How to Legally Structure Your IndieFilm Production Company

​I’m not a lawyer, but I get a fair amount of questions about the legal structure of a Production company and a film.  So I thought I would write a blog about how I’ve learned to structure each individual entity, as well as the benefits and drawbacks of each choice.

Generally, you’ll want to have one legal entity that exists as your production company, and one legal entity for each project you produce.  Generally, your production company will be a general partner in each project, and when each project has run it’s course, the entity will be dissolved.   If you’re producing episodic content, you can probably get by with one entity per season.

Before we get started, I’d like to reiterate that I’m not a lawyer.  You should definitely talk to one before you proceed in forming a business. ​

LLC>LP

The way I was originally taught was that your production company should be a Limited Liability Company (LLC) and your projects should each be Limited Partnerships (LPs.) In this instance, your production company would be the General Partner, and all of your investors would be limited partners.  This structure offers you better creative control, shields the assets of your investor in case something goes wrong. 

​The way that your creative control is protected is that only the general partner can make important decisions regarding running the business.  As such, any important creative decision remains with the general partner.  In exchange for the limited liability protection, your investors are treated as silent partners, and unable to heavily advise on the day to day operations and decision making of the company. ​

​Given that the General Partner is your production company, your personal assets are still protected. 

​However, I will admit that I’m just about the only person I know (aside from the teacher who taught it to me) that favors this structure.  Most producers I know favor the following structure.

LLC>LLC

The Production Company LLC being the general partner of the film’s LLC and all of the investors being considered full partners in the film LLC is the most common structure I’ve seen in my time in California.  The big benefit here is simplicity.  Investors are treated the same way that the general partner is, and everyone benefits from the pass through nature of the entity. 

The assets of your production company are also better protected here is things go awry, but the investors are not forced to be silent.  This can lead to less creative control for the filmmaker, however if you were going to run into this with the film being a Limited Partnership, it likely would have ended just as poorly as it would end in this scenario. 
​

S-Corp/C-Corp

Finally, the other primary way you could structure your film is as a corporation.  Either an S-Corp or a C-Corp.  The primary reason you would do this is to issue lots of shares to potential investors. Practically speaking this would mean more than 10-20 individual investors.  This is relatively unlikely for most filmmakers.   

Corporations also encounter additional accounting challenges, and in many states additional taxation beyond that of an LLC.  Corporations are subject to corporate accounting, and then payroll is generally issued as an individual check.  For an LLC, you can pass your income through to yourself, which makes tax time much easier.  LLCs provide most of the same benefits that you would actually use as a media production company/media project.

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