Unsolicited advice for filmmakers looking for financing

Heath McKnight · September 2nd, 2004, 09:48 PM

John J,

I have an S-Corp, MPS Digital Entertainment, Inc., can I use this to produce my film, or should I form an LLC to produce it seperate from MPS Digital? I would want MPS Digital to hold the copyright.

Thanks,

heath

Dan Uneken · September 6th, 2004, 01:20 AM

Check out "The Producers Business Handbook" by John J. Lee.
It's about big time filmmaking in LA, but he operates on the basis of some very interesting principles, that apply to the entire business, big or small.
Well written too.

John Jackman · September 7th, 2004, 09:41 PM

Heath,

Think through how you would sell off chunks of ownership in the movie. If you sell off chunks of your s-corp, it's forever and generally constitutes participation (without additional investment) in any future projects' profit.

This is why in most cases, projects are kept discrete (an LLC for each project) unless your biz plan and funding is for a multiple-picture company. That's also a feasible concept, but usually raises much more cash (2-3 films worth) with the design that the company will become self-perpetuating and investors will take ongoing profits from all subsequent projects.

In most states, you can set up a manager-managed LLC where you are the manager and your S-corp owns the majority of the stock. You then sell off pieces of the single-project LLC but you retain full ownership of the S-corp.

Lotsa paperwork, have cash on hand for the lawyer! But this is the approach that is being used most commonly now. The names for the LLCs get pretty amusing. David Gordon Green ("George Washington") named his company "You and What Army, LLC"

Heath McKnight · September 8th, 2004, 07:11 AM

I really DON'T want investors in my company. Guess I'll start an LLC for my next film.

Thanks for the tip!

heath

John Locke · January 1st, 2005, 12:43 PM

Did the Coen brothers set up any sort of business entity to raise funds from private investors for their first film "Blood Simple"? From the "shoot from the hip" way they got into the filmmaking business, I'm guessing they didn't.

Heath McKnight · January 1st, 2005, 06:34 PM

According to Barry Sonnenfeld, they shot a trailer and raised the funds that way. I don't think I'd do that (maybe a short film with the characters), but hey, if it works, it works.

heath

Rob Yannetta · January 20th, 2005, 04:24 PM

<<<-- Originally posted by Heath McKnight : DON'T ask for donations, don't even ask for "gifts," because I'm almost 100% positive none of you are making your movies as a "non-profit" ventures. -->>>

Actually, I am. I'm releasing my productions under a Creative Commons licence. How does this affect my begging?

Heath McKnight · January 20th, 2005, 05:55 PM

I'm not clear on what that is, but if you have to ask, direct it to a business lawyer.

heath

Rob Yannetta · January 20th, 2005, 06:10 PM

<<<-- Originally posted by Heath McKnight : I'm not clear on what that is, but if you have to ask, direct it to a business lawyer.

heath -->>>

http://www.creativecommons.org

Heath McKnight · January 20th, 2005, 07:13 PM

Probably don't need to worry, since it's non-profit. Ask a lawyer for advice, regardless.

hwm

Brad Mills · January 23rd, 2005, 10:40 PM

How much of this thread applies to a Canadian film maker?

I have a single investor, willing to invest $40,000.00 CDN for my first project.

All the books and articles I've read so far pertained to US film makers...not much info for the canadian first time producer.

Heath McKnight · January 24th, 2005, 07:51 AM

As I've advised to American filmmakers, I will say the same to Canadian, of which I'm unfamiliar with business, investment and tax laws: talk to a Canadian lawyer who knows this stuff.

heath

Brad Mills · January 24th, 2005, 09:53 PM

So just to clarify...I might sound like an idiot here, but what's the difference between a sole propietorship, a corporation, or an LLC? I know I have the info in one of my books, I just can't remember which one.

I mean what's the difference in terms of registering a project specific LLC for a film.

Heath McKnight · January 24th, 2005, 10:12 PM

In America, it's more expensive, so I went with an S Corporation vs. LLC.

heath

Ken Tanaka · January 24th, 2005, 10:54 PM

Brad,
I strongly advise you to consult a Canadian attorney before establishing a business entity. Don't take legal advice from strangers on some darn Internet chat board (even this one). Most of us are as dumb as you about this subject. This is a decision that's larger than your small film project and can have significant implications on your legal liabilities as well as your prospective tax liabilities. Many young people just register LLC businesses because it's cheap and easy to do on the Web...this is a huge mistake.

Professional advice: Just get it.

September 2nd, 2004, 09:48 PM	#16
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	John J, I have an S-Corp, MPS Digital Entertainment, Inc., can I use this to produce my film, or should I form an LLC to produce it seperate from MPS Digital? I would want MPS Digital to hold the copyright. Thanks, heath __________________ My Final Cut Pro X blog

September 6th, 2004, 01:20 AM	#17
Dan Uneken Major Player Join Date: Sep 2001 Location: Andalucia, Spain Posts: 301	Check out "The Producers Business Handbook" by John J. Lee. It's about big time filmmaking in LA, but he operates on the basis of some very interesting principles, that apply to the entire business, big or small. Well written too. __________________ Film & TV locations & production Spain http://www.fotofilmvideo.com/

September 7th, 2004, 09:41 PM	#18
John Jackman Great DV dot com Join Date: Sep 2003 Location: Lewisville, NC Posts: 78	Heath, Think through how you would sell off chunks of ownership in the movie. If you sell off chunks of your s-corp, it's forever and generally constitutes participation (without additional investment) in any future projects' profit. This is why in most cases, projects are kept discrete (an LLC for each project) unless your biz plan and funding is for a multiple-picture company. That's also a feasible concept, but usually raises much more cash (2-3 films worth) with the design that the company will become self-perpetuating and investors will take ongoing profits from all subsequent projects. In most states, you can set up a manager-managed LLC where you are the manager and your S-corp owns the majority of the stock. You then sell off pieces of the single-project LLC but you retain full ownership of the S-corp. Lotsa paperwork, have cash on hand for the lawyer! But this is the approach that is being used most commonly now. The names for the LLCs get pretty amusing. David Gordon Green ("George Washington") named his company "You and What Army, LLC" __________________ John Jackman www.johnjackman.com

September 8th, 2004, 07:11 AM	#19
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	I really DON'T want investors in my company. Guess I'll start an LLC for my next film. Thanks for the tip! heath __________________ My Final Cut Pro X blog

January 1st, 2005, 12:43 PM	#20
John Locke Retired DV Info Net Almunus Join Date: Sep 2001 Location: Austin, TX USA Posts: 2,882	Did the Coen brothers set up any sort of business entity to raise funds from private investors for their first film "Blood Simple"? From the "shoot from the hip" way they got into the filmmaking business, I'm guessing they didn't. __________________ John Locke SursumFilms.com

January 1st, 2005, 06:34 PM	#21
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	According to Barry Sonnenfeld, they shot a trailer and raised the funds that way. I don't think I'd do that (maybe a short film with the characters), but hey, if it works, it works. heath __________________ My Final Cut Pro X blog

January 20th, 2005, 04:24 PM	#22
Rob Yannetta Regular Crew Join Date: Jan 2005 Location: St. Petersburg, FL Posts: 85	Re: Unsolicited advice for filmmakers looking for financing <<<-- Originally posted by Heath McKnight : DON'T ask for donations, don't even ask for "gifts," because I'm almost 100% positive none of you are making your movies as a "non-profit" ventures. -->>> Actually, I am. I'm releasing my productions under a Creative Commons licence. How does this affect my begging?

January 20th, 2005, 05:55 PM	#23
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	I'm not clear on what that is, but if you have to ask, direct it to a business lawyer. heath __________________ My Final Cut Pro X blog

January 20th, 2005, 06:10 PM	#24
Rob Yannetta Regular Crew Join Date: Jan 2005 Location: St. Petersburg, FL Posts: 85	<<<-- Originally posted by Heath McKnight : I'm not clear on what that is, but if you have to ask, direct it to a business lawyer. heath -->>> http://www.creativecommons.org

January 20th, 2005, 07:13 PM	#25
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	Probably don't need to worry, since it's non-profit. Ask a lawyer for advice, regardless. hwm __________________ My Final Cut Pro X blog

January 23rd, 2005, 10:40 PM	#26
Brad Mills Regular Crew Join Date: Jan 2005 Location: Sydney, NS / Toronto, ON Posts: 41	How much of this thread applies to a Canadian film maker? I have a single investor, willing to invest $40,000.00 CDN for my first project. All the books and articles I've read so far pertained to US film makers...not much info for the canadian first time producer.

January 24th, 2005, 07:51 AM	#27
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	As I've advised to American filmmakers, I will say the same to Canadian, of which I'm unfamiliar with business, investment and tax laws: talk to a Canadian lawyer who knows this stuff. heath __________________ My Final Cut Pro X blog

January 24th, 2005, 09:53 PM	#28
Brad Mills Regular Crew Join Date: Jan 2005 Location: Sydney, NS / Toronto, ON Posts: 41	So just to clarify...I might sound like an idiot here, but what's the difference between a sole propietorship, a corporation, or an LLC? I know I have the info in one of my books, I just can't remember which one. I mean what's the difference in terms of registering a project specific LLC for a film.

January 24th, 2005, 10:12 PM	#29
Heath McKnight MPS Digital Studios Join Date: Apr 2003 Location: Palm Beach County, Florida Posts: 8,531	In America, it's more expensive, so I went with an S Corporation vs. LLC. heath __________________ My Final Cut Pro X blog

January 24th, 2005, 10:54 PM	#30
Ken Tanaka Retired DV Info Net Almunus Join Date: Dec 2001 Location: Chicago, IL Posts: 6,943	Brad, I strongly advise you to consult a Canadian attorney before establishing a business entity. Don't take legal advice from strangers on some darn Internet chat board (even this one). Most of us are as dumb as you about this subject. This is a decision that's larger than your small film project and can have significant implications on your legal liabilities as well as your prospective tax liabilities. Many young people just register LLC businesses because it's cheap and easy to do on the Web...this is a huge mistake. Professional advice: Just get it. __________________ Lady X Films: A lady with a boring wardrobe...and a global mission. Hey, you don't have enough stuff! Buy with confidence from our sponsors. Hand-picked as the best in the business...Really! See some of my work one frame at a time: www.KenTanaka.com