Lost Creek - A Film by Colin Adams-Toomey

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Legal Malarky

So...it's the sad truth that not EVERY aspect of a movie is fun to do.  Like the legal stuff, for example.  But it's REALLY necessary.  And kind of confusing.  So I thought I'd share our experiences, if it helps other new filmmakers navigate the thicket!

So...a movie needs money.  But where do you put it?  And it's a lot of money.  That can be scary to handle...so what do you do?

Step one: open an LLC. Every movie does this, from Spielberg to, well, us. An LLC is a Limited Liability Company. They are easy to open, inexpensive, and offer the perfect kind of legal protection for a movie. They are more flexible than a normal corporation, and you can open one with just one person managing it. The main point is the “LL.” Limited Liability. That's the protection. If you produce your movie as an LLC, then for most things you are not liable. In other words, say something goes wrong on the set (god forbid) and someone wants to sue you. You, as producer, should be very careful to hire/work with only people you trust, who are not likely to screw you over. Also, it is your responsibility to create and maintain a safe, happy working environment on set. But still, say that happens. Under an LLC, that person can only sue the company, and not you. Your personal assets are protected. Plus, as an LLC you may open a business account at a bank, which means that the budget you raise will be kept separate from your private money which is a must. You don't want to go down that road.

SO...opening an LLC. Almost anybody can do it, but I don't recommend just anybody does necessarily. There's lots of legal stuff here. If you're like me, that gets confusing fast. And as a first time film producer, you don't want to make dumb beginner mistakes that cost you money or ruin the film. So as I see it, you've got 3 options. Do a TON of research on your own, open it yourself, and hope for the best. Or, happen to have a family friend who is an accountant, financial adviser, or lawyer. Or, hire a lawyer.

That's what we did. Again, everyone's experience is going to be different, but still try to be smart about it. Lawyers can be expensive. I happened to know one from that SAME play where I met Katie, Elizabeth, and Kevin. (Again, keep yourself open to possibilities!) I was friendly with him. So, we spoke to him and he agreed to represent us for a deeply discounted fee. For us, it was worth the money. It meant that we had experienced lawyers who could draft all the necessary documents for us, and answer any legal questions we had. You can't do it on your own, I'm afraid. Or rather, you can, but it's a big risk. Everyone you talk to, every blog you read, will basically end with the same advice: talk to a lawyer. They end that way for a reason.

But basically, a quick run-down of LLC stuff:

Filmmakers generally open one of two kinds: “Single Entity” or “Umbrella.” That's pretty self-explanatory. In Single Entity, the company is formed for the sole purpose of producing a single film. That's why you'll often see something like “Copyright [name of the film], LLC” at the end of the credits. That's why our LLC is called “Lost Creek Productions, LLC.” Umbrella is for if you want a company to manage several films. We went Single Entity, for the purpose of raising money. A good corporate attorney can help advise you how to do that.

Then, you decide who's going to be part of the LLC, and who the manager(s) are. That is somewhere you want to be careful. This is real, so make sure you're careful who comes on board, and what their powers are. No one wants to get involved in a legal battle with their friends.  For us, we started with our LLC consisting of only one manager and member, who was me. The joy of LLCs is that you can change things as you go, if you need to.

The two documents you'll need to organize your LLC are:

Articles of Organization

Mostly to officially outline the existence and purpose of the company, the official address, name of registered agent (the person who accepts paperwork on behalf of the company, in this case again me).  

You'll hear a lot of different opinions on what state is best to open your LLC.  You'll hear Delaware and Nevada thrown around a lot, as they have weird/beneficial tax laws.  Since I technically live in Maryland, our lawyers counseled us to open the LLC in the same state as where the manager (me) lives, so we'd be reporting taxable income from one state only.  But, do your research.  Some states make it WAY easier and cheaper to open an LLC than others (I hear NY is difficult).  That might need to be a factor in your decision.

Operating Agreement

This is where you legally spell out all that stuff I just mentioned: who does what, etc.

And this is where I say again: TALK TO A LAWYER. It's much, MUCH better if you have an experienced attorney help you draft these documents and get you started. And, they will counsel you as to the best and legal ways to obtain the funds you need to produce the film.

Once you're organized and registered, you'll apply for an EIN (Employment ID Number) with the IRS.  This, along with your Articles of Organization, is what you need to go to a bank and open a business account.  You can register to get your EIN online at the IRS website, but we had our lawyers do it.

So, you've got your script, crew, you've opened an LLC and bank account to receive funds, what next?

Stay tuned...

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