Forming an LLC Production Company

K

Kevin McCallister

Well-known member
Has anyone here formed their own LLC (Limited Liability Company) for their production business? I am looking for feedback on the process, how complicated it was, the tax ramifications, etc. For example, if your LLC takes in no profit, is there a flat tax that still needs to be paid?

Any resources, books, advice, etc. on the topic of forming an LLC would be greatly appreciated.
 
i have ownership in 2 LLCs .. for my state we just fill out a quick form online, and they send you the papers.. you also have to consult your office for other permits or id# like the federal EIN and such that youll need, but its really easy to form an LLC. then you just file your tax forms as required. there are likely renewal fees and such . but its all pretty straight forward. contact your states dept of commerce and theyll give you the scoop. if your business has no revenue youll may not have to pay any fedral business tax, but it all pends your state as well. its different for corporations than it is for a sole proprietorship and such.. you might want to consider having your taxes done somewhere else if you usually do them yourself. and you cannot operate at a loss continually.
 
Not quite on the topic, but......
Does an LLC give enough protection? I'm also looking to start a company. I'm looking for complete protection of my personal assets against liability incurred by the company. I'm especially worried about intellectual property challanges and on-set accident liability. I was looking at a corporation, because I was under the impression that nothing less would provide that protection. Will an LLC provide that?
Thanks,
Mike
 
Theoretically, yes. But as a practical matter, things are less sure. There's decades and decades of case law associated with corporations, hundreds of thousands of suits that have been decided and established precedent, etc. LLC's are supposed to offer similar protection but they haven't been as tested in the courts (obviously; as they are such a new invention).

Nothing will shield you or your assets from gross negligence though. You have to do things properly, set up proper insurance, don't co-mingle funds, etc. Having a corporation won't automatically protect you from any and all claims -- you can't do something outrageously negligent (not saying you would; just using the example) and then claim "na na na, you can't touch me, I did that as a corporation..."

So mind your forms and your processes, do things legally and appropriately and intelligently, conduct the corporation's business completely independently of your own, and the corporation or LLC should provide insulation of personal assets against corporate lawsuits. But then again, someone could always sue you personally/individually, and the corporation, and the corporation's board of directors (which would, most likely, be you again)... at that point, it all comes down to who can afford the best lawyers.

This is just general rambling at 1:00 in the morning; obviously you must consult with a qualified attorney to get actual, factual, usable answers.
 
Even if it's not gross negligence, there are reasons to pierce the corporate veil. How you conduct operations has a lot to do with it.

As always, consult an attorney in your era, etc., standard disclaimer. (And always a very good idea.)
 
I think this applies to an LLC, but I may be misremembering: If you do multiple productions under the same LLC, someone claiming against one of them can suck money from the rest of them. So Movie A, which was a dog, could turn Movie B into a non-money-maker, too.

It's best to set up a separate LLC for each production.

Did I remember correctly? Or should go a little easier on the NyQuil?

Dan
 
Yep. Just looked it up. Separate entities for each production, whether S, C, or LLC, is the way to go.

If you're actually making any money at it, anyway.

Dan
 
It depends how big you are. If you plan on making a little money, then LLC may be the option, since taxes are based on your personal income. Companies and Corporations are separate entities. Another option for you may be to start a company under sole proprietorship. Don't be confused about what LLC is for. Limited Liability typically is not something a production company needs. Rules, certification, and fees vary depending on where you live. Some states don't even allow LLC. All you need is a mailbox in the state that you are forming the LLC. In some cases you will be required to fill out a Writs Of Organization/Formation to prove to the state that you are a legally known operating organization.
 
My film production company is an LLC but that is for the acquisition and development of the different properties. Once any one of them goes into production, it will become a limited partnership for each one with the investors and others involved.

But in all cases, I worked with a business consultant and an attorney when setting up the company.

Michael
 
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