The Art of Voice Acting: the art and business of performing for voice over (50 page)

Due to the growing popularity of the home studio, the voiceover industry is quickly becoming a legitimate and extremely fun way to generate income from one’s home. The growth of the home studio has also allowed a diverse cross-section of the population to get involved with the fun. In this writer’s experience, many people are now entering this field in retirement, or as a second career.

Fun aside… just like any other home-based business, the “business” side must not be ignored or some serious tax and legal consequences can result. This is especially true for those entering voiceover as a “second career” who may have built up some assets during their prior career.

Like many other businesses, the voiceover industry has its own set of legal and business issues, which this chapter will examine. Of course, this chapter is not meant to be an all-inclusive discussion of every legal and business issue associated with the voiceover industry. Rather, it merely scratches the surface, and some of the issues discussed herein are common to any business regardless of the industry.

Although there are no requirements to actually take an exam and become “licensed” to do voiceover work, as there are for other professionals like attorneys or doctors, there are many jurisdictions that require any business to obtain a license to operate within that jurisdiction. Voiceover, if one is undertaking it as a business and not a hobby, is no different. These licenses are more of a general license where you need to register with either a local or State authority, usually by paying a fee or tax, and filing annual or other regular reports.

In addition, another regulatory compliance that must be investigated by a voice talent starting a voiceover business are the local zoning regulations.
If a voiceover artist plans to record from their home, then they must check to see if businesses are allowed to be run from their home. Some jurisdiction’s zoning laws are very strict and do not allow
any
form of business being run out of certain residential zones. If that is the case where the voice talent lives, then they will either have to ask for a variance, or set up a studio somewhere outside of their home by renting space in a mixed or commercial use zone. This is obviously something a voiceover artist will need to know so they will know how much capital they will need to start up their business.

Due to the local nature of business licensing and zoning laws, the author highly recommends a voice talent either research this on their own with their local authorities, usually the Department of Revenue or Taxation Board and local zoning boards, or hire competent legal advisors to assist in this process. Many States also have special departments you can contact that assist small businesses with start-up issues such as these

The question about whether or not to incorporate has been subject to much debate in the voiceover community. It is this writer’s firm belief however, that there should be no debate about it whatsoever. The question should not be
whether
to incorporate, but
how best
to incorporate.

Just like engaging in any type of business venture, a decision needs to be made about what “form” the business will operate. Will it be a sole proprietorship; a Limited Liability Company (LLC); a C Corporation; or an S Corporation? Normally, voiceover artists don’t even consider their business formation and commence operating as what this writer terms “a sole proprietorship by default” as they just jump into the business, willy-nilly, without a plan. They will start sending out their wonderful professionally produced demos as soon as they receive them, set up their websites, MySpace pages, sign up for one of the many online audition sites, commence auditions, and so on, without even giving a second thought as to how their business is structured. This may be because some people getting into voiceover treat it as more of a hobby than a business.

The logic is “until I start to earn some money at this, what’s the point?” However, this same logic doesn’t prevent many of those voiceover artists from doing business under a “trade” or “stage” name, like “ABC Terrific Voice”, or some other catchy phrase. This is what is referred to in the legal world as a “DBA” or “Doing Business As.” Nor does the logic prevent voice talent from spending thousands of dollars on home studio equipment, training, production of their demos and marketing efforts. All expenses that the talent believes will pose no problem deducting from their income taxes.

Even after many voiceover artists do start to earn income in the business, they still don’t get around to setting up a more formal structure
and they only think about such things around tax time, or if they are ever subject to a legal action.

In this writer’s opinion, the cost of setting up a formal entity, like an LLC or Corporation, far outweighs the potential cost involved in defending a lawsuit or action by the IRS and, in some cases, will also result in tax savings, depending on the revenues generated from the voiceover business. In fact, an LLC is extremely simple to set up in almost all States and, unless a voiceover artist has employees working for the LLC, it doesn’t even require a separate Employer Identification Number (EIN) like a corporation would need.

Further, the IRS makes a very serious distinction between a “hobby” and a “business.” If the IRS determines that someone is pursuing voiceover as a hobby, then it will
disallow
any deductions for any voiceover related expenses, like production costs of the demo, home studio costs, workshop or conference expenses and so on. The number one factor that the IRS says you should ask yourself concerning whether an activity is considered a hobby or a business is “Do you run the activity in a businesslike manner?” In this writer’s opinion, operating your voiceover business as an LLC or Corporation
certainly
would go a long way in convincing the IRS that your voiceover activity is a bona fide business rather than just a hobby.

One of the many other advantages of setting up an LLC applying specifically to voice talent is that, in most States, it eliminates the need to file a “Trade Name Certificate” or “Fictitious Name Certificate.” Most States require individuals who are operating under a name other than their proper legal name as a sole proprietor to file a form with a designated governmental entity. This includes names like “ABC Terrific Voice” or a “stage name” the voice actor uses that is different from their legal name.

Filing an LLC eliminates this requirement in most jurisdictions because the LLC paperwork is filed with the Secretary of State and is deemed to be notice of a “trade name” in that State. This would equally apply to doing business as either an S or C corporation. The failure of a sole proprietor to file such a “trade name” certificate can result in punitive damages, and can even result in criminal proceedings in some jurisdictions.

In short, some form of corporate structure should be the first step in protecting a voiceover artist’s personal assets in the unfortunate event that they are sued, and eliminates the problems mentioned above concerning operation as a “DBA.” To gain maximum protection, I would recommend operating under a corporation rather than an LLC, but either of these entities is much preferable to operating as a sole proprietor.

As a voiceover artist I agree, in theory, with the statement I often hear from other voiceover artists that “this is a liability-free industry.” As an attorney, however, I
know
better than that! The sad fact in the United States these days is that whenever money changes hands or an injury occurs the potential for a lawsuit exists.

The voiceover industry is a contractual based business. The unions that represent voiceover talent have gone through painstaking processes to ensure that voice talent are protected in the contracts they sign with producers, and that they are fairly compensated for the work they do. On the other hand, the unrepresented nonunion or Financial Core talent are on their own when it comes to negotiating their fees and protecting their interests contractually for nonunion jobs.

All agreements as to what is to be recorded and delivered and the cost of same should be in writing, and equally as important, the usage of the spot being recorded should be
clearly
spelled out. It would be a great idea for a talent to have a standard contract that he/she gets signed for every job, like an attorney has a standard retainer agreement that gets signed at the commencement of each case. Keep in mind that it has been said that the true purpose of a contract is “to keep an honest man honest.”

However, due to the often fast-paced nature of the voiceover business, written contracts are not always practical. At a minimum, emails should be exchanged between the client and talent indicating the price, usage and delivery requirements for the final sound files.

It can be as easy as the talent writing a simple email like: “I will FTP the final .wav files to you for this 30-second TV spot by X date, which you can air for a year in the State of X, and you shall pay me the amount of X dollars. Please reply to confirm.” Once you get that reply, you have a binding, written contract that is enforceable in a court of law.

Of course, for larger jobs where you are being hired as a “voice” of a company where you will be doing repeated work, a more detailed contract should be signed either prior or simultaneously to work being done.

First, if a contractual term is greater than one year, it
must
be in writing to be enforceable under every States’ Statute of Frauds. Second, not only should the contract lay out all the above basic information, but it should also have a provision in there that allows the talent to terminate the arrangement after a certain period of time should things not work out, and it should cover situations such as the sickness or death of the talent.

The reason for this is to prevent the talent from adverse consequences at the hands of the company who has likely hired the talent to associate his or her voice as “branding” of its product or service. As you can see, if a talent just quits once the client has invested a substantial sum of money into such branding associated with the talent’s voice, it could potentially be devastating for the client.

A talent’s standard contract should also have a clause in it so that the talent can get a copy of the finished spot. The contract should also have a clause that allows the talent to use the finished spot on the talent’s demo or website, and if a standard contract is not signed, the talent should again, at a
minimum, use email to get specific permission from the client to use that finished spot for marketing purposes.

Although it is customary for a talent to use the final spot for marketing purposes, a talent should never assume it is OK to use the spot without getting the client’s permission as the client may not agree, and such would be actionable against the talent as a violation of copyright law.

Another very important point concerning contracts is that, now that the voiceover industry is a global business, even if you have an enforceable written contract, it may not be worth the paper it is written on due to jurisdictional issues. For instance, if you as the talent are in New York, and the client is in California, and you record in New York while the client never steps foot out of California, the New York Courts would have no jurisdiction over the dispute because the individual you are suing resides in California.

Thus, you would have to take a trip out to California, or hire local counsel there in order to collect your money; hardly worth it for the average nonunion voiceover job. As such, it is extremely important to get at least part of the payment sent to you upfront by either PayPal™ or by credit card. If a talent is doing work from around the country, signing up to accept credit card payments will be well worth the expense.

Another specific provision of contract law voiceover artists need to be familiar with is the confidentiality clause, or non-disclosure agreement (NDA). Voiceover artists will often be working on projects that have not been released to the general public. If that is the case, then the producer or owner may request that the talent sign a “non-disclosure agreement” which states that the talent agrees to keep the nature of the work confidential until such time as it is aired, or until the talent receives written permission from their client to release information about the project. The thing to keep in mind here, is such an agreement will prevent the voice talent from displaying the finished spot on their websites, or otherwise, until the piece airs, or until the client gives them permission to display the material.

Non-disclosure agreements or confidentiality clauses are very common in the business, but nonetheless, if a voice talent is uncomfortable with the terms, especially the penalties if they breach the agreement, then they should run that agreement by a competent entertainment attorney, or their agents, to make sure nothing overbearing is being requested.