company Forming an LLC

IvonV

Member
Hello everyone, new forum member here.

I am starting work on a microbudget feature. Most of the financing is committed. This is my 4th feature and in the past I would have formed an LLC specifically for the film being produced. However, our budget is very low and very tight (aren't they always?) and we've encountered an issue in trying to form the LLC.

We intend to shoot in NY and planned to form the LLC there. However, our budget only has $200 for the formation of the LLC. It won't be enough. NY has a requirement to publish notice of formation LLCs. This publishing requirement will add another $500-700 which we do not have.

I have a California corporation already formed as my production company. Any opinion on the downsides of using my production company (it's an S-corp) as the legal entity rather than forming a separate LLC specifically for this film?
 
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directorik

IndieTalk's Resident Guru
Is there a reason you don't want to form an LLC in CA or NV
for this film?

You know the reason for forming a different LLC for each project
so the downsides of using your S-corp is liability.

Welcome to indietalk!
 

IvonV

Member
Is there a reason you don't want to form an LLC in CA or NV
for this film?

You know the reason for forming a different LLC for each project
so the downsides of using your S-corp is liability.

Welcome to indietalk!
The reason I don't want to form in CA is that there will be a $800 per year minimum tax. NV I'm not sure about, but I believe you have to have a local address to serve as agent.

I also think we will have to file a "doing business in NY" if we create an LLC elsewhere, adding more $ we don't have into the mix. This is a cost we'll have to eat if we use my CA corp.

I realize there is liability in whatever we do, but my CA S-corp has protections like an LLC. I'm just wondering if there is any reason to form a separate legal entity for this project when I have a legal entity already I could be using.
 
'I also think we will have to file a "doing business in NY" if we create an LLC elsewhere"'...

It depends on what you're doing. If you try to get state tax credits you'd definitely need a local LLC. If you form in NV you can hire a "registered agent" with a local mailing address; they're like $50 - $100.

What is your S-Corp actually doing on the film? If it's the producing entity you really have no reason to form an LLC, because your LLC could easily have its limited liability pierced and be conflated with the S-Corp anyway. This would definitely be the case if your insurance policy covering the film (if you have one) is under the S-Corp.

If you intend for the LLC to own the rights to film, you could always produce under the S-Corp and then "sell" the film to a new LLC if you're looking for the ownership rights to be managed away from the S-Corp. But again, you'd lose limited liability protection and your film is conflated with the S-Corp's assets (until it's sold - from my understanding; not a lawyer).


EDIT: Having said all that, it looks like LLC are NOT subject to the minimum tax (only Corps are): https://www.ftb.ca.gov/businesses/Structures/Limited-Liability-Company.shtml
 
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directorik

IndieTalk's Resident Guru
I'm just wondering if there is any reason to form a separate legal entity for this project when I have a legal entity already I could be using.
In the past you formed an LLC specifically for the film being produced.
Why did you do that? Wasn't it to deffer liability from your S-corp
to the films LLC?

The reason one establishes a LLC for each project is liability. That
is the answer to your question:
"Any opinion on the downsides of using my production company (it's an S-corp) as the legal entity rather than forming a separate LLC specifically for this film?"
 

IvonV

Member
In the past you formed an LLC specifically for the film being produced.
Why did you do that? Wasn't it to deffer liability from your S-corp
to the films LLC?

The reason one establishes a LLC for each project is liability. That
is the answer to your question:
"Any opinion on the downsides of using my production company (it's an S-corp) as the legal entity rather than forming a separate LLC specifically for this film?"
Thank you directorik, that helps clarify.
 

IvonV

Member
'I also think we will have to file a "doing business in NY" if we create an LLC elsewhere"'...

It depends on what you're doing. If you try to get state tax credits you'd definitely need a local LLC. If you form in NV you can hire a "registered agent" with a local mailing address; they're like $50 - $100.

What is your S-Corp actually doing on the film? If it's the producing entity you really have no reason to form an LLC, because your LLC could easily have its limited liability pierced and be conflated with the S-Corp anyway. This would definitely be the case if your insurance policy covering the film (if you have one) is under the S-Corp.

If you intend for the LLC to own the rights to film, you could always produce under the S-Corp and then "sell" the film to a new LLC if you're looking for the ownership rights to be managed away from the S-Corp. But again, you'd lose limited liability protection and your film is conflated with the S-Corp's assets (until it's sold - from my understanding; not a lawyer).


EDIT: Having said all that, it looks like LLC are NOT subject to the minimum tax (only Corps are): https://www.ftb.ca.gov/businesses/Structures/Limited-Liability-Company.shtml
Thanks Aiden, the LLC would actually be formed in NY and subject to NY taxes, not the CA minimum tax. You raise a good point about ownership and that is where I think it gets a little tricky as I have partners for this particular film.

Given the responses here and some of my own reading, it does make sense to find some budget to form a separate LLC for this project.
 

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