Advice needed for film company

filmkid

Hey all, like i said i'm looking for any info you can provide about the formation of a business and subsequent running thereof. Baring in mind I have no previous business experience!

My friend and I are looking to start a company. It is a private limited company that will be officially involved with film production. We will be the two directors and i will fill the role of the secretary.
The company will be registered for VAT so as we can get a return on an personal computer-editing system we wish to purchase.

Now, how it works after this is where I'm stuck. The "business" will not be providing goods or services for at least a year while we work on mastering the new equipment, writing scripts, shooting short practice films. As such I'm going to be maintaining my full time job while still "running" this company.
For now the main reason a registered company matters is the access to various agencies and such that "amateur" people arenot privy too. Also the VAT returns on the ever increasing equipment needs is very appealing.

Anyway in short, I have a business that isnt trading for the next year what forms, tax returns, general meetings (i.e paperwork) will be required throughout this period.

As there is no capital or money in what is the status on the start-up shares i've been told about and will i be able to "hire" others and bring them under the benificient wing of a business WITHOUT having a wages policy or PAYE.

Any help you can give on these issues, or even other points you feel should be mentioned will be really appreciated.

Thanks.

jayok

Hey Filmkid,

If you are going to setup and maintain this business you WILL have paper-work. Namely VAT, PAYE, Corp Tax Returns and End of Year Filing. Expect this to cost in the order of €800 per annum + VAT.

Every Month you'll need to return a P30 (for PAYE/PRSI) even if Zero Amounts
Every Two Months you'll need to return VAT form - even if zero
You'll have to make a Preliminary and Final Corporate Tax return - even if zero
You'll have to file accounts with the CRO - even if zero

There are other misc things you'll need to keep on top of. Running a Ltd., co is no trivial matter as there are serious penalities if things aren't done.

As for the PAYE / PRSI matter of people working for you. If they are "employed" by you then you are required to deduct the appropriate taxes and return to the Collector-General. The only way around this would be if people are going to sub-contract to your Ltd company. In this role people would Invoice you for their services - but you need to be careful here, someone who subcontracts to you 40 hours a week 48 weeks of the year "could" be viewed as an employee, oh it can get so messy.

Either way, I assume you have spoke to an Accountant about this?

madramor

jayok wrote:

Every Month you'll need to return a P30 (for PAYE/PRSI) even if Zero Amounts

You don't have to register from Paye/prsi, even if you did,
1: they send you a form
2: you enter 0 where says amount due
3: sign it
4: stick it in the pre payed envelope

jayok wrote:

Every Two Months you'll need to return VAT form - even if zero

VAT is the same enter the amounts, and the return will be
put in your bank account

jayok wrote:

You'll have to make a Preliminary and Final Corporate Tax return - even if zero

yes

jayok wrote:

You'll have to file accounts with the CRO - even if zero

It will 18 months after you set up the business before you will have to file accounts with the cro.
You will have to file a B1 6 months after you setup company, but its a very simple form.

jayok wrote:

There are other misc things you'll need to keep on top of. Running a Ltd., co is no trivial matter as there are serious penalities if things aren't done.

If you only have 1 shareholder, you can setup as a single member company which menas you are not required to hold AGMs

as directors of the company you will be required to file additional forms each year from 11 or 12, I'm not really sure

check out http://www.boards.ie/vbulletin/showthread.php?t=295069

filmkid

Thanks guys.
I'm meeting an accountant next week, but i wanted to get some more info so i can have some idea what to ask and expect.

Once someone lays out the essentails and the required form filling (and how to do it) i think we can take care of it ourselves. No money in or out, still earning a living from our "real" full time jobs and only one or two VAT refunds on equipment purchases all adds up to a pretty simple streamlined system.




Next year when money and services and the proper business end become involved we'll definetly look to getting a proper book-keeper.

Thanks again for all the info. You would really think the State would have a simple easy to follow web site on all this junk.

I know a single member company is easier but we both want the responsibility and involvement directorship holds (help keep each other in check).
Which leads me ask about the shares. I believe that you can start with only 2 valued at one euro each. Is this two from the possible 10,000 or whatever (thereby the rest are available). Or is the total number 2 and they will be sub-divided in the event of people wishing to buy more shares. Actually i think i can leave all this uber-technical crap to the accountant.

Thanks again. Taxes and accounting is far too much like Mr. O'Briens maths class to me...

betterthanyou

filmkid wrote:

No money in or out, still earning a living from our "real" full time jobs and only one or two VAT refunds on equipment purchases all adds up to a pretty simple streamlined system.

You have to put money into the company in order to buy the equipment, pay contractors.

filmkid wrote:

I know a single member company is easier but we both want the responsibility and involvement directorship holds (help keep each other in check).

Obviously not,
because a single member compnay is still required by law to have 2 directors

filmkid wrote:

Which leads me ask about the shares. I believe that you can start with only 2 valued at one euro each. Is this two from the possible 10,000 or whatever (thereby the rest are available). Or is the total number 2 and they will be sub-divided in the event of people wishing to buy more shares. Actually i think i can leave all this uber-technical crap to the accountant.

you can have as many shares as you like
they you buy the shares from the company,
you can buy 2 shares
the created shares are called the Authorised Share Capital
the 2 shares you take are called the Issued Share Capital
if you pay for them in full (which you will) they are Paid-Up Share Capital

Its really very simple, better to read up first to prevent accountant ripping you off.

Most people use a compnay formations agent rather than an accountant to form a company (google company formations) because most times accountants just farm this work out to them.

A few hours of research could cost you hundreds.

VAT and PAYE/PRSI form are nothing, very very simple.

Bergstrom

I'm in the same game. I'm more interested in the creative side of film-making and I only want to set up a film prod co to have control over the project.

Does Enterprise Ireland give any grants to single member companies that will not be employing any full time staff, apart from themselves and may not be conducting any business for at least a year, when the film might start going into pre-production? Its a risky business!

Is there any such thing as risk-free / start up seed capital, whereby, if your intentions are good, but the whole company/venture goes belly up, that you STILL don't have to repay any money.

And I've heard that some accountants WON'T charge excessive amounts for companies that are returning account with balance sheets with a few pence and sales of zero. So, there is a God after all.

Any advice on above would be appreciated.

Thanks,

Berg

delanest

why not set up a partnership without limited liability, get your VAT number, then once you wish to start trading services then form your limited company.

antoinolachtnai

I would not set up a partnership without taking legal advice (and the legal adviser will tell you not to do it if you can avoid it because you take on full responsibility for debts your partner might incur with or without your permission - it's just too much risk).

I don't exactly see where you think the risk is in getting a shell company and leaving it sitting around for a year. If an investment of 400 quid is your idea of risk, the flicks is the wrong business for you.

Yes, there is such a thing as start-up capital. Take all the money out of your savings and put it into the company. Ask your friends and family who believe in you for an investment and give them shares in return. It's not easy, and it's certainly not problem-free, but it's how these things are generally done.

Bergstrom

http://www.bankofireland.ie/html/gws/business/start_your_own_business/starting_your_business/index.html#doclink4

Bank of Ireland - Business - Start a Business - Starting your Business

What do u guys think about this Business start up loan? I don't particularly like BOI because of the Screw the customer attitude, but even this looks attractive.

But with regards a film production company, I have heard that the banks have been hit badly by Prod Co's going belly up. Now what happens in that situation?

Imagine u get the €200,000 and you tell the bank that you may not be receiving any money from the distributors for at least 3 years. Would they see it as feasible to give u the loan in the first place, seeing that film is a very risky venture, even if the film was successful!

What happens if the whole Co. goes belly up. You spend all the €200k on equipment, wages, travel to markets, phone bills etc and nothing comes back.
The Co. has spent the lot and nothing has come in, the film isn't a hit, the distributors backed out at the last minute etc..

Imagine the worst case scenario. I know it will be a LTD co and they can't sue u personally for the €200k, so is the bank down €200k and they just write it off as a bad debt, or do they send down some heavies to get their money's worth, using u as a punching bag (I'm sure banks have these guys).

I'm just imagining the worst case scenario. I want to set up a film prod co, but I hate BOI and am just wondering if there are any other banks that offer a similar/attractive loan like this?

Thanks,

Bergstrom

antoinolachtnai

I take it you wouldn't be matching the bank's 200k with your own funds. I would be surprised if the bank would give you any money for your business. There is too much risk and not enough return for the bank. So the scenario you mention is unlikely to arise.

Have you discussed this with someone who has actually ever made a film? There are specialized people who fund this sort of preproduction stuff.

Bergstrom

antoinolachtnai wrote:

I take it you wouldn't be matching the bank's 200k with your own funds. I would be surprised if the bank would give you any money for your business. There is too much risk and not enough return for the bank. So the scenario you mention is unlikely to arise.

Have you discussed this with someone who has actually ever made a film? There are specialized people who fund this sort of preproduction stuff.

I contacted the filmboard about this, but they're crap to be honest at this sort of thing i.e advice on business plans etc../ business loans. I know they hand out development loans for films and I've applied for one as a writer as I don't have a Co. set up yet.

I know Anglo Irish Bank have a film division, but thats not for the commercial loans. What I want to do is have a company and then set up a sub company to make the film.

Think of Lucasfilm and the Star wars films. But the film was produced by JAK productions, set up SPECIFICALLY to make the prequels ( a sub co. for tax reasons). Now I know Lucasfilm can survive because of Star wars, but I'm doing this to retain the company name of my initial company.

i.e Bergstrom Productions starts up. But sets up a separate co JUST to make the one film. Then next time, Bergstrom Productions still exists and sets up ANOTHERsup co, just to make another film. U have to start a company every time u want to make a film.

The problem is that any revenue from the sub co will be used to pay back investors of the film. And what will keep the ORIGINAL company going?

I did that film prod course at filmbase but it didn't answer a lot of questions about the business viaility side of things, although the feeling was that u won't make any money at all and just make what u can from the film budget!!

Some business links would be useful here. I've googled Irish seep capital loans etc... but not much turns up. The BES scheme wouldn't apply here. And I looked at the startingabusinessinireland site as well. But if u don't have the money to match he loan, what do u do???

I know this is a long winded post, so apologies.

Bergstrom

Shortnose

(psst... go offshore and start a corp. in like Gibraltar or Malta or Panama... no corp taxes... or very loooowwww....Isle of Man? Jersey Island? Hmmm...)



Meanwhile, perhaps you can hook up with the Aussies. I have a client in Sydney who markets funding programs for the AU gov't. I just helped her find funding for a water tech company in the US with the US Dept. of Interior to the tune of $4M AU. (wouldn't I like a piece of that pie!) If an Aussie company lands funding in the US, the AU gov't will match the funding - due to the 1 year old free trade agreement with the US.

I wonder if Oz has any kind of mutually beneficial program with Ireland???

You never know...you never do!

Plus, you might seek international grants for extra $$ to get on your way.

Still, if you go international, you might be able to wear berets and grow mustaches and don smoking jackets whilst carrying bullhorns and scene clackers.

And btw, my fav movies of all times have come out of Ireland... and the funniest out of Australia. What a match, eh?

Oz & Eire.

PS: You might try doing something 'clever' to raise funds on your own, outside of going to a bank. Either private label a product, presell a 'share' in the first movie as a gimmick, whatever.

Here in the US there was an big article about how the film industry is going to start releasing DVDs on the same day a film opens. (?!!) The movie theaters are sounding the death knell, fearing people will just buy or rent the DVD and stay away from the theaters. The industry is changing like wildfire. Things have to get cheaper (Hollywood actor salaries for one!) as it has simply gone out of control. And if I'm not mistaken, the Dream Team decided to sell out.

Yep... here's an article about it:
http://www.washingtonpost.com/wp-dyn/content/article/2005/12/12/AR2005121201411.html

Also, Spike Lee made his first film by charging everything on credit cards! LOL!