Establishing a production company for a short film production?

[Thomas Berg Petersen]

Hi everyone,
I am in a process of producing a short film, and I have received a lot of valuable information, but one question still remains: Should I establish a production company for my short film production?

It seems that there are different perspectives whether or not a production company is needed to produce a short film.
Some will just pick up their camera and shoot whereas others maintain to establish a company to avoid personal liability i.e. if the crew or others sue you.

I think I am in between. I would love just to go out and produce this short film and hope for the best (it is not a 2 milion dollars production for crying out loud). On the other hand I know that accidents happen and that you could be sued. A limited company would of course limit your liability.

Could anyone please inform me how you are producing and if you already have a production company, how you established it (preferably as detailed as possible).
Thanks!

[Jay Gladwell]

Thomas, before I going to the expense of setting up a company, examine what kind of short you're going to make and where you'll make it. What, if any, are your liabilities? If they are low or non-existant, then put the money on the screen, where it'll make a difference. If your liability is high, then simply buy yourself some liability insurance.

[Jeff Donald]

There are other aspects to think about other than getting sued. Some states require you to obtain licenses etc. There can also be tax advantages if you are a real company. It could save you a lot of sales tax if your a real company. Real companies can sometimes get grants, breaks on office space, etc. Is this a one time deal or will you be doing more in the future. Get advice from us, but also other professionals (lawyers, accountants).

Jeff

[Derrick Begin]

Thomas,

Good Morning! Excellent to hear you are doing a short! Pleasantries aside, I am shooting a short as I bang out this text on this machine.

Here is my two cents:

1. A good place to start that would be this reference book: FILM & VIDEO BUDGETS by Deke Simon and Michael Weise. It is a practical reference guide that breaks down the paper pushing into manageable pieces. Also, since you are in New York City and the possiblities of you using union talent at some point, go to SAG's website and check out their contracts. If you want them to send you a production packet give them a call and ask for the Film and Theatrical Contracts department. (By the way, this requires you to register your script with the Library of Congress)

2. If you intend to work with union actors you will need insurance. Workers Compensation insurance is available through the State Insurance Fund of New York. It cost me 265.00 to insure everybody including myself (Period of SEPT 13-OCT 1, 2002). (A light could burn someone, or any mishap) Purchasing it made me feel better and the talent/crew appreciates it. I told them there all insured, however, BE AWARE and CAREFUL. SAG contracts require this plus a 500.00 bean security deposit for the production. Which you get back. (My production is under the SAG EXPERIMENTAL SHORT contract - - Legit, however, my 500 beans is tied up because the Library of Congress takes so freaking long to register my copyright for the script)

3. I did not incorporate into an LLC or anything. I am a sole proprietorship at the moment. I did however, get a government federal id number by filling out the SS-4 form for my D/B/A "ODO PRODUCTIONS" I plan on incorporating next year... As a sole proprietorship everything, write-offs and such passes directly to you. Your assets are not protected. That risk I was willing to take. (Check with an accountant)

I hope this helped some... See you OCT 5th! If you need an actor (http://www.dpbegin.com) or have some questions, send it on over. Consider me involved...

Cheers!

Derrick
ODO Productions

[Paul Sedillo]

Thomas,

As was stated by other members, there are advantages from starting a production company. If you are planning on doing more than one production it might be something that you should consider. From a tax prerspective, consult with an accountant. There are tax benefits from having a company established.

In Texas for example, you can receive assitance from the state if you are a film production company. They actually have an office that deals with film related stuff. I would expect that New York would have the same sort of government related office.

Good luck and let us know how your business develops.

[Peter Wiley]

One thought, maybe warning.

If you derive income from your DV activities you are a business as far as the IRS is concerned (unless your income is so small that it qualifies as a "hobby"). This has advantages and disadvantages.

The disadvantage is that you are liable for federal tax, including the "self-employment" tax -- your own social security and medicare contributions. These add up fast.

The advantage is that you get to file a schedule C and deduct many of your production expenses as business expenses.

These tax issues require a hard look at what kind of company you might form and such considerations do drive people in one direction or another. You might consider consulting with your accountant, or if you don't have one, consider getting one.

[Mike Rehmus]

It is easy to become a recognized business.

Go downtown and get a business license. Minimal cost for a small company with small revenue expectations.

Might have to file with the County too. And post your intent to do business under a ficticious name in the local paper.

Since you are not going to sell products, you don't need to worry about sales tax issues.

Hire your crew through a temp agency and you don't have to worry about all the paperwork, insurance (for them) and other problems (you have to confirm their right to work in the U.S.) and other related regulatory problems. etc. You can cut a deal with a local temp agency and reduce their override since you are bringing them the folks you want to hire. They don't have to recruit and they don't have to test em.

Join a group like WEVA and take advantage of their insurance contacts. Reasonably cheap insurance for the business, specifically tailored for a production company, and it covers your equipment.

LLC and Incorporations do not, as most think, necessarily protect you personally from lawsuits and other liabilities. Unless you have a lot of money to defend yourself, it is rather easy for someone to 'pierce your corporate veil,' and get you held personally responsible. And the way corporate managment responsibility is about to change, there may be no more protection. The Enron guys have only begun to bleed.

[Jeff Donald]

The costs will vary from state to state. Florida, for example has no state income tax. However, to make up for the income tax, licenses are very expensive here. Because of all the fly by night businesses here as well, fictious name licenses are required at an additional expense. Sales tax is another state issue that will vary. In Florida, I have to charge tax on some services I provide because of the way it is used to create a product for resale.

Jeff

[Dan Holly]

Everyone’s situation is different, and in our case the best plan was to start a LLC due to the nature of hazards while shooting in Alaska.

My best advice is to talk to an attorney about your particular situation.

The people on this board are a wealth of information, and I’m not downplaying that fact…….but I haven't noticed anyone who is a practicing attorney <;~).

I would play it safe, but that's just me......

[Paul Sedillo]

<<<-- Originally posted by RC Productions : The people on this board are a wealth of information, and I’m not downplaying that fact…….but I haven't noticed anyone who is a practicing attorney <;~).

I would play it safe, but that's just me...... -->>>

No, but I play one on TV! :)