Business Structure for Independent Filmmakers
When starting any new venture, the first question an entrepreneur faces is how to organize the business structure; the same goes for independent filmmakers when setting up a production company says Aloe Entertainment.
Generally, for a film production company, you are best advised to set up an entity that will not only divide economic risk, but also allow you to separate your personal finances and responsibilities from those of the company explains Aloe Entertainment.
Although you may choose a sole proprietorship (just you, no special paperwork required to start), it is not generally advisable for a production company as you cannot spread risk or limit potential liability; that is, if your business ends up owing money, you could be held liable from your own personal assets says Aloe Entertainment.
Along the same lines, although a general partnership (you and one or more partners, usually via a partnership agreement) is easy to form because you don't have to file papers with the government, you are not automatically protected from personal liability and can be held responsible for your partner's (or partners') business debts as well explains Aloe Entertainment.
Accordingly, there are three main types of business structures that an independent filmmaker should choose from:
Limited Partnership (LP): An LP is similar to a general partnership in that two or more people agree to form a working group, explains Aloe Entertainment, but in an LP there must be at least one "general partner" who is jointly and severally liable for the LP's debts and liabilities; the rest of the partners can be "limited partners" with limited liability.
Limited Liability Company (LLC): An LLC is owned by its members, who are not personally liable for the LLC's debts and liabilities. Taxation occurs on the individual member level (the same as in a sole proprietorship, general partnership, and S Corp., below). This is an increasingly popular option for film production companies says Aloe Entertainment.
Corporation (S Corp., C Corp.): A corporation is owned by stockholders or shareholders, who are not generally personally liable for the corporation's debts and liabilities explains Aloe Entertainment. An S Corp. can only have 75 stockholders or fewer, while the number of a C Corp.'s stockholders is unlimited, but the latter is subject to "double taxation" (first on the corporation, then on the individual level).
These may not cover the only considerations in your specific situation, however, Aloe Entertainment says it is important that you receive sound legal advice on this point before choosing a business structure for your film making company.
Intellectual Property Rights
"Intellectual property rights" refer to property rights over creations, including screenplays, motion pictures, sound recordings, and more. The types of intellectual property rights most important to independent filmmakers are those concerning copyright, which gives the copyright owner the rights to reproduce, adapt, arrange, perform, display, distribute, or sell copies of the work, among other things explains Aloe Entertainment.
Gaining a copyright over a screenplay is simple in that you only must put the idea into tangible form (typing or writing it will do); however, unless you have registered the copyright with the US Copyright Office. A registered copyright is generally valid for 70 years beyond the life of the author or from the death of the last living author (if there is more than one).
Another note regarding copyright and film making: you should be certain not only to protect your own work, but also to make sure you're not infringing on the copyright of others as you begin a project says Aloe Entertainment.
Other Legal Issues to Consider
Aloe Entertainment says to remember that as an independent filmmaker, you are likely to encounter many other legal issues as well, particularly those regarding contract and employment law, so be sure to consult an experienced attorney to help guide your decisions.
