In my last post I wrote about writing documentary film proposals and shared an official Sundance Institute template for you to use when you begin writing your own. Now, I’d like to get some of the business of making a documentary film out of the way… specifically: how and why you should form a business for your documentary film.
Why You Should Register Your Film as an LLC
Before I get into the nitty-gritty details of how to form a business, I want to explain why it’s important to think of films as businesses and register them as such.
Most people don’t think of films as businesses… but the sooner a filmmaker begins thinking about their films as businesses the sooner they can make a living at their craft, eventually growing and expanding the scope of what they are able to do.
Films are expensive to produce. Low-budget features can cost anywhere from a few thousand to a few million, depending on the scale. Because the cost of producing films is so high, it’s important to be able to generate some type of revenue, and in order to generate revenue you have to treat your films as businesses.
Eventually, with enough practice, you can become skilled enough to balance costs vs. revenue, turning profits on your films and rolling those profits into future films. But, in the beginning, it’s important just to think about projects from start to finish, including all aspects of development and distribution.
When it comes to raising money, for example, your film will need to be registered as an LLC if you plan to sell equity or borrow money. It will also need to be registered as an LLC if you want to apply for grants or take tax-deductible donations. When you begin distributing your film — promoting and selling it online — you’ll need an LLC to clearly divide the film’s revenues from your own personal income. I will explain all of these things in future posts, but for now it’s important to understand LLCs.
One final note here: in my experience working in television, I’ve noticed that most production companies register individual projects as separate LLCs, including a separate LLC for the production company as a whole. The reason for this is fairly straightforward: by separating each project individually, and from the production company itself, these companies protect themselves from liability. More specifically, if a project runs into legal or financial issues, it’s a lot less likely to bring down the entire ship (and the captains) if it’s separated into its own LLC. I am not a lawyer, so for specific information on what kinds of liabilities an LLC protects you from, I encourage you to read up on LegalZoom.
How to Register Your Film as an LLC
I don’t have extensive experience with the LLC registration process, but I did recently register the LLC for a project on LegalZoom and I found their service to be outstanding.
Not only does LegalZoom file all of the initial paperwork for you (and, trust me, there is a TON), they also send you notifications when upcoming deadlines are approaching. I find this feature helpful because, well, I’m more chaotic than I am organized when it comes to the business of it all and it feels good to know that someone is paying attention if I’m focused on the more creative aspects of filmmaking.
Finally, LegalZoom has an extensive library of legal documents available for free for those who register an LLC with them. You can buy these templates even if you don’t register an LLC with them, so I highly recommend checking that library out. They have appearance releases, location releases, artwork/submission releases, performance releases… and a whole host of other documents that are available for your use.
Now, I’d be remiss if I didn’t mention the cost associated with registering an LLC with LegalZoom. Recently I registered an LLC for a film and the final cost of registering an LLC with LegalZoom was $442.94. In addition to the registration fees, there is an $800 minimum franchise tax in California for LLCs, meaning that each year the LLC exists it is required to pay $800 in taxes even if it did not generate any revenues. This cost is prohibitive for filmmakers who intend to release their projects for free — I totally understand that — and that’s why this is the first project I’ve registered an LLC for. But, if you plan to raise money like I do, and/or if you plan to sell the project like I do, registering an LLC is a requirement.
That said, I feel very good about registering with LegalZoom because their cost is low, and yet their value is high.
Want to support my blog? Use my Amazon Affiliate link to give me a small commission (a few pennies for every dollar you spend) on any items you purchase at no added cost to you!