Production companies for everyone

L

Lynos

Well-known member
Alright, every kid who's posting a short film on youtube has a "production company", usually seen in big bold letters in the opening credits.

When you're making a loooow-budget short film, for example, your actors and crew will ask you what's the name of your "production company" for their resumes, even if you don't have one.

so what's with all this "production company" stuff? In order to have a company you need to formulate a business plan, talk to lawyers, research, work hard... not every indie filmmaker is up for that. Not everyone has been to business school. Not everyone wants to hire people and pay them salaries because maybe you don't have financial resources for that.

Yes, I'm talking about myself in third person here.

But it seems that if you don't have a Production Company you're missing the point, or late in the game, or whatever. But I'm sure not everyone who has a production company actually has a production company, legally speaking.

Is it just inventing a "company" and giving it a name so that your films will look good and "serious"?

What is the real purpose behind it? Can you do your stuff without one? How important is it to have a production company, even an unregistered, "fake" one?

Can't you just make films that are made... by you?
 
Whooo boy. Great questions, not so simple answers. "Production companies" are artificial entities created under specific terms of our legal system to do things other than as "you" - yourself. They are created to allow the separation of "you" from total responsibility for the legal and financial ramifications of your endeavor.

If you're willing to assume full responsibility for your endeavor (film), you certainly can - in fact, without such a legal alternate entity you in fact are.

The only sure way not to be sued in this world is to be poor. If you're willing to risk everything, including future earnings, then by all means go for it. The minute you need additional funding from an investor who's not willing to risk everything - you're going to need an alternate entity.

They don't have to be complex or expensive - you can create and register a LLC on the internet for a couple of hundred bucks. Pretty cheap insurance. The size and complexity of the entity generally mirrors the size and complexity (read $$$) of the project.

Every creative type HATES this - it's one more major pain in the a**, just like model releases, location releases, etc etc. We all whine about it, but it really comes down to the same two choices, learn to do it yourself or hire it done. And even that's not totally true - even if you hire it done, you still need to learn enough about it to know it's being done properly for your own protection.

- OR -

you can take a vow of poverty, have all your equipment, supplies, talent, crew, fx and post donated, and shoot up a storm. If you figure out how to do this, cut a DVD on how to do it - we'll ALL buy it - and you can retire rich.

Best wishes -
 
One more thing - "fake" companies -

First, they're obviously no protection at all - you're totally exposed financially.

Legally, ranges from a slap on the wrist misdemeanor for doing business under a false name without registering, to the much more dangerous allegation of civil or even criminal fraud.

Tread softly . . .
 
Lynos said:
Is it just inventing a "company" and giving it a name so that your films will look good and "serious"?
Click to expand...

For most logos you see on Youtube or student films, this is probably the primary reason. I think it also gives you a nice umbrella entity under which to tie all of your work together.

What is the real purpose behind it? Can you do your stuff without one? How important is it to have a production company, even an unregistered, "fake" one?
Click to expand...

Without incorporating or registering an LLC of some kind, these production companies are little more than window dressing. It is useful in some ways to distance the work from someone's personal identity and that's fine. But it provides no legal protection and has no real legal validity.
 
I use it as a track record. Independent production companies come and go through the years, but if you establish yourself with a company name (whether it is just you as a sole proprietorship or a full blown corporation) and carry it through year to year (resisting the urge to change it every 3 months) , it establishes massive credence to future relationships (actors, crew, investors). I think (and have found) it to be VERY important.
 
Thanks all

Couple of questions: Is DBA (doing business as) and LLC the same thing?

Pixelated mentioned Internet sites for registering. What sort of sites? Isn't registering a company a state affair?

Despite my bitter tone, I find it important to have a production company IF you're doing Independent stuff and not going for the "director for hire" approach. I don't know if it matters if you're making a short or two with a bunch of people but it could certainly come in handy when you're entering higher budget territory and certainly feature films.


still, I don't know how many of you have actual companies, but to me, the thought of having a business and handling money issues and and contracts and paperwork and legal issues. Well, it just freaks me out a bit. And it seems so... foreign to the actual task of making a film and telling a story. At least from my point of view.
 
Lynos said:
Couple of questions: Is DBA (doing business as) and LLC the same thing?
Click to expand...

No. You need to have an established company before you can do a DBA.

Despite my bitter tone, I find it important to have a production company IF you're doing Independent stuff and not going for the "director for hire" approach.
Click to expand...

Many freelancers I know are incorporated. For one thing, it protects your personal assets from your business assets in case anything happens. Second, it's a lot easier to deduct your business expenses as a freelancer than if you were deducting from your personal filing.

I don't know how many of you have actual companies, but to me, the thought of having a business and handling money issues and and contracts and paperwork and legal issues. Well, it just freaks me out a bit.
Click to expand...

I have an actual production company and you're right that it sucks to deal with business stuff. You can either learn it as a part of doing business, of you can hire someone to take care of things for you on a weekly, monthly, or quarterly basis.
 
If you look in the credits of almost every single feature film you will find some production company that is usually named some variation or cute joke centered around the film title.

For example Babel Productions was no doubt formed to just film Babel and was then closed.
 
Arson said:
For example Babel Productions was no doubt formed to just film Babel and was then closed.
Click to expand...

This is usually a case of necessity. Films today are made with so many separate production companies involved that it makes sense to partner under one corporate entity to handle employment and production responsibilities for the duration of that project.

For my feature film, my production company partnered with another production company. To make things simpler, we formed a partnership called Lost Mission LLC whose sole purpose was to handle paperwork, ownership, and finances for that one movie. When the movie was sold to a distributor, that company went with it but we retained ownership of our respective parent companies.
 
I HIGHLY recommend a separate legal entity for a production company. Otherwise you as an individual are liable for any injuries, damages, etc. They can come after your house, your wages, your bank account or any present or future asset.

As for a separate entity for a single production, this is also a godd idea not only as a second layer of liability protection, but all assets, expenses and iincome are funneled through that entity which can simplify whose money is whose. Most serious investors will never right YOU a check, but they will make a deposit into and escrow account for XYZ, LLC for the purpose of production.
 
establishing your name

establishing your name

If it's just to post on Youtube and establish your name as a viable filmmaker, you don't need to form a business entity. If you're starting out and making short films, I don't think you need to go to the expense of incorporating, etc.

If you're making a big little movie and you have investors, then of course you need to incorporate. And everything said so far is great advice.

My point is: don't forget to establish your own name, and that means some degree of exposure. Remember what Zorba said? :)
 
The second you need to form an LLC is when you hire crew or need to get insurance. At that point it just isn't worth it to do it under your own name, especially if someone gets hurt or there is a lawsuit.
 
If you're doing anything that anyone could sue you for (if something goes wrong), you should have an LLC or corporation in place.
 
What did Zorba say?

I heard somewhere that the first thing you should do is register a "doing business as" entity, but someone here said that you can't do that before doing the LLC route, so what's the "lesser" entity here? What is the most basic thing for beginners? It needs to be a sole proprietor arrangement.
 
Sole Proprietorship (in the USA) is the easiest and most useless entity. You can set yourself up as a "business" and file a DBA form (doing business as) and use that to open a checking account. But legally there is no company, it's you. If your light stand falls over on a shoot, they're suing you, not your company, and it's your house and your car at stake.

A legal entity, an actual company, is a partnership or LLC or corporation. Creating one of those entities (preferably a limited-liability entity like an LLC or corporation) provides a layer of insulation between the company and your personal assets. In other words, unless you're grossly incompetent and grossly negligent, your house and your car and your other assets are no longer (generally) at risk just because you're operating a business. But it costs a little bit to create one of those entities, and you have to file separate tax returns for them, etc.

Simplest = sole proprietorship, but that gives you no protection at all. Most complex = full "C" corporation, and for most small businesses that's overkill and (probably) too expensive in that it subjects you to double taxation. The "S" corporation provides just as much protection but simpler paperwork and simpler taxes. The LLC "should" provide as much protection and much simpler paperwork too.

None of this matters though, until you ask your own attorney what you should be considering. Heck, in Canada the entities may be entirely different! Ask an attorney, or at least an accountant. You can probably get a free consultation even.
 
And what if I don't have a house, car or assets? :-)

Doesn't LLC mean I need to have a partner, though?

Thanks for your reply.
 
LLP = limited liability partnership, which would imply partners.

LLC = limited liability company. Many states (I don't know about all) allow LLCs to be formed, owned and operated by one person (i.e., no partners needed).
 
You must log in or register to reply here.
Back
Top