Sophisticated financial advisors and other professionals set up loan-out corporations for entertainer clients such as actors and musicians to insulate their wealth from unfounded and frivolous lawsuits. Loan-out corporations can also be used to mitigate taxes.
The way it works is that the entertainer—an actor, for instance—is an “employee” of the loan-out corporation. The corporation then enters into contracts with other businesses wanting to use the entertainer’s “brand” to market their services or products. Then the loan-out corporation “loans out” the services of the actor to the production company.
