How accountants can help production companies
Having accountants for production companies can make all the difference. Whether you’re a theatre producer, film producer or other production company in the film industry, qualified accountants will help you navigate the financial jungle. Financial management is key to production companies, so your projects stay on budget and tax compliant.
As experienced accountants, we have have industry specific knowledge to help production companies in all sectors. We help with budgeting and payroll, tax compliance and relief opportunities. So you can focus on the creative while staying financially healthy.
Plus we can offer bespoke advice to help your production company grow. We understand the industry challenges and will provide solutions that fit your business. Lets take a look at some of the ways we help productions companies.
Production Accounting
Production accounting is essential for production companies in theatre, film and TV. It’s managing budgets, compliance and using specialist software for cash flow.
Production Accounting Basics
Production accounting tracks the income and expenses of a production company. It keeps each project on budget. Key tasks:
- Budgeting: Estimating costs for production elements like salaries, equipment and locations.
- Financial Reporting: Reports for stakeholders.
- Contract Negotiation: Financial aspects of contracts with suppliers and crew.
- Expense Tracking: Every transaction monitored to avoid overspending.
- Payroll: Salaries calculated and distributed.
- Preparing and managing statutory annual accounts.
Good bookkeeping is key to cash flow and compliance with financial regulations to avoid legal issues. On a film or theatre production accountants work closely with producers, directors and department heads to keep everything financially on track throughout the process.
Production Accounting Software and Tools
Specialist software and technology is key in modern production accounting. Common tools are:
- Budgeting Software: Creates and manages project budgets.
- Accounting Systems: General bookkeeping and financial reporting.
- Payroll Services: Film and TV specific to handle industry payroll needs.
Using these tools effectively will help you streamline tasks, reduce errors and stay compliant. Clear records are essential for audits and reports to investors.
Financial Management for Production Companies
Financial management in production companies requires attention to cash flow, budgeting, strategic planning, financial reporting and financial support. Financial stability is key to successful productions.
Cash Flow and Budgeting
A positive cash flow is essential and accountants can provide financial support to have funds available during production. You need to track income and expenses to have funds available during production. Regular budget updates will help you foresee and fix financial shortfalls. Budgeting will allow you to allocate resources effectively, not to overspend on one area of the production and neglect others.
The significant costs include:
- Cast and Crew Salaries
- Set Design and Construction
- Equipment Rental
- Marketing and Distribution
Tracking these costs will keep your production on budget.
Strategic Planning
Strategic planning is key to long term success. This means setting financial goals and creating a plan to achieve them. You need to forecast revenues and expenses, considering future projects and market changes.
Key elements are:
- Setting Clear Financial Goals
- Risk Management Strategies
- Resource Allocation
- Financial Projections
By planning strategically you can make informed decisions to steer the production company towards profitability.
Financial Reporting and Analysis
Regular financial reporting will give you an insight into the company’s financial health. Accurate reports will allow you to monitor performance and make adjustments. Key reports are profit and loss statements, balance sheets and cash flow statements.
Financial analysis involves:
- Actual vs Budgeted Results
- Trends and Anomalies
- Financial Performance
- Decision Making
By digging deeper you can optimise financial operations and ensure the production company succeeds.
Tax Compliance and Relief
Understanding tax compliance and taking advantage of relief will make a big difference to production companies. Key areas are VAT and corporation tax, film and theatre tax relief schemes and audio-visual expenditure credits.
VAT and Corporation Tax
VAT and corporation tax are key to production companies. Value Added Tax (VAT) is a tax on goods and services, usually 20% and you need to keep accurate VAT records and submit to HM Revenue & Customs (HMRC) on time.
Corporation tax is on profits from business activities. Currently 25% on profits over £250,000. Keeping detailed financial records and understanding allowable expenses will help reduce your tax bill.
Film and Theatre Tax Relief Schemes
Film Tax Relief (FTR) and Theatre Tax Relief (TTR) are big benefits. FTR will give you an extra deduction for production costs or a tax credit.
A film will qualify if it passes the British Film Institute’s Cultural Test. TTR will allow theatre companies to claim 20%-25% relief on qualifying production costs. This can include stages, sets and even scripts as long as costs are directly related to the production.
Audio-Visual Expenditure Credit
The Audio-Visual Expenditure Credit (AVEC) is another relief. Available for high-end TV and animation projects it will give you a tax credit of 20%-25% on qualifying expenditure.
Projects must meet the minimum UK expenditure threshold and pass cultural tests. Expenditure can be on pre-production, principal photography and post-production. Accurate record keeping and timely compliance is key to claiming these benefits.
Production Company Business Advisory
Another area accountants can help production companies is by navigating growth, protect intellectual assets and manage international tax obligations.
Financial Consulting for Growth and Scaling
Business advisory services can help production companies with financial planning for productions and growth. Scaling up requires careful budget planning and cash flow management. You need a clear financial strategy to invest in new projects while maintaining profitability of existing ones. Financial consulting will help you make informed decisions on equipment purchases, staffing and marketing investments. Budget forecasting will help you plan for short term and long term goals.
Intellectual Property and Valuation
Intellectual property (IP) is key to production companies. Valuing your IP, scripts, music and trademarks will help you understand what it’s worth. An accountant will help you with IP protection and licensing so you can maximise your income. UK film and theatre productions often rely on unique IP so valuing it accurately is essential. Protect your rights with patent registrations or copyrights to avoid legal issues. Licence your IP to other companies and increase your revenue streams.
Cross-Border Tax and International Production Guidance
International productions require extensive tax planning. Cross border tax can be complicated due to different regulations. Get guidance to understand tax obligations in different countries, VAT, withholding taxes and tax treaties. Good tax planning will reduce liabilities and ensure compliance. Music industry valuation and international projects require understanding local tax incentives and credits. Navigating international laws will help you take full advantage of any financial incentives offered by overseas markets and reduce overall costs.
Other Accountancy Services for Productions
Production companies often need extra accountancy services beyond bookkeeping and tax filing. These services include managing financial records, compliance with employment laws and securing funding.
Bookkeeping and Annual Accounts
Accurate bookkeeping is vital for production companies. You need to track all expenses, revenues and ensure financial records are up to date. Good bookkeeping will help you prepare the statutory annual accounts which will show the financial health of your company. Annual accounts include the balance sheet, profit and loss statement and cash flow statement. These are required for tax purposes and to attract investors.
Using software for bookkeeping will make this process easier. Software can automate data entry, reporting and compliance.
Payroll Services and Employment Compliance
Payroll services are key to managing payments to employees and freelancers in the film & TV industry. You need to handle salaries, bonuses, deductions and taxes accurately. This includes handling HR tasks such as contracts, benefits and ensuring employment laws are adhered to.
Employment compliance means keeping up with regulations such as minimum wage laws, working hours and reporting requirements. Failure to comply will result in fines and legal issues.
Outsourcing payroll services will manage these complex tasks so you can focus on production and ensure your employees are paid correctly and on time.
Corporate Finance and Funding
Corporate finance is managing your company’s funding and financial strategy which is key to both film and TV production. Getting financiers for your productions is vital. This may mean applying for loans, grants or attracting investors. Good financial planning will ensure you have the funds for short term needs and long term projects.
You may also need to produce detailed budgets and financial projections for each production. This will show the potential profitability and help secure funding. Building relationships with banks and investors is key to having a steady flow of funds.
By using these additional accountancy services your production company can manage its finances, comply with employment laws and have funding for your projects.
Industry Specific Accounting Challenges
Theatre and film production companies face unique accounting challenges. These include the complexities of their creative industries, producer specific needs and keeping up with changing regulations.
The Complexities of the Creative Industries
Creative industry tax reliefs are one of the many things accountants need to manage. To make sure you get the most out of these reliefs requires specialist knowledge. There are many expenses to track from set design to post production.
Cash flow can be unpredictable. This unpredictability makes budgeting difficult. Good forecasting will keep you financially stable.
Producer Specific Needs
Producers have many cost centres to manage including actors, costumes, locations and special effects. Each expense category has different accounting requirements.
You need to produce project specific financial reports. Keeping these records detailed will help with cost control and financial analysis. Finding the right financial structure is key to tax efficiencies.
Keeping Up with Industry Regulations and Changes
Regulations in the creative industries change all the time. Staying current is crucial. This means keeping up to date with tax reliefs for theatre and film.
You may need to change your financial practices to comply with new rules. Get specialist advice to comply. Engage with industry bodies to get the latest regulatory updates.
Client Relations and Personalised Services
Accountants have a key role to play in building relationships with production companies. They offer bespoke services to each production studio and partner with cultural institutions.
Communicating with Creatives
Communication is key. You need to understand the creative vision of the production company. Regular meetings will keep you up to date with budget requirements. Clear and transparent dialogue will build trust.
Using plain English when talking about finances will ensure everyone is on the same page. Email updates and progress reports will keep the production team informed.
Bespoke Services for Different Production Needs
Every production company has different financial needs. You need to shape your services to fit these needs. Understand the financial challenges of theatre and film production companies.
Offer bespoke budgeting and financial planning. Flexible payment plans and expense tracking are useful. Create services that can adapt to each project’s requirements.
Cultural Institution Partnerships
Partnering with cultural institutions like the British Film Institute can be useful. These partnerships will give you access to funding and resources. They also provide networking opportunities with other industry professionals.
Working with institutions gives you credibility. It shows you are committed to the cultural sector. Building these relationships will benefit both your clients and your practice long term.
If you’re looking for a qualified and experienced team of accountants for production companies, get in touch with us today to discuss how we can help. You can also find more information on the services which may be relevant to your agency on our Media Accountants page.
