How to Set Up Your Film Production Companies
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How to Set Up Your Film Production Companies

How to create a production company. The basics.

When making an independent film or television program, new filmmakers inevitably face the questions of "should they"  and "how to" set up their production company for their film.

Should a Production company be set up?

The answer to the first question, should they set up a production company, is relatively simple.  

If the filmmaker want to make any money through the sale of their film, the answer is yes.  If the filmmaker is very wealthy and doesn't need the money, is making the film for their own private use and viewing or is someone that just wants to show their work on the internet for free, like a viral youtube piece, then the answer is no.  

For this article, let's make an assumption, the filmmaker has chosen to treat their filmmaking as a professional and commercially viable skill and any film or television program they create is what they want to make their living from.   Therefore, they decide to create a production company.

Creating a production company.

The steps to creating a production company are relatively easy to do.

  1. Rent or establish a business address, rent a mail box or a virtual office with a physical address.  This will be used on all legal documents of the production companies.
  2. The filmmaker will create a legal entity, actually the filmmaker will form two (Limited Liability Companies) L.L.C.s,
  3. the first, is the parent Production Company,  for example XYZ Productions L.L.C. , this company will manage the any project companies set up, the filmmaker will be the parent company's manager,  but the parent company, which in the eyes of the law is its own, individual entity, will be the manager to any project companies, that are established.  Example  Bob the filmmaker is the manager of XYZ Productions L.L.C., but XYZ Productions is the manager of "MY First Film Productions, l.l.c.."
  4. The second L.L.C. formed is the individual project's Production Company, example "MY First Film Productions, l.l.c.."  This is done to allow the project the opportunity to raise money, individually, for the project through investors and to accept and report any and all profits that the project may produce, without being contaminated by other (future) projects that the filmmaker may embark on.  
  5. To create an L.L.C., especially in today's world, can be done online using companies like   Just fill out the questions and both companies can be set up in a single night.
  6. Once the legal entities has been created, it is time to establish them as businesses.  Publication and business filing, federal business registration is usually just your EIN numbers (that is the number your business is assigned by the IRS), but getting a Dun and Bradstreet number can open up some government doors, that sometimes have great value to filmmakers.  Sometimes local and state publications of new businesses are taken care of through the company that you have used to create your companies.  A filmmaker should check for these options.  If not available the next step is to publish the companies in local publications for the required time that the business license requires.  Each local has different rules so this must be checked by the filmmaker, when filing.  The filmmaker may either file online or by actually going down to your city, county, state business office and filing in person.
  7. Once the filmmaker has established the business, an entertainment accountant, hired on a quarterly basis to review the books of the parent company should be obtained.  A (part time) bookkeeper should be hired once a week to keep the books current  in the office.  This is less expensive than hiring full time employees to start with and when production starts, keeping the books are the last thing the filmmaker will be thinking about.   Remember: good books kept, means less headaches at tax time.  
  8.  A lawyer should be consulted.  Keep the lawyer on file, (you should arrange their services on an as needed basis only , don't pay for services not received, save your retainer money, you'll need it for you film),  use for the agreements the filmmaker will need connected to SEC filings, tax filings, investor letter's of intent, cast and crew employment, and the myriad of other paperwork that comes in on a regular basis, when making a movie and operating a company.
  9. A payroll company should be contacted and a relationship established for the time the filmmaker intends to pay employees, cast and crew, again pay when you need the service, not before.
  10. You parent company will pay for the administration, office expenses, and general overhead, while your project company will pay for everything directly related to that project.  That is the reason for an entertainment account.
  11. Lastly, once you have set up your company, go to your office, sit on your chair and say two things out loud,  This is my business and Lets make movies.

Best wishes from Hollywood on your new venture.

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Comments (1)

Interesting article.....thanks