Hey folks.
Okay, a group of friends and I are working on our first independent film. We've got our script, we've secured the camera equipment (MiniDV, not film) we need at no cost, and we've gotten permission to shoot at our main location, provided we get the insurance they require.
Here's my basic question: Just how formal and business-oriented shoudl we be in this venture? I've considered the issue of whether we should remain just a bunch of individuals doing this, or whether we should form a subchapter S corporation or LLC. Forming a company would obviously simplify issues of getting insurance, signing the proper waivers with the locations we're gonna shoot at, designating the copyright on the film, and so forth.
However, I'm also concerned that if we become an actual business, rather than just a bunch of friends, then it's going to become alot more difficult for people to volunteer to be in the film and serve on the crew, as is the plan now. Once we're an actual company, will the government say "no volunteers, pay these people" and also require us to carry workers' comp. on everyone? Or is it possible to be an organized company but still do the film with all volunteers who aren't getting paid?
Any advice on how formal or informal we should keep this, or what the best legal and business arrangements are, would be most appreciated.
Thanks!
=Tom=
That is the exact question bouncing around in my head right now. I look forward to the answers myself.
I've read in one book that you should declare yourself as a non-profit or else you need to pay minimum wage to keep the IRS happy. If your form a non-profit what happens if your film actually makes a profit? Yeah, get a lawyer but before that happens I'd like some more details if anyone has them.
RJSchwarz
Unfortunately, the replies don't seem to be forthcoming right now. ?:)?
Forming an actual non-profit corporation is a pain in the rear, from what I hear. Those organizations are highly scrutinized by the IRS, and it can take forever to get approved to be one. I can't see that as being a viable option for our production.?:)?
Well yesterday I bought the Independent Filmmaker's Law and Business Guide. I'll get back to you when/if I figure something out.
RJSchwarz
Doesn't completely answer your question, and it doesn't cover Non-profits but "The Independent Filmmaker's Law and Business Guide" by Jon M. Gardon does have a bit of interest.
quote:
For many independent filmmakers the limited liability company is the best choice for forming a film production company. The Operating Agreement is more flexible than corporate bylaws fr structuring the film company operations. it provides as effective a limitation from personal liability as does the corporation.for films financed with outside investors, the traditional corporat structure may serve as the best vehicle. the use of multiplle classes of stock and shareholders' agreements can be drafted to achieve the same results as those sought under the Operating Agreement the tax advantages of a partnership may have little value for the film company, since the investors are more interested in the long-term growth of the inevestmen than short term losses for tax purposes. As a result the preferred form of structure depends on the particular makeup of filmmakers and investors.
For guerrilla filmmakers as well as many independents, there may not be any benefit to forming a separate entity unless the filmmaker is seeking investment financing. Most debt will come from personal loans or unsecured personal credit cards. These obligations will not be changed by using a corporate or limited liability form. Most tort liability-liability for accidents-will arsie from activities in which the filmmaker is personall involved. Since the limited liability only shields the filmmaker from liability as an officer or director of the business, it will be of little value to shield the filmmaker from liability for accidents she caused or for her failure to supervise the cast and crew.
If the filmmaker is shooting a short project with small cast and crw then the filmmaker may be best advised to remain a sole proprietor. On the othre hand, if the size of the project increases or if investor financing becomes a part of the organziation, then it is very important that the filmmaker work through the corporation or the limited liability company. The worst choice is to ignore the problem and have the law treat the project as a general partnership.
RJSchwarz
