Is it necessary to start a film company?

If you’re setting out to produce a feature film, and you’re serious about finding film investors and making money with the film, you’re going to probably want to set your film company up as an official, you know, company.

But first, before you start researching all the different directions you can go when starting up your film company as an official entity, let’s make sure you’re even ready to do that, and/or let’s make sure you’ve got what it takes to keep it going and utilize it properly.

Ask yourself the following questions:

1) Am I serious about accepting film investment money from private investors?

2) Are the private investors I’m going after serious investors (as opposed to just close friends and/or family)?

3) Would it be highly impractical to try to make this movie without a legitimate company entity?

4) Am I ready to keep track of a totally separate tax-entity, and keep track of that entity’s profit and loss on a year-in, year-out basis?

If you answered NO to any of those questions, you may want to re-think starting your own film company.

Flat out, it’s best to have a film company on paper, official and ready to go, when making a feature film. But a lot of producers and filmmakers don’t understand the many intricacies, responsibilities, and finances that go into setting up a real, actual, legal company entity.

If you’re taking limited investment funds from a handful of friends, family, or close relatives, you can probably get away with a simple investment contract between you and the investors.

Further, if you’re on a small enough scale budget-wise, you probably don’t need to be worried about major liability issues, such as “Our actor lost both his limbs in a helicopter stunt.” You’ll likely only be dealing with liability on the scale of “Who’s gonna pay for my car windshield now that your camera mount shattered it?”

So be realistic. Don’t go to all the trouble of setting up an actual, legal company entity of any flavor if you’re just making a small film. You’ll end up doing a lot more paperwork and “playing office” than you will raising money for the film, and/or actually, you know, making the film.

That being said, if you’re planning a budget of $50,000 – $1 million or even upwards from there, you’re going to want to set up a company. Investors on that level are simply not going to invest if you don’t have a legitimate business on paper.

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