4.3: The Business of Filmmaking

Be Professional

Yes, filmmaking is a craft and an art. It is also a business. There are advantages to being a business. First consider yourself a business owner. The moves you make should be professional ones. You need to budget your expenses, find professionals to help you, study, purchase or rent the right equipment, and maybe try to earn some income for future projects. You need to market your current project and find investors for future ones. Take yourself seriously and you will attract serious filmmakers.

If you take a job for a client, you should be paid a wage comparable to your skill set(s). If you pay workers for shooting, editing and crewing your project, you should pay them for their skill set(s). Even if you only feed your crew lunch, keep track of that expense. If you receive grants, win money or camera equipment from film festivals, that is income and will all be reflected in your tax returns.

Be Legal

There is a tendency to skip the legal requirements surrounding your film company. There are really good reasons to get a business license however. The city you live in will issue you a permit which will need to be renewed every year. This is not expensive. In my community the initial registration fee was under $100 and the yearly fee is under $70, as long as the gross income (money you make before any deductions for expenses) from the business is under $50,000. Your community will have a different set of fees, so do some research.

A license will allow you to deduct expenses from filmmaking and to write off the cost of your tools, equipment, and expenses (like gasoline as you go from home to set) against the income. If your city discovers that you lack a proper license, you may get fined, have to register for the permit, and pay the back fees anyway. Consult a CPA or tax attorney for specific rules in your community - each city and state will handle tax rules differently.

Check with your city about how to apply for a license. Many cities allow you to do it online. There are categories for different businesses. Find the one which closely matches "Motion Picture Production".

Account for Expenses

When you complete a yearly tax return, you will need to have a clear idea of your profit and expenses. This can be as simple as keeping a monthly list on paper, or an Excel or Word document. Keep evidence of your profits (as invoices) and expenses (as receipts for purchases or statements from utilities) in case you are audited. Here is a partial list of possible expenses:

• Travel, fuel and parking costs to and from work
• Office costs, stationery, phone bills, office rent
• Equipment, hardware, rent or purchases
• Clothing expenses, any specialist clothing
• Advertising and Marketing, website costs
• Training courses related to your business
• Work from home expenses
• Business and filmmaking software
• Crew and cast salaries

You can deduct your expenses from your income from production work. This will lower your tax liability.

Your Tax Return

When you are self-employed you only need to complete a tax return once a year. If you have a different job and freelance video work, everything you earn from both will be counted as your income for the year.

Usually your tax year will be the calender year from January 1st to December 31st. For each year you need to complete your tax return as part of your regular taxes by the 15th of April. Your state may allow an extension to this deadline - you will need to research the rules in your area. You have a lot of time to file your tax return, but if you fail to do this, there will be penalties.

Since you are the proprietor of your film company there is no automatic withholding of income. Try keeping aside at least 20% of any profits from film jobs. This is the simplest way to make sure you can afford to pay your tax.

If all this sounds too complicated you could always hire an accountant to do this for you. Taxes do not have to be complicated or stressful. Make this process as easy as possible, by taking the time every month to calculate your profits and expenses in advance.

Invoices

When you complete a job, you will need to send off an invoice to get paid.

This is simply a document stating what work you have done, how much you will get paid, and maybe your bank details if you elect a direct deposit. You will get paid typically within 30 days of sending your invoice; however, some people or companies pay much later. Therefore you should negotiate payment terms before you start work.

An invoice is a single page long and must contain the following basic information.

• The word ‘Invoice’
• The date of the invoice
• Your employer's name, address, and contact information
• Your name, address, and contact information
• A brief description of the work you have done, including date(s)
• The total amount you are charging, and how you should receive the payment (i.e. check to mailing address, Direct deposit details)
• Payment terms (e.g. within 30 days)
• Payment Penalty statement (i.e. Due and payable upon receipt. A service fee of 1.5% monthly will be added to all unpaid accounts 30 days from due date)

Basic Invoice

Here is a simple invoice I made from a template in Microsoft Word:

Figure \(\PageIndex{1}\): Simple Invoice (CC-BY Steve Shlisky; Download the Sample Invoice).

Branding

Branding is one way to show that your film company exists and looks professional. You should think about designing a logo, having a company name and creating a website or a Social Media page. You will want to create a positive impression of the kinds of work you provide, such as, filming weddings, or just making films for an audience. You will want to promote or market your product so clients or investors can find you.

Thinking about Branding:

• What is the unique persona you want to promote. You might be the low budget alternative to big crew productions. A "Dirt Cheap Videos" company name promotes that idea and would be appealing to some customers. Maybe you only want to do music videos or science documentaries. Your brand may suggest the kinds of projects you will take on.
• Brands add a sense of professionalism in your ability. Brands often bring first impressions to a client. It may be the first thing people see before they meet you.
• If a brand icon looks clean and appealing, it will color a client's first impression of you. Since you are in a visual medium, a pleasant visual avatar only helps.
• A catchy brand will make it easier to remember your name.
• Since you and your brand are different entities, you can promote the brand any way you want. You might be many things to different people (a daughter, father, friend, lover). Your production brand only concerns filmmaking.