This is the first of a series of blog posts I will be writing on the topics of production payroll and accounting. I have noticed there isn’t much information on these topics out there that is clear, concise, and all in one place. I hope you find this series informative. Please let me know if there are any topics you would like me to cover in the future.
What is it?
Payroll is a list of a company’s employees and the amount of money they are to be paid. In the entertainment industry, most productions rely on the services of a payroll company. The payroll company is typically listed as the employer of record.
What are the responsibilities of a payroll company?
- Takes care of both above-the-line and below-the-line employee payments
- Provides Workers’ Compensation Insurance
- Pay all appropriate payroll taxes and union benefits
- Report union hours
- Pay residuals
- Issue W-2s
- Provide the accounting system for their clients’ shows and handle trust accounts for child actors
- Signatory to all unions and guilds
- Have labor relations department that’s made available to their clients
- Advise on all matters relating to incentive programs
When do you need it?
A payroll company should be used any time there is a production that deals with the unions. The exception to this would be a SAG short film. Many producers try to get around using payroll due to the payroll fees and the security deposits on top of that. But as you can see, the payroll company responsibilities are a lot for a producer to take on themselves while doing the rest of their job.
Union Security Deposits
Another great thing about payroll companies is that they assist in getting the production’s security deposits back from the unions. That’s right, when budgeting your project, you must also budget for security deposits. Below are what the typical security deposits are for each union.
- IATSE
- Typically 2 weeks worth of employees total salary
- DGA
- 2 weeks worth salary for director’s crew
- SAG
- Usually equal to the sum of the following:
- performers’ estimated wages for the first two weeks of the production
- applicable SAG-AFTRA P&H
- 40%-66% of the estimated payroll
- Usually equal to the sum of the following:
As you can see, those SAG security deposits can get real steep coupled with the payroll security deposit, which usually equals 2 weeks salary for everyone on the show. There is a company I just stumbled upon that helps productions with this dilemma. Bondit provides advances against SAG, DGA, and IATSE deposits to free up cash for production or post-production financing.
How much does payroll cost?
Payroll fees vary depending on the size of your production, your budget, etc. But most reputable payroll companies will tell you that you should negotiate these fees. Traditionally, payroll fees are negotiated at $10 / check for all above-the-line payments and 1/2% fee based on the below-the-line payroll.
So as you can see, payroll is really important. Some producers find ways to do it themselves in order to avoid the payroll fees and deposits. To be honest, I don’t know how they manage all of those responsibilities coupled with producing responsibilities. I would much rather let a company take care of it, budget for the fees, and have my cast/crew happy and paid.