Insurance, Pemits & Licenses

[Rick Shipley]

Hello there everyone,

I saw it mentioned in another post that the producer is in charge of permits and licenses as well as insurance (I put that in there). I wanted to touch on this subject for just a second.

Since Colorado isn't Califonia, is there much casue for obtaining permits and licenses for low budget productions in this state?

My personal experiences in Baltimore and Las Vegas, folks didn't give much hastle about having permits and licenses to shoot. As long as you weren't trying to disrupt traffic, shut down sidewalks and such, nobody questioned you about having permits and licenses for a low budget production. Don't get me wrong, if you have a crew of 15 people or more, a bunch or lights burning up the darkness and loud noises like gunfire booming, I'm sure the police would like to see your permits and licenses for shooting that night. BUT if you have something as minor as, a 5 person crew, 20 mins of shooting time of someone walking into a building or a minor dialogue scene outdoors, I don't think that many people (including the police) take notice.

On the same not about permits and licenses, does anyone know how easy are they to obtain in this state and what is the cost?

I would also like to ask if anyone carries insurance on their productions here?

If so, is there anyone local that handles this and what is the current rate in this state?

Thanks,
Rick

[Nicholas H. Schmid]

Thank you for the advice, Jim and Darlene! I will probably end up starting an LLC that will be shooting year round. If you do happen to run into a decent agent, please let me know! I'll be on the lookout as well and let you know what I find.

[Michael Haskins]

Great info, Darlene.

If you go the LLC route, which is a great route, please don't forget that you do have to treat the LLC and its activities (i.e., the film) as an independent entity separate from yourself or you risk losing your liability separation. What does that mean? For example, the LLC needs to be adequately capitalized to pay for things. If you need to loan the LLC money from your personal funds, document this additional capital investment, draft a promissory note or some other form of actual transfer. Don't pay an LLC debt from your personal funds directly... and vice versa. Another example, be certain that all of your agreements are between whatever provider and the LLC. Now, you will likely be required to sign on as a personal guarantor, but that doesn't mean that you, the individual, is a direct party to any agreement. If you decide to bring another party on board, who is unrelated, you will need to draft an operating agreement for the LLC and you may choose to formally describe the relationship between the parties with regard to investment, management, dissolution, return and right to transfer interest. If you have any investors, you will want to issue subscription agreements and private placement memos to avoid any SEC headaches.

Please remember that the CO Secretary of State doesn't examine your articles of organization and implore some official status as a legal entity. They simply maintain the required filings in a central repository. An adversary can challenge the legitimacy of the entity structure regardless of your certificate of good standing.

Forming an LLC for your film, or your studio, is still a great option despite all that stuff above. Just keep your eyes open and make sure you follow the procedures to maintain your limited liability.

Mike

[Darlene Cypser]

You are correct that the LLC and any other business needs to be respected to maintain the liability limitations. However, it is not necessary to draft a promissory note every time you invest money into your own company when it is a LLC. Transfers from your personal bank account to the business bank account is an adequate trail. You should be keeping receipts for everything in any case.

It is important to avoid signing as a personal guarantor whenever you can. Usually this will be required only when you are doing a bank loan or a lease. If you don't respect your LLC and use its funds for your personal expenses or pull money out of the company when it has outstanding debts then you could possibly become personally liable through the legal process call "piercing the veil."

But most of this is far beyond what the poster above is going to get involved in at this stage. And private placement memorandums and stock issue subscriptions are light years away and aren't required for a small simple friends and family investment in a closely held LLC. When he gets big, if he does, he can consult a lawyer about those details.

Darlene Cypser, Esq.
licensed attorney in Colorado & New York since 1988