Do I Need an LLC for My Film Production Company?

Starting a limited liability company (LLC) for your film production company can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a film production company, lawsuits can arise from things like accidentally infringing on a copyrighted script without receiving legal consent, harassment claims, and contract disputes with hired actors and directors.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your film production company seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Should I Start an LLC for a Film Production Company?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Film Production Company

By starting an LLC for your film production company, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Film production companies will benefit from liability protection because of the risk of trademark infringement, property damage, libel, and personal injuries.

Example 1: Your production company is filming in a remote location for a TV show. Unfortunately, the team was unable to complete their shoot and must return at a later date. The locals sue your company for obstructing their business during the time of the shoot. With an LLC structure in place, the company’s personal assets are protected from legal action.

Example 2: A camera operator working on a film production is critically injured due to faulty equipment. Your company is sued for damages and medical costs related to the injury. Limited liability protection ensures that the lawsuit will have no effect on your personal assets.

Example 3: Your film production company is contracted to create a full-length feature film for a studio, but your team cannot deliver within the required timeframe. The studio decides to sue your company for breach of contract. With limited liability protection, your personal assets are protected from legal action, and only the business assets will be held liable.

Example 4: While filming a scene on a city street, a contained fire outbreak gets out of control and ends up destroying a nearby store. The store owner sues your company for the damages.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Film Production Company

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a film production company owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Film production companies rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a dependable LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Film production companies need insurance to protect their investments, ensure the safety of their employees, and provide legal protection. Insurance helps film production companies cover any losses incurred due to accidents, illness, or injury that occur on set or during the production process.

Common Situations Business Insurance May Cover for a Film Production Company

Example 1: Some heavy equipment crashes on the set and lands on a passerby who wandered away from his studio tour. His leg is crushed, and he is rushed to a hospital. If liable for the incident, your company would probably have coverage through general liability insurance for the resulting damages or for a settlement reached.

Example 2: During a dangerous scene featuring a contained fire outbreak, the flames get out of control and end up destroying a small local bookstore. In this case, your business would likely receive coverage for the bookstore’s sustained damages through a general liability policy.

Example 3: Your caterers provide food for the wrap-up party after filming completes. Some actors and studio workers bring their friends and family, but many of them get sick after eating the food. The caterers made a major mistake and provided spoiled food to the party. If held liable for this incident in court, general liability insurance would probably cover some amount of the resulting damages as well as any settlements reached.

Other Types of Coverage Film Production Companies Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all film production companies should obtain:

Commercial Property Insurance

To a film production company, equipment is everything. Your cameras, set pieces, computers, costumes, cosmetic supplies, and more are vital material assets. If these assets are compromised by a force of nature like fire or violent weather, it can spell disaster for an uninsured film production company. Don’t get caught off guard by sudden catastrophes. Commercial property insurance helps to cover losses sustained to owned commercial real estate, equipment, and other supplies that support your business. This policy is non-negotiable for truly serious businesses.

Commercial Auto Insurance

A film production company will require some number of motor vehicles for transportation of equipment and personnel to new locations for shooting. For that matter, your automobiles might make it into a scene when vehicles are called for! Any motor vehicle that drives on public roads is legally required to be insured. Commercial auto insurance will help cover accidents that occur on the road, whether you’re actively filming a car chase or just picking up lunch for the artists and crew.

Workers' Compensation Insurance

Your film production company will thrive on the talent and competence of its employees. Any part-time or full-time employees (not including independent contractors) must be offered workers’ compensation as a matter of law. Any on-the-job accidents that take place are potentially eligible for coverage under a good compensation policy, and it will help your workers to rest easy in the event of injuries sustained in the line of work. Disability and death benefits are also offered through this policy, providing coverage for not only employees but their families as well.

Commercial Umbrella Insurance

You never know what might happen on a given day at work, but this is especially true for workers in a film production company. Commercial umbrella insurance is an add-on policy that supplements maximized insurance, adding a new range of coverage for businesses looking to cover all their bases. Working with such a diverse array of people and equipment, your film production company can’t be too careful about which potential threats it leaves uncovered. Commercial umbrella insurance can be a major safety net for businesses.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance.

Read our Film Production Business Insurance article for more info.

Starting a film production company requires a sizeable capital for workspaces, production gear, employees and crew, marketing materials, and insurance. Workspace costs will depend on the size of the team; production gear is essential for quality filmmaking, while employees' wages can range from $20,000–$100,000 per year.

Visit our How to Start a Film Production Company guide to learn more about the costs of starting and maintaining this business.

Some of the main operating expenses for a film production company are payroll, insurance, office space rental, and travel.

Learn more about running a film production company.

Film production companies make money by producing video content such as movies, TV shows, and commercials and selling it to customers. This could be for a flat rate or a fee per hour, depending on the project.

Learn more about starting a film production company.

Film production companies create, produce, and advertise film projects. These can be full-length movies, television shows, commercials, or shorter videos meant for consumption on platforms like YouTube.

A film production company can potentially have relatively low startup costs, depending on their focus.

Learn more about starting a film production company.