Is a production company necessary?

thefilmgeek

thefilmgeek

I'm a filmmaker myself, just alone currently. I work with all my own equipment, and will be shooting my first feature this summer.

Do I actually need a production company for anything, if I plan on doing all the work myself, and distributing the film myself?

What actual benefits would forming a business entity like a production company afford me?

I know *ZERO* about business, so I'm really not all that interested in forming a production company at this point... so just need a little advice.

Thanks, guys.
 
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No it is not. If it is a large production and you wish to protect your personal assets you should form a production company (Inc. or LLC) for each film. This makes it easy to sell, and it protects all of your other assets, including films, from lawsuits.
 
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indietalk said:
No it is not. If it is a large production and you wish to protect your personal assets you should form a production company (Inc. or LLC) for each film. This makes it easy to sell, and it protects all of your other assets, including films, from lawsuits.
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What do you mean it 'protects' my personal assets, including films?

Sorry if it's a dumb question, I literally know nothing about business.
 
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It's called "limited liability". It's the main reason people incorporate any business, not just film. If someone sues you and a judgement is issued against you that you can't pay or insurance doesn't cover, they can take your house, your car, your films, etc. If your film is incorporated, they can only touch the assets under that corporation.
 
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Sorry again.. what do you mean by an incorporated film? A film that was produced by an LLC production company?

Also, what assets are under a corporation? Mainly just income gotten from anything sold, etc?
 
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Like I said, it is wise to have an incorporation for each film. For small productions I wouldn't worry too much about it, just get the usual production and equipment insurance.
 
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Oh gosh, literally a new LLC for each film?

Would that mean basically if someone sues the 'company' over the film, the only thing they would be able to get out of it are any assets the company itself literally owns, or any profits the company has?

As in, if the company itself rents it's equipment, the only thing someone could sue the film for is whatever profits the company has?
 
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Yes that's what it means. You said you are shooting a feature, right? If the feature is called Two Cars, you could form Two Cars, Inc. This would be solely for this production. If you plan to sell the film, then you just sell the company. If you want to incorporate a blanket production company you can do that as well, but if you use this company for all your films, then all the assets are at risk. If that doesn't bother you than you can do that. You can also skip the incorporation process and do it all as an individual. It's up to you, your budget, and what you want to protect. I am no lawyer this is just discussion.
 
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Ah, hm.

If someone were to sue the LLC for a copyright infringement over a film it produced, the only legal action could be taken against LLC profits?

I just don't really know how far the protection of an LLC reaches.
 
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Correct. For example, if you sue a fast food chain for 20 million dollars, and a judgement is issued against them, the CEO's house and other companies are not at risk. However if they cannot afford this judgement, their restaurants, properties, etc. are at risk.
 
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With the way people like to sling around lawsuits these days, it sounds like the smart money would be to go ahead and form an LLC for my feature film.

Let's say for whatever reason someone decided to sue my production company over copyright infringement over a film produced by it. Then, say my production company makes negative income, so it actually has no assets or money to fork over. If a judgement is issued, what actually happens? Anything at all?

What if the company itself dissolved? What happens to the judgement or lawsuits against the company for the infringement?
 
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I know *ZERO* about business,
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You shouldn't even THINK about doing a project yourself until you know what you're up against. You should read the Insider's Guide to Releasing Independent Movies by Stacy Parks.

Let's say for whatever reason someone decided to sue my production company over copyright infringement over a film produced by it. Then, say my production company makes negative income, so it actually has no assets or money to fork over. If a judgment is issued, what actually happens? Anything at all?

What if the company itself dissolved? What happens to the judgment or lawsuits against the company for the infringement?
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As an officer of a Corp you are expected to do things legally or you could be held personally liable whether or not the company is still in tact. Of course there's a gray area of copyright law sometimes. If you took the proper steps and sought legal advise over a decision to use something in a movie that got approval from a lawyer but later drew a lawsuit then I don't think you could be sued personally.

You can't do a "fraudulent transfer of assets" in the middle of a lawsuit (example: sell the movie to yourself for $1.00 after a suit has been filed).
 
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