I recently had an opportunity to work on a budget project for a new film production studio. It was really interesting to see how much money it takes to make a movie, and how much organization it takes to make sure everything stays in budget.
As a result of increased tax incentives offered by several states to lure film and television projects, the number of independent filmmakers has been steadily growing over the past few years. While these new filmmakers have the skills to create a movie, many of them lack the skills to create a realistic film budget. There are consequences to not having a budget, which include difficulty hiring an experienced production team, and not being able to secure financing for a film. No production team wants to be part of a project that doesn’t have funding in place and no investor wants to invest in a film project that may potentially lose money.
Because so many new filmmakers don’t know how to set up a budget, I am sharing some of the tips I learned.
One of the first things I learned is that a film needs to be insured. This was definitely a surprise to me. The amount of insurance needed depends a lot upon how much it cost to make the film and what is involved in making it. For example, films with a budget over $10 million will need more insurance than a film with a $2 million budget. Also, if a film is using a lot of stunt people and special effects the insurance bond will cost much more.
The next thing I learned is that you need to be educated and up-to-date on current salary rates for union production crews and actors. If you don’t follow salary guidelines you can get into a lot of trouble. If you don’t have the budget for union actors, you can specify “non-union” actors in your casting calls.
Speaking of unions, using a lot of non-union personnel on your film may prevent you from getting film tax incentives. I don’t have a lot of knowledge about these tax incentives, but I have read that many states require that filmmakers need to use a certain number in order to qualify for tax breaks. This is one area that independent filmmakers need to get more knowledgeable about. Many are running to states like Georgia and Louisiana to shoot their films because of the huge tax incentives they offer, not realizing that 8 times out of 10 their film budget will not meet those state’s qualifying guidelines. Not qualifying for tax incentives, can really affect a film budget. This is something to keep in mind if you are shooting an independent film with a non-union production crew and cast.