You’ve made it through all the ‘pre-pre’ stages, and we’re ready to say this is a real project, greenlit and 100% ready to go ahead.
It’s time to really get started.
It’s time to dive into pre-production.
If you read Part 1 of this series, you already know all about the ‘pre-pre’ production stages.
If not, go back and read Part 1 now.
As a refresher: this series will be your all encompassing guide to tax, accounting, bookkeeping and generally managing all things ‘money’.
It’s been written for producers, line producers – or anyone else trying to get a project off the ground – who might have questions about the best way to handle money while making a film.
This part of the series will help you understand
- What you can do yourself and what you might outsource during pre-production
- What an ‘ideal’ production look like from an accounting perspective
- And the big question: do I really need a production accountant?
It’s part guide, part advice and part ‘day in the life’.
Let’s dive in.
Pre-production: week one
From an accounting perspective, the first week of pre-production is all about set up.
It’s time to get systems in place.
We need to make sure every line item in your budget matches up with an item in the cost reporting system. In the first post of the series we spoke about productions using a system like Xero.
Your budget is likely in a spreadsheet in the A-Z budget structure. It’s time to add it to your cost reporting system line-by-line.
It’s a lot of admin and can easily be outsourced to a good bookkeeper. Ideally, that bookkeeper would be aligned with your production account (i.e. work in the production accountant’s business), or would be staying with you through the production. They’ll know how everything operates, and what the budget is, from the very start.
Also, if you haven’t yet given your accountant access to the bank account, this needs to be your number one priority. This is best done early on in pre, as it sometimes takes the banks a little while to process.
Week two
It’s time to start paying people.
Your payroll will need to be rock solid from the get-go. Payroll is a big part of any production, so the sooner you can get into a rhythm the better.
For payroll, you need to collect Tax File Declarations for the team, as well as ensuring that there are contracts in place, and that you have all the right bank details.
This paperwork will start now and continue throughout the production.
This week will be full of admin as these details all get loaded into the payroll system.
And with payroll, comes payroll tax.
Make sure you know exactly who will be preparing the BAS. Is it a tax agent or a production accountant? Any production comes with a high volume of payments. When it comes to BAS time, life will be much easier if,
- You’ve got a great record management system
- You’ve had someone constantly reconciling payments
You need to make sure that you know who that someone is going to be.
Week three and into production
Weeks two to three is also when money starts going out to your suppliers.
This is where a system like Xero really starts to pay for itself. You can attach invoices to transactions in Xero so that – when it comes time to reconcile your accounts or do your audit for the Producer Offset – you’ve got all your records on hand.
You’ll start to prepare – or review – regular cost reports.
The production team will need regular, complete rundowns on exactly what’s been spent, where it’s been spent, and what’s left, in order to make good decisions.
…but more on that in part three.
If you have got to this point without bringing someone on board, you really need to consider bringing a production accountant into the team now.
Because here’s the thing.
A production accountant needs notice.
They are on deck with you every day, throughout the entire production. They are one of the few people that are still part of the core team after the wrap party. They will stick around with you until delivery and, if they also have a tax accounting background, will be there for you as you apply for the Producer Offset.
Basically, your production accountant is going to need to clear their diary.
What’s next?
No matter what stage of production you are at, we can provide advice on what to do next.
We’ve been involved in many productions – big and small. We know exactly how it feels to want to bring a great story to life.
A note on this article
Information provided by the Above the Line Accounting on this website is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice.