You often need your investors to help finance the startup of the company as well, so it’s best to wait to form the company until you find an investor.
If you don’t set up some form of a production company, you’re what’s called a sole proprietorship, and don’t have the protection that a production company
may provide. Setting up a corporation or limited liability company gives you
have a little more protection from lawsuits and other headaches. The company
can act as a shield so that, in the event you’re sued, only the assets of
the company — and not your personal assets — are vulnerable. Each situation
is different, so always consult a lawyer about your options and risks.
Being in the right company
You have lots of choices when it comes to the type of company you want to
form, each of which has its own advantages and disadvantages:
1. General partnership
2. Limited partnership
4. Limited liability company (LLC)
5. Joint venture
As you choose the company that best suits your situation, consider these
three main factors:
1. Liability: Who will be responsible in case of a lawsuit or bad debts? You
and the company partners, or just the company?
2. Taxes: What kind of tax structure does the company have? Does the
company pay tax or do the taxes flow through to you and your partner’s
3. Ownership: Who owns the film and any other assets of the company?