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Forming a limited liability company, or LLC, is essential if you intend to sell shares of your film to equity investors.
In independent filmmaking, structuring your business properly can make the difference between a smooth production and financial complications. John Cooke of Inside Indies explains why forming a limited liability company (LLC) is essential for filmmakers seeking equity investment.
“Forming a limited liability company, or LLC, is essential if you intend to sell shares of your film to equity investors,” Cooke says. An LLC shields both filmmakers and investors from personal liability while providing flexibility in management and taxation. He emphasizes that “it’s crucial for each project to have its own separate LLC to prevent financial entanglement with other ventures, safeguarding the success of individual projects.”
The advantages of establishing an LLC are clear. By separating personal assets from film liabilities, filmmakers can manage contracts, finances, and investments with confidence. As Cooke notes, an LLC also “[facilitates] lending and investments for the film,” offering credibility when approaching potential investors. However, legal guidance is essential throughout this process, since selling shares triggers regulatory obligations with the SEC.
The process of forming an LLC involves several key steps. According to Cooke, these include “choosing a unique name, selecting a registered agent, drafting an operating agreement defining decision-making processes, filing articles of incorporation with the state, obtaining an employer identification number from the IRS, and opening a business bank account while securing necessary licenses or permits.” Each step ensures that the LLC operates smoothly, protects stakeholders, and positions the film for financial success.
Ultimately, creating an LLC is more than a legal formality. It’s a foundational tool for independent filmmakers aiming to secure financing, protect personal assets, and provide a professional structure for their projects.
Protect your investors. Protect yourself. Learn how forming an LLC, paired with payroll support, can keep your film on solid ground.
