Starting a new television production company...on the side...help!
June 19, 2015 7:12 AM   Subscribe

Myself and two associates are teaming up to create a television production company. We are all very experienced producers and are considered accomplished in the field. However none of us have any business experience. We are taking our time to learn more about the business side of things as we set up what we need to set up. We are all currently working on other projects and will continue to work for other people until we are in a good place to launch. So many questions, but right now, I have identified two areas to tackle:

1) The Partnership. I know we need an agreement, but how formal does it need to be? We've discussed not starting full time until we get a deal (Sell a series to a network), but does that need to be in writing? Is this something that we must have a lawyer draft up? Does it matter if we are in different states?

2) The Company formation. It has been suggested that we form a LLC to get started. This is fine, but I want to have a better idea of what kind of tax implications we will have. I do not anticipate any sort of revenue in the short term, but obviously in the long term. We are all putting in little $$$ but sweat equity to start. We may seek outside investors to help with cash flow to accelerate our growth once we get our first deal/product going. How does that change things?

I'd love any suggestions or war stories from you all. Tips on websites, books, podcasts, etc would also be very appreciated. Thanks!
posted by anonymous to Work & Money (4 answers total)
 
I think you need a partnership agreement before you even start pitching to networks. I would suggest an LLC, and getting a lawyer, a corporate bank account and all the rest of it. If you did sell something, you don't want to be scrambling around trying to get your internal affairs sorted at the same time as being in production and trying to hit your deliverable deadlines. You might also think about adding someone with a business background to your team, or at least as a consultant.
posted by Ideefixe at 9:22 AM on June 19, 2015


Well, I don't know anything about the producing side of it. I have started a one-person LLC and a two-person LLC. The one useful thing I know, which you may know already, is that the IRS doesn't consider LLCs to exist for tax purposes. Their revenues and expenses and so on pass straight through to the owners. So a one-person LLC would be treated as a sole proprietorship, while an LLC like yours with more than one member would be taxed as a partnership.

I suspect in a case like yours, where there will be several partners, possibly with diverging interests, and you're talking about bringing in outside investors, a more formal corporate structure will make more sense, though you might start as an LLC now and agree to fold it into a new corporation when you get to that stage.

When forming an LLC, you'll file articles of organization with your state, and most states will require you to also have an operating agreement. Even in states that don't you should damn well have one. This is the formal agreement where you all agree to the answers to the questions you're asking - things like how do we handle the money, who owns how much of the company, etc. It doesn't have to be drafted by an attorney - there are sample templates online you could use - but again, what is starting real simple has the potential to go way south real fast in your business once there are suddenly valuable IP assets to be owned, and money to be apportioned etc. I'd advise having an attorney at least look over what you come up with and look for places where you'll all end up in court and hating each other three years from now.

And I agree you'd be well-served by finding someone with a business background to put on the team.
posted by Naberius at 9:24 AM on June 19, 2015 [1 favorite]


Oh, as for the all living in different states thing - that doesn't really matter. You'll have to pick a state to organize the LLC in. Some people choose the state where they actually are because it's simpler, while others advise shopping around for the most favorable treatment.
Whatever state you pick, you'll need a Registered Agent with a physical address in that state. This is someone to basically be the point of contact for regulatory paperwork, where the papers are served when you get sued, etc. If you live in the state where you filed, this can be you. But it can also be someone else. It can be an attorney's office, and there are services that will do this for you.
So where the individual members live isn't really important. You can pick up and move. The LLC lives in the state where you create it, and as long as you have a registered agent within that state, you're fine.
posted by Naberius at 9:31 AM on June 19, 2015


Money will change everything. Put your intentions down in writing before you do anything else, and revisit them regularly. You don’t want to find yourself in a Hoefler & Frere-Jones situation in the future, even an accidental one where hazy memories make it difficult to remember who agreed to what when. Equal partnerships have their own problems, and you may want to decide on a CEO-figure now and do an unequal split now so it’s easier to determine what to do when things start moving quickly.

I was a junior partner in a design firm for many years, and we did a 60/40 ownership split, which later became a 51/34/15 split after a third partner joined. When I decided to leave, I appreciated the clarity that provided. It was easier on my partners to skip a big debate about who should be in charge, because we had that discussion during calmer times when less was at stake.
posted by migurski at 7:14 PM on June 20, 2015


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