Low Budget Filmmaking and Fun with LLC's

[Matthew Kaplan]

Okay.


GOAL: To shoot a Mini-DV feature within the next year. I'm writing low budget scripts now (one location, maybe a bit more).

BUDGET: Under 5,000. Probably closer to 1,000 dollars. Figured I could rent the DVX-100 for four weekends, for 150 a weekend, plus tape stock.

I think I have a good grasp on most of the production and post production issues, but what concerns me, is the PRE-PRODUCTION.

I'm overly concerned about legal issues and whether to form an LLC or just shoot now and not worry about it. 2 years ago, I never knew or cared about this legal stuff and I wish never learned about it.

FEARS: Getting sued for some reason.

QUESTIONS:

INSURANCE:

Besides a camera, actors, and a good script, what else do I need? I can get insurance on the equipment I use through the rental house.

Do I need to get other types of insurance for the production?

LLC:

1) Do I need to form an LLC with such a low budget?

I live in NYC with my girlfriend (although there is no proof I live there as of now). I think all the paper trails still lead back to my hometown in MA.

2) My questions is, where do I form the LLC. Nevada and DE are cheapest it seems, but does that mean I have to do other things to be able to do business in NYC or MA. And is making a film count as business.

I think if I shot a film, I would probably go back to MA to do it.

So does that mean I need to register in MA? But I thought MA was one of the places where you can't have 1 person own an LLC.

Can I form the LLC anywhere and film wherever I want?

3) I have a production company name. Let's call it BUNNY FILMS.

Do I make the LLC, Bunny Films, LLC?

I heard you should form a new LLC for each film you do, to keep it totally separate.

In other words my production company is Bunny Films, but the LLC making my current movie would be say Goat Boy Films, LLC.

Is that how it works, or can I just make my production company the LLC?

4) Does that mean I need to in fact make 2 LLC, one for my production company, the other for the one I'm suing on the current film?


I don't understand how people trying to make a movie for 1,000 dollars can spend 5,000 on legal expenses.

I know for facts that lots of filmmakers just ignored it all, broke every rule and made it.

I believe that in real life, my likelihood of being sued is low, but yes it can happen?

5) What is reasonable legal protection as opposed to overkill?

Any tips in the right direction would be great. I've read as many books as I can over the years, but real life experience from fellow filmmakers I feel is the best and most realistic way to go.

[Don Donatello]

nolo press has some books on forming LLC
www.nolo.com

do not take this as legal advice .. just an opinon.
1) depends do you have any assets ?
what do you have that i could get/want?
what kind of RISK is involved for your crew/actors. stunt work ?
seems most doing no budgets do not form a LLC

2) form it in state where you live or where you are temp living. NY is around 200 year, MA 500 .. if you form a LLC you are a buiness.

3) Bunny films could be the LLC and it could make any number of movies. but remember if one of the movies gets sued they are suing bunny films too .. so bunny's assets are all the movies they have made , scripts they own , equipment they own etc.. if you have LLC for each movie then the only asset is the current movie.
also remember you can't hide behind a LLC if you knowingly do something you know you are not suppose to .. like no permits, doing stunts without permits, burning down building without fire dept present etc . so if you set out to break all the rules/laws and figure you will form a LLC so you are not responsible - not going to work.

4) see #3 .. you can have each individual movie be its own LLC then have bunny be a LLC that owns all the other LLC's ... heck lets face it when one gets sued they name everyone that is within 3 degress of separation to it.

most no budgets do not form LLC, get permits, have production insurance ...many are just friends getting together to make a movie for FUN and many homeowners policy will cover it ..however if intention is to make money , advertise for crew/actors and attempt to make a movie that you can sell and/or distribute then home insurance will not cover it unless you get a FLOATER policy that says it will cover it ... check with your home owners insurance company ...

IMO the insurance you do want is workmans comp. if any crew/actor get hurt then workmans comp will cover them for medical and wages ( if you are paying them) . IMO you want a employer -employee relationship with crew/actors. if you are NOT paying them you might consider defferred pay ...

if you are using locations , shooting on street most require $1 million liability insurance. ( 900- 2000 year depending on state, and type of production )

[Matthew Kaplan]

thanks for the reply.

I was wondering about taxes and LLC's.

If I have an LLC for my company name... and then one for each film I do....

does that mean I have to pay taxes on this LLC's forever?

I don't know if the owner of an LLC is just taxed like he would always be or if the LLC adds problems in that respect.

If I make a film using an LLC for 5,000, and it sells, but probably doesn't, what do they tax on that?

nothing?

[John Heskett]

This is how my CPA explained it to me - (this means I am not the expert),
All income above cost is both taxed by your State and Federal but also be Social Security. Social Security tax for self-employed is 15%.

Now that is why I went ahead and incorporated. In the Inc., I can draw a salary, which is taxable all around but also I can take Dividends which does not get taxed by Social Security. That 15% more in my pocket spoke loudly to me. The cost to form an LLC or Incorporate was the same in my case.

Now this was my CPA's advice to me and your circumstances may be different.