Limiting Debt and Maximizing Business: Why Form a Loan-Out Company?

By: Tifanie Jodeh, Esq. & Kelmer Messina

When we think of the word “company” we usually imagine huge buildings with thousands of employees running operations that amount to millions of dollars. While this can be one, a company can potentially be formed by one person and even be run from home.

Companies can come in many shapes and forms but, ultimately, a company is a legal entity created with the purpose of conducting business and limiting liability (such as debts and mortgages). A company is a different legal person from its members, meaning their assets and obligations are different from your personally. 

In the case of the Entertainment Industry, it has become customary for actors, producers, directors or any other Industry professional to loan out their creative services through what we call a “loan-out” company because of its many advantages. 

In this article we will examine 3 benefits of going through the work of incorporating a company, even if you do not run a huge operation with little or no employees. These 3 benefits are:

• #1: Forming a company can limit your personal liability. When contracting through a company, the obligations and debts you incur during the course of business become separate from your personal finances. 

• #2: Organization. Having your personal and business matters separate from one another will make it a lot easier for you to do business. This clear separation can benefit you during dealmaking and also makes it a lot easier for money to go to the right place. Payments and liabilities are directed from your Company to partners, employees or independent contractors

• #3: Legitimacy. When working with others in the Entertainment Industry or securing financing, it can give an air of legitimacy and professionalism, ultimately making it easier for them to do business with you. Longevity of your business will make it better for you to secure loans, create good will and build your brand

We can assist you with forming the appropriate corporate entity. It is worth the time to explore your options and find out if it’s the right fit for you and your goals. 

If you have questions concerning this topic, or other areas of entertainment, business or corporate law, please email us at Asst@entlawpartners.com or call us at 310-684-3666 to schedule a free initial consultation. . 

COPYRIGHT; DISCLAIMER: Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs. 

Entertainment Law Partners is a full-service Los Angeles and Miami area based entertainment, business and corporate transactional law firm providing expert counsel in a wide array of business transactions with a focus on corporate, business, entertainment, media and technology industries. 

You are receiving this newsletter because we most likely met you somewhere at an entertainment related function such as a film festival, event, party, networking or we've done business with you. 

For more information about the firm or to stay up -to-date on current issues in the business, visit our site at Entertainment Law Partners or follow us on Facebook, LinkedIn, Instagram or Twitter (@entlawpartners).

When should you work with an Entertainment Attorney?

By:  Tifanie Jodeh, Esq. 

It's best if you have an attorney in your pocket at the very beginning of your project. For example, this may mean hiring a writer to write your script or getting permission to make a screenplay from a book.  The can also be helpful in sourcing your team which includes casting directors, co-producers, directors, talent and the like.  Your team will need contracts and your attorney will be there to lock everyone in to your project. 

Contracts drafted-  A savvy filmmaker or producer knows that everything in the realm of business is smartly done via contracts. Contracts protect both parties. Contracts form the foundation for duties, tasks and responsibilities of all parties involved. When you have everything documented, you are one step ahead in making certain that your production is fully "cleared".   Cleared means that all rights and legalities have been formally executed and that your film is able to acknowledged that you hold all the needed rights to use each aspect of the property.  Cleared rights include trademarks, options, work for hires, name and likeness, copyrights and insurance.  Your entertainment attorney will help guide you in the right direction and make sure that you don't legally impede your production. 

Other items to consider.

Make sure you have a budget that includes items such as script clearance, title clearance, E&O insurance and (sometimes) a bond.   It protects you as a producer and filmmaker, it protects your investors and distributors.  Make sure your attorney sees a first cut of your project.  They may flag possible clearance issues that you did not catch during filming.  For example, a shot of a "McDonald's" cup appears but you failed to call the McDonald's company to get permission to use their trademark.  You and your attorney can work together in obtaining permission or leaving the image on the cutting room floor. 

Additional Resources

Our website, www.entlawpartners.com is full of information and resources.  Our blog contains the latest news, views and updates on entertainment law.  Or, you may give us a call for a free consultation. 

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs. 

Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.