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Mick Scarborough
08-28-2013, 05:06 PM
All too often I am reading advice to form an LLC for films and to hire an attorney for the production. I can understand the logic behind this advice but in reality we are low budget to no budget filmmakers. How many acutally do these things?

Nick Soares
08-28-2013, 05:31 PM
It is extremely important to form an LLC for each title even if it is a no budget film

Here is why - Even though you might be making a movie with no money it still does not prevent some actor or actress from suing you because she got hurt in the middle of a scene. Without an LLC you as a person are liable for all damages to that actress, the suit can take your home garnish your wages etc... If you have an LLC in place then the LLC will be liable which would be separate from your personal life...

Hope this helps :)

D4Darious
08-28-2013, 05:43 PM
It is important to get an LLC. We didn't have money for an attorney to do it so we did ours through legal zoom, Upon the recommendation of a fellow independent filmmaker. I cost about 1300 dollars but it's alot cheaper than an attorney.

Mick Scarborough
08-28-2013, 06:08 PM
It is extremely important to form an LLC for each title even if it is a no budget film

Here is why - Even though you might be making a movie with no money it still does not prevent some actor or actress from suing you because

Thanks. Can you fill me in on why one for each film rather than a film company? Like if I made dodo bird pictures, would that cover all the films I made or do I really need to spend the money for an LLC for each movie I shoot?

Nick Soares
08-28-2013, 06:14 PM
Thanks. Can you fill me in on why one for each film rather than a film company? Like if I made dodo bird pictures, would that cover all the films I made or do I really need to spend the money for an LLC for each movie I shoot?

Great question -

Because it is important to separate liability on each film - Lets say you shoot a feature with no budget and it doesn't even find distribution, then you later create another feature film that goes on to make millions, anyone from the first film could sue your company that has the million dollar film attached to it. So a no budget film under the same umbrella as the million dollar film can come back to haunt you by loosing all of your profits from the millions dollar film because of some issue with the previous no budget film.

Recap - If you had different LLC's for each film, the person that found a cause to sue in the no budget film cannot affiliate the million dollar film if it is a separate LLC

Mick Scarborough
08-28-2013, 06:28 PM
Okay that makes perfect sense. Oh well I guess I have to roll that cost into my production

Mick Scarborough
08-29-2013, 10:37 AM
Ok crap. One more question. Once the LLC is formed and the film is done, do you need to maintain the LLC forever or let it "expire"?

Klay M Abele
08-29-2013, 11:05 AM
I'm a little confused, could you still put your production logo and whatnot on each film even if they're under separate LLC's? Or do you have to make a different company name up for each one?

Nick Soares
08-29-2013, 11:15 AM
I'm a little confused, could you still put your production logo and whatnot on each film even if they're under separate LLC's? Or do you have to make a different company name up for each one?

Disclaimer:
(I am not a lawyer, you should always seek advice from an Entertainment Attorney)


Another great question -

Yes you can. Basically each production LLC would be a subsidiary of your company, in which your parent company is not liable for damages by any sister (subsidiary) company. Just keep in mind that all of this doesn't mean shit if your talent/crew do not clearly separate the companies.

Most larger companies create LLC's mainly for tax and protection reasons.

Lecasm
09-06-2013, 08:20 PM
I am curious about this, as well.

Lecasm
09-06-2013, 08:21 PM
That is, Mick's last question concerning letting the LLC expire.

Nick Soares
09-06-2013, 09:10 PM
Ok crap. One more question. Once the LLC is formed and the film is done, do you need to maintain the LLC forever or let it "expire"?

Yes there is a yearly fee - I think my past LLC have been around a $75 annual fee

Lecasm
09-06-2013, 10:25 PM
Yes, but what are the potential consequences of letting it expire after a year? Would you the individual assume all liability and still be at risk years down the road?

Mark
09-07-2013, 12:06 PM
Wow, sweet topic. Thanks for starting this one. Very informative!

Not that I have the money to go on a movie spree but if I did, this topic would have saved my life about LLC's....

mara
09-07-2013, 12:38 PM
Every year I get a notice from the state indicating that the fee is due. I go on line, answer a few questions (has the mailing address changed, have the company's officers changed), and pay the fee. They make it very easy to stay current.

Mick Scarborough
09-07-2013, 10:54 PM
What I was wondering is do I have to keep renewing it to be protected? Like in 10 years do I have 15 LLCs going because I made 15 movies?

Director
09-08-2013, 08:11 PM
I'm going to jump into this, but like Nick, I am not an attorney, or tax consultant, nor am I giving legal or tax advice. Consult an entertainment attorney.

Actually, you don't have to specifically form an LLC. It can be an LLC, LLP, or C-Corp. You can even form an S-Corp, but I wouldn't recommend it.

The real main purpose of forming the Corp is if you plan on having investors and you're looking to raise capital to make a movie. As a rule of thumb, most corps receive 75,000 shares by default. You can purchase more if you feel you need them. But whatever you do, you better have a Private Placement Memorandum (PPM) in place. The PPM is about 30 pages of nothing more than warnings to the potential investors, letting them know that this is a risky venture, and that they probably will lose their investment capital.

Also, without a PPM, If an investor decides to bring a law suit against you, you can also be tried on criminal charges, and there are filmmakers who have done time for this very thing. That's why you ALWAYS want a PPM connected to any proposal for investment.

Regarding an actor suing for being hurt on the job. To begin with, technically, everything should be on the books, meaning, you're paying everyone as a W-2, or 1099 employee, in which case you should be paying for workers comp as well. It is the workers comp that would cover any injuries.

You can also take out an umbrella policy that would give you added protection. I recommend this and it's really not very expensive.

Note of caution. If you plan on doing all this, make sure you have a filming permit. If there is an injury, workers comp and any additional insurance you have will not pay out if you didn't have a film permit.

Regarding being sued. You can still be sued by anybody, for almost any reason, but having an LLC, C-Corp, etc, affords you an added level of protection. But, you must run it like an actual corp. In other words, no mixing personal funds with corporation funds, don't use your home address, make sure you pay your taxes, etc. In short, it can be a complicated affair.

For continuing your corp, it would depend on what is happening with your movie. I won't tell you what I do, but technically speaking, you're supposed to keep the corp up to date as long as business is being conducted from that movie.

To continue to keep a corp active there are usually state fees involved. In California for example, no matter what type of corp you have, the California tax board charges $800 annually. And that's if your movie is not making a penny. And if you're movie is not making any money, this is tough to justify this expense.

Other states have cheaper fees, like Nevada, but now you get into a more complex situation regarding if you're covered under an accident. Because if you have a Nevada corp but you're making your movie in another state, you should get what's called a foreign cooperation certificate, and doing this now opens you to double fees. That's the gotcha.

Sorry for the lengthy reply, but you asked, and there seemed to be some confusion on a few points. And, if you're wondering how I know all this, it's because I have already been through it, twice. All in all, it actually more complicated than it is expensive.

For no budget film, I would draw up an agreement for all actors and film crew stating that they are taking part in your movie on their own free will, and that they hold you blameless for any loss or injuries, etc. You can find specific wording for this online. Make sure they all sign and date it.

Phoenixf2b
09-17-2013, 04:51 PM
http://www.amerilawyer.com/

That is a great site to have an LLC set up for you and have the paperwork done for you. It's cost effective too.