Two things in life are guaranteed: death and taxes.
Whoa there! No need to get all dark about this. Taxes aren’t that scary. Neither is setting up an LLC. Don’t get too intimidated by all this!
Here are the three steps you'll need to take to legitimately get your movie off the ground:
1. Setting Up An LLC.
The first step you should take is to set up an LLC for your film. This will be the foundation you’ll build your movie house on (legally and financially).
An LLC is short for Limited Liability Company. It gives you an entity to operate business through that is not your personal bank account or personal liability.
Note: you are still liable for the actions of your business as the owner.
Most states allow you to register an LLC online now. Follow the instructions exactly and you won’t have much trouble. You don’t need to hire a lawyer yet, but if you feel REALLY uncomfortable with all this, then go for it.
The cost will vary depending on state, but here in Pennsylvania it costs around $150 depending on what other forms you submit.
Part of this will require you to name your company. Don’t worry too much about the trademark, but follow your state's rules that should be clearly laid out when signing up for the LLC.
DO NOT DWELL. This name IS NOT your production company name. It’s ONLY the legal name for the film. Nobody is going to see this other than your investors and the people you pay.
Part of the LLC formation is making an Articles of Incorporation and/or Operators Agreement. This is a legal document, but don’t let that scare you. You can use a template like this one to start out. Start super basic; you will return to this later on to add the complicated stuff.
The difference between Articles of Incorporation and an Operators Agreement can be hard to understand at first. Here is an really good explanation of the two. Depending on your state you may or may not need Articles of Incorporation but you will ALWAYS need an Operators Agreement.
2. Applying for Employer Tax Identification Number
Once you’ve set up an LLC you’re going to have to wait awhile, but what you should do next is apply for an Employer Identification Number (EIN) from the big bad IRS.
It’s really simple actually. Go to the IRS website and you can do it all online.
3. Setting Up Bank Accounts
Once you’ve done all that and you get your paperwork for the LLC. it will be time to set up a bank account. You NEED a separate bank account for your film.
Most banks don’t charge anything for these accounts, but many require a minimum balance. They make their money from the additional services like checks.
Using a bank you're familiar with is a good idea. You’ll feel better about asking questions and you probably will have questions at some point.
Make sure you have everyone there with you that should have access to the account administration if possible; it’s really annoying to try and add people later.
You should set up two different accounts. Have one labeled checking and the other labeled escrow.
There is another post coming soon about what an escrow account and how it can help you finance your film. Subscribe to our content mailing list to be notified.
Take a deep breath.
That’s all done for now.
Congratulate yourself on laying a strong foundation on top of which you can build your film.
The next step will be challenging. If you like telling people about your project, you'll love this! Now is the time to go out and pull together some funding for development and preproduction.