself when done right.

Here’s a general breakdown of what to expect:

One-Time Costs	Ongoing Costs (Annually)
Incorporation fees ($100–$800 depending on your state)	S Corp tax filing (can range from $500–$1,500+)
Legal setup (optional but recommended, $200–$600)	Payroll service ($50–$100/month)
EIN & state registration (varies)	Bookkeeping & compliance support

And don't forget the time investment: you’ll need to stay on top of things or work with someone who will.

4. When Does an S Corp Make Sense for an Actor?

Honestly? Not everyone needs an S Corp. Here’s when it usually does make sense:

• You're consistently earning $75K+ in 1099 income (not just W-2s).

• You’re being hired directly by studios, producers, or clients who are open to paying a company instead of you personally.

• You're open to a little more structure and willing to treat your acting as a legit business. (Because it is!)

Still unsure? Here's a quick way to think about it: If you’re paying thousands in self-employment tax and can’t deduct the majority of your career-related expenses, this might be your solution.

5. Things You’ll Need to Be Ready For

A few mindset shifts and habits to prepare for:

• You’ll have to run payroll. Yep, even for yourself.

• You can’t commingle funds. No swiping the business card for your personal Target run.

• You need a team — whether that’s an accountant (like me 🙋🏽‍♀️), a bookkeeper, or even a payroll service.

• You’ll be wearing two hats. One as the actor, the other as the CEO of your business.

The good news? That CEO energy? It looks really good on you.

6. What If I’m Not Making That Much Yet — But I Want to Be Ready?

First of all — I love this energy. Being proactive about your business setup means you’re already thinking like a CEO, and that mindset will carry you far.

If you’re not quite at the income level yet (say, under $75K in 1099 income) but you see it coming soon, here’s what you can do now to set yourself up for a smooth transition:

• Start tracking your income and expenses now — even if it’s part-time or irregular. The better your financial records, the easier the shift later.

• Use a separate bank account for anything related to acting income and expenses. This creates clean separation and habits early on.

• Talk to your accountant (hi 👋🏽) about your goals and projected income. We can run the numbers and help you know exactly when it makes sense to file.

• Start thinking like a business. How are you marketing yourself? Are you investing in things that help you grow? Are you organizing receipts, keeping mileage logs, etc.?

Setting up an S Corp before the income supports it could actually cost you more in taxes and fees, so the timing has to make sense — but that doesn’t mean you can’t prepare like the business owner you’re becoming.

7. Still Not Sure? Let’s Talk It Out.

Every actor’s financial situation is unique — and this isn’t a one-size-fits-all move.

If you’re thinking, “I might be ready, but I don’t want to mess it up,” that’s exactly what I’m here for. I help actors go from tax-time panic to year-round financial strategy — including setting up S Corps the right way.

Ready to talk it out and see if it makes sense for you? 👉 Book a session with me here and let’s break it down together.