How to form a film production company?

drameddie

drameddie

Well-known member
I was wondering if anyone can provide some information on how to get started in forming a small film production company. What are the legal actions to take? Is it expensive? Would you make it a sole propiertorship or a limited partnership? Is it wise for an Indie Filmmaker to set one up?
Any info appreciated. Thanks.
 
This is a great and complicated question. I looked into this too awhile back and you really have to make some hard decisions. From what I gathered, if you're going to make a film for under 100,000 dollars, it's probably not worth it. The expenses outweigh the benefits. If you're going to make something for more than that, you might want to consider it.

The thing is, if you're going to get people to invest in your film, and you don't know them personally, they won't give you money unless you have the proper channels set up. So in that case, you pretty much have to. Also, if some terrible accident happens on your film (easy to say, 'it won't happen to me', but accidents are actually pretty likely on film sets), they can sue you. And if you don't have a company set up to protect you, they can go after your personal accounts, possessions. Then again, if you have nothin, you have nothin to lose. But if you have rich parents, they MAY be able to go after their money. As you can see, it starts to get complicated quick.

Oh, most indie films go with an LLC (limited liability). I don't know why b/c I keep forgetting the difference between all of them, but that's the one they usually go with.
 
Thanks for the info. How about on securing a name for your Company? For example, in the beginning of your film it says: A film by "Destination Films." But you don't really have a company set up called Destination Films. And maybe you have a website set up for it. Now, what happens if someone else forms a company with the same name and sees your site and your film?

As for the sole and limited. I just found some info on it from http://www.filmmaking.net/faq/answers/faq14.asp that I cut and pasted below:

Sole Trader/Proprietor
With a "Sole Trader/Proprietor" business, you and your business and effectively the same thing in terms of financials and legals. The main advantage of this type of business is that they are extremely cheap to run because the statutory reporting requirements (e.g. annual accounts) are very minimal in most jurisdictions. In some states and countries, you do not even have to register your business name - you can simply pick a name (that does appear to be used by anyone else) and start trading. The standard tax implications apply if you earn money through your business, and although you and your business’ finances are technically one in the same, it’s always a good idea to use separate bank accounts for your personal and business transactions.

The main disadvantages of a sole trader business are that 1) there is no separation between your personal and business income for tax purposes, and 2) this type of business offers no liability protection. If you get sued by someone for something involving your business, all of your personal assets are liable as well. For example, consider the following situation: you are shooting a film and one of your crew falls off a ladder and breaks their spine (and you haven’t taken out any production insurance). If this crew member decides to sue your company for damages and wins, everything that you own (house, car, etc) can be seized to pay the monies owed if you do not have enough money to settle the claim. For this reason, most independent filmmakers opt for the limited liability company approach.

Limited Liability Company
As the name suggests, limited liability companies (LLCs) offer protection for their shareholders from liability incurred by the company. This means that in the example described previously, only the assets of the company would be exposed to the damages claim. The assets of the company directors and shareholders would be protected (assuming there are no personal guarantees in place). This protection exists because the LLC is a completely separate legal entity from its directors and shareholders. In most jurisdictions there are also tax benefits associated with incorporating as an LLC that aren’t available to sole traders.

The downside for limited liability companies is that they involve greater bureaucracy and expense to maintain. The bureaucracy comes in the form of the fact that a LLC must have directors, shareholders, articles of association, and there are rules about how money can be moved in and out of the company (eg. because it is a separate legal entity, you can’t just draw money out when you feel like it like you can as a sole trader). Running a LLC also involves certain unavoidable expenses. Most jurisdictions which register LLCs will charge a once-off registration fee, and these can vary dramatically between states and countries. LLCs are almost always required by law to submit annual accounts to their regulating authority, and normally it is necessary to involve accountants in preparing these.

In the US, limited liability companies have the suffix "LLC" appended to their names; in the UK and Canada, they are just "Limited" or "Ltd"; and in Australia, the suffix is "Proprietary Limited", normally abbreviated to "Pty Ltd". Registration of LLCs in the US is managed at a state level (normally by a relevant commerce department). In Canada it is possible incorporate at a Federal level through Corporations Canada; all incorporations in the UK are managed by Companies House; and in Australia registration is managed at a Federal level by the Australian Securities & Investments Commission. Visit the relevant website for more information.
 
There's no reason you can't set yourself up as a sole proprietorship, and go to your county courthouse and register yourself as a DBA with your new company name ("doing business as"). This will give you some trademark protection, and if you already have a web URL of your business name, no one else can appropriate it. Just be prepared for a lot of junk mail to your new business.

As far as liability, some form of business insurance is a must, and its not very expensive for just your liability (~$300/yr). If you hire crew as independent contractors, and require them to be bonded or have insurance, then you do not have to worry about labor laws, their taxes, etc.
 
A friend of mine said that I can just copyright the name of the Film Company and not even have to worry about starting up the company. Is that ture?
 
You can't copyright the name of something.
Check out the Faq on the copyright website
http://www.copyright.gov/help/faq/faq-general.html#what

You would have to register the business name in your state but you only have that name in that state and someone in another state can get that name in their state. Now if you want to own that name all over you will have to get the name trademarked with isn't that cheap.

To check on that you can go to the USPTO ( United States Patent and Trademark Office ) website.
 
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