September 25, 2014 at 3:04PM, Edited September 25, 10:37PM

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PRODUCTION COMPANY VS INDEPENDENT CONTRACTOR VS LLC

I have been working on various types of film projects for roughly the past 5 years "professionally". I use the term professionally lightly because I'm still not convinced I have worked on enough legitimately professional sets to say that.

The most confusing part of the entire process has been the confusing and conflicting advice on starting a production company or being a freelancer. I attended film school briefly and then left to work for a small "production company" in the city to gain more professional experience and in hopes to narrow down what direction I really wanted to take. I realized along the way that the reason this is such a confusing decision for many film students and freelancers I'm associated with is because everyone seems to have their own opinions, misconceptions, and advice on what starting a production company actually is. I witness on a regular basis filmmakers and videographers making quite a lot of mistakes before they figure this all out on their own. As someone who has attempted the research to get simple answers, there really isn't a lot out there on this subject that feels actually relevant.

Some people will say to start an LLC and that's all you need. Some people will create a logo to a name and call it a production company without any business knowledge or plans what so ever. Some people will advise you to stay an independent contractor and stay away from LLCs unless you're planning to buy "x" amount of equipment/gear. Some people will advise you to use your name and nothing else to stay as open as possible for every opportunity. Also attached to this topic, the ten thousand different opinions on handling your taxes depending on which one of these routes you choose.

I personally, after 5 years, have realized it did a lot of damage to the jobs/sets/clients I was offered to be attached to a "production company" name. For me, it held me back because it was assumed I was only willing to work underneath that company name and that I wasn't open to other people's projects or other companies projects. Even though I feel I've learned that much, I still have a million unanswered questions.

In conclusion, I feel there just isn't enough information and advice out there on this topic for those starting out and making these decisions and it leads to a lot of taking stabs in the dark, opportunities lost, and wasted money spent to figure it out.

Is there anyone else in this struggle? Or better yet, anyone with some simple advice to pass on in terms of researching these decisions?

4 Comments

The #1 reason to organize as an LLC, as an individual, is for legal protection -- a single-member LLC is a pass-through entity for tax purposes. By legal protection I mean, if something goes wrong with your business activities, your liability is limited to your related assets -- for example, you couldn't lose a personal asset, like your house, in a lawsuit against your LLC.

I think you're getting some bad advice, because I'm not sure why organizing as an LLC (a lot of people call it incorporating but an LLC is not a corporation) would PREVENT you from taking any opportunity that comes your way. A lot of freelancers have an LLC, and that really shouldn't hurt you in a job market -- a lot of the time the LLC name doesn't even need to enter the conversation until someone needs your tax info. So from a networking standpoint I'm not sure why that would ever be a hindrance.

While LLCs have some expenses associated with setting them up -- in the case of New York, the antiquated publishing requirement is more costly than the actual formation of the LLC -- they don't add a ton of extra administrative paperwork come tax time because they are pass-through entities. You can get fancier with S-corps and C-corps and try to play games with your fiscal year and incorporating in other states and the like in order to save some money on your taxes, but with corporations you are generally going to need to hold shareholder meetings and take minutes and incur additional administrative hassles. An LLC is a more flexible entity that leaves you open to pretty easily changing things down the road if you need to.

All of that said, I'm not a lawyer or an accountant, so YMMV, but hope that was helpful in some way!

September 25, 2014 at 10:54PM

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Ryan Koo
Founder
Writer/Director

I definitely agree I have received bad advice.

However, let me clarify.

It wasn't the LLC decision that led me to negative networking, the choice of "branding" with a "production company name" is what became negative networking.

For example, it is pretty common among students in film school to form small partnerships with other students and tend to do many projects together. It is also common for that to spur into a "production company name" that they start attaching to all of the projects they do together as a team. I myself chose to go that route twice with others and execute projects as a team under a branded name which developed more negativity than positive exposure.

The other production companies and teams in the area overlooked all of us when searching for crew hire because they assumed we all only worked together and under that brand name.

If I was to give any counsel to students on the verge of graduating film school or even those out there planning on making a few films, it would be not to brand yourself with a production company name rather than just using your name.

September 26, 2014 at 1:25PM

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Keagan Anfuso
Director / Editor
90

Whilst building up the reputation of a brand, never forget that the reputations of the people running it (you!) are just as important. Don't neglect the fact that brand-aside, you are still very much your own person, with a reputation to upkeep.

I'd say there are great benefits to having both concurrently, but you can be equally as successful, if not more, with just one of each.

September 26, 2014 at 3:36PM

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Basil Yeo
Director of Photography
348

I'm with our founder - having the LLC is very manageable and does allow the security of working projects without losing your personal assets in a court of law. I've had no problems as a single-member LLC, and I do think it's important in such circumstances to build a brand as yourself and work out the logistics with other companies and a W9.

September 29, 2014 at 11:08PM

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