For anyone involved in the film industry, especially serious filmmakers, the likely dream is to have their own production or film company set up. Having a company means it’s easier to do and focus on business. Setting up your production company has its benefits but it also has its pitfalls. Let’s take a quick breakdown of the pros and cons of creating your own production company in this post.
Before starting, it’s crucial to seek proper legal advice. Speak with a licensed tax and legal professional where you are based. You need to have solid, legal information when starting out your company or corporation.
Becoming a corporation affords a good degree of legal protection on your part. When you operate as a company, you are less directly exposed to litigation which could arise from your work.
Let’s face it, filmmaking has a lot of potential for litigation. The film set alone could become a dangerous place if you’re not careful. A cast member or crew could get injured and sue the company for assets. If you happen to be an independent operator, your own personal assets could be fair game.
When it comes to Hollywood, the common practice is to set up a different company for each production, this way whenever a lawsuit is filed against one production, it won’t affect the money or profits from other projects. While it won’t prevent someone from suing you personally for damages or negligence when someone gets hurt on set, it’s still best to consider this option.
As for raising money, independent filmmakers often find creative ways to raise funds for their projects. While this is your own discretion, there are a variety of ways to creatively finance production. From equity crowdfunding like what New Dawn Films is doing with their latest project, An Angry Boy; to directly finding sponsors, willing producers or clients as a corporation.
Filling and Knowing Your Taxes
There are different tax requirements for every country and state. One thing to note, if you form a company or corporation, expect to pay higher taxes. It’s also more expensive to file taxes as a corporation or company. Plus, if you happen to live in a country where you are required to file personal taxes then you also need to file this separately from your company.
The flip side is that as a company, you have more potential tax deductions than individuals. Companies are usually taxed on profits instead of their gross income. You see, the government expects companies to reinvest their earnings in their business or equipment. Doing this as an individual will make your tax department suspicious since it’s usually not something designed for individuals to do.
Separating the Budget
One advantage with having your own film production or company is you can keep personal expenses and earnings separate from your business. It’s easy to mix up both work and pleasure expenses. Sometimes this makes life extra difficult during tax season. When you have separate items, money, earnings, bank accounts and credit cards for your company and your personal expenses, it makes things so much simpler.
Presenting your company has a rather different effect on clients and of course, viewers, compared to when presenting yourself as an individual. What’s more, some companies only expect to work with other companies instead of dealing with individuals. At times, they’re simply not designed to deal with individuals so payments can be delayed or worse, it could cost you a job.
The longer your company stands and the more experience you get, it will become an asset in and of itself. A lot of production companies, when established right, can be bought and sold like any asset. Some can be worth millions.
Although it may seem intimidating to create your own production film from scratch, it can be done. And while the start can be a bit rough, once your company is established, it’ll become a valuable asset that will also take your filmmaking to a whole new level.
Read more about how to start your own company and other tips you can follow to become a better filmmaker here.
Also make sure to visit New Dawn Film’s Campaign Page for An Angry Boy and get a chance of bringing the film to life.
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