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Entertainment Payroll and Accounting: "Can't I Just Do It Myself?"

For the independent filmmaker, there are many financial production issues to deal with; much more than any one person on a large production...

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For the independent filmmaker, there are many financial production issues to deal with; much more than any one person on a large production. From handling cost reports to dealing with payroll, there are hundreds of things that need to be managed successfully. The reason of course, is because the independent filmmaker is wearing many hats and needs to perform each job with talent and skill. Although there is great reward in producing a successful small independent film, handling the budget and other financial issues can be very challenging.

Sitting in the Burbank office of the company he founded in 1985, semi-retired CEO of ABS Payroll & Production Accounting Services, Kevin King, is going over a film budget for a production leaving for China. He has just returned from a luncheon with the Executive Producers who will be using the firm for entertainment payroll and accounting services on the project. As he looks over the films multimillion dollar budget, he makes notes with regards to various expenses and costs related to the four month shoot. The company will be sending a production accounting team overseas to watch over the production finances while the project is filming.

"Although this is a larger project" King states, "most of the films we work on are actually much smaller productions. Over the years we've become known as 'The Independent Filmmaker's Choice' because we work on projects that the larger movie payroll companies don't want to deal with. We handle a lot of low budget SAG indie films."

There is Always a Need to Know Where You Stand Financially

King explains: "No matter what size the budget of a show might be, there is always a need to know where you stand financially. This is especially true if you don't have much money to start with and you have investors involved." According to King, keeping a project on budget can only be achieved when you're keeping close track of what you're spending. "Whether your budget is ten thousand dollars or ten million dollars, you need accurate and up-to-date accounting information to base your production decisions on. During production, when things are typically hectic, many producers just put the receipts aside, hope for the best, and total them up at the end of principal photography. By then, they find out that they just spent most of their post-production budget."

"Although most student filmmakers are working on projects that may be related to getting their education in production or finishing course requirements, most of the learning happens when you get out in the real world and start doing it. The financial side is one of the important lessons. Many filmmakers who are on the creative side of the industry; writers, directors, etc. are so focused on just getting the production completed that they sometimes forget that despite all of the creativity, the film industry is still a business and accounting is ultimately the basis for all good business decisions."

"Most investors invest in films for one reason: to get a return on their investment. It's one thing to get a movie made - it's another thing entirely to see it through to distribution and have investors actually see a return on their investment. Investors want to know that their investment dollars are being spent properly and filmmakers want to present the most professional image of themselves to the investors so that their projects will be funded. When you utilize a professional entertainment production accounting firm to watch over your investors' funds (as opposed to a CPA firm that isn't familiar with production), you show the investor that you are experienced and take his investment participation seriously and that you understand your fiduciary responsibility to watch over his investment."

"But how do you consistently make money for your investors on small SAG indie low budget films? By having great production teams and keeping your costs down. At ABS, we've had a lot of our producers do this over the years. By having a good understanding of production cost reports and accurately calculating your estimated financial costs using up-to-date accounting information, producers can keep on top of the finances and avoid potential problems before they occur.

Unlike other large firms in Hollywood that provide only payroll services, ABS is a bit different. ABS focuses on total accounting services for their clients whether on or off production. They act as the "employer of record" taking over the tax liabilities as well as providing the entertainment workers compensation insurance that is legally required on each production.

In addition to providing entertainment payroll, ABS also offers other production related entertainment services including:

• Complete production accounting
• Post production accounting
• Corporate accounting services
• Script breakdown and budgeting

Their Financial Services Entertainment Division provides corporate bookkeeping as well as business management to celebrity and high net-worth entertainment clients.

With larger productions, ABS sends out payroll and production accountants on location or at the offices of the production company. However, their standard business model for independent filmmakers is one that benefits them by utilizing their in-house production accountants and on-line web-based accounting programs. "An experienced production accountant can range anywhere from $2,000 to $3,500 a week in a traditional setting" states King. "That is just too cost prohibitive for the independent filmmaker on a tight budget. But with today's technology, even a small project can still have professional accounting at a fraction of that cost simply by outsourcing the work to experienced production accountants. Our clients save thousands of dollars and still get studio quality reporting."

King, who began his career in the music industry as a tour manager in the 1970's, switched to the film business a few years later, starting off as a payroll accountant with MGM Studios (now Sony) in Culver City. "After many years at MGM, dealing with lots of producers, I came to realize that there was a real need for a firm that the smaller independents could turn to for their accounting and movie payroll needs. Some producer's try using their CPA's for this, but that usually doesn't work out very well since they don't understand production. Your CPA wouldn't know the difference between a dolly grip and an apple box."

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