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What to Do If Your Project Starts Making Money

So what happens if your project actually makes money? Bet you didn’t see that one coming! In all seriousness, congratulations. The reality is that so many artists are prepared not to make any money that they forget to have some structure in place in case they do. You don’t have to run out and hire Goldman Sachs to be your financial strategist, but a few simple steps can make a big difference when your project makes it rain dollar bills.

Photo: Tim Evanson

You already have an LLC. Good. This will separate yourself from the tax liability of all that revenue you didn’t expect.

At the same time, you can create a calendar to keep track of when you’re supposed to be paid. Even if you signed a contract with a commercial distributor, it’s a good idea to know when they actually need to honor that agreement. The timing language is often something along the lines of “payment will be made 60 days after the end of the first full quarter of exploitation” – and they will exploit the fact that you don’t know what any of that means.

Also, make sure you know when your investors get paid, and who gets paid first. A big advance from a distributor might seem like a nice way to cover all that extra money the project cost, or even just to throw a really kickass party. However, investors will consider that revenue regardless of what you view it as, or even how you spend it. You could wind up indebted to your financiers for the rest of your life in the exact wrong way. On that note, lawyer up.

Make sure you have some kind of financial advisor. Maybe it’s your new best friend the production accountant; maybe it’s your uncle who’s kind of a dick but at least is a certified CPA. Remember, you’re making money at this point, so theoretically you can afford a little more…but be sure it’s someone you trust.

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