Highlights
- Production payroll has unique complexities: It demands expertise in union regulations, multi-state tax compliance, and handling residuals.
- Using production-specific payroll software and partnering with experienced professionals, like ABS Payroll, can automate tasks, minimize errors, and keep your production compliant. Contact us to learn more.
Production payroll keeps the film industry running. However, unlike traditional payroll, it involves additional challenges, such as dealing with union regulations, overtime penalties, short-term contracts, and multi-state tax compliance — all, while ensuring that every cast and crew member is paid accurately and on time.
This article helps you navigate this process and offers insights into best practices for staying compliant and efficient.
Let’s get started!
What is Production Payroll and How It Differs from Traditional Payroll?
Production payroll involves managing the compensation and financial obligations for the cast and crew working on a film project.
It involves a range of tasks, such as;
- Accurately classifying employees
- Collecting and processing timecards
- Calculating wages and hours worked
- Withholding and filing taxes
- Ensuring compliance with labor laws and regulations.
The entertainment industry, however, presents characteristics that make payroll processing more complex than that of businesses with full-time employees and consistent pay structures:
Production payroll needs to take into account union-mandated rates, overtime rules, and special provisions like meal penalties and turnaround times. In terms of compliance, you must adhere to union and guild agreements, such as those set by SAG-AFTRA, IATSE, and the DGA, each with its own set of rules governing wages, benefits, and working conditions.
Since film and television projects often shoot in multiple locations, payroll must account for multi-state tax regulations, ensuring proper withholdings based on where work is performed.
Additionally, production payroll must handle residuals and royalties—payments owed to performers, writers, and directors when a project is re-aired or distributed in new formats.
With so many moving parts, production payroll requires specialized knowledge and expertise to ensure compliance and avoid costly mistakes.
Key Stages of Production Payroll
1. Collect Documentation and Classify Cast and Crew Members
When onboarding new cast and crew members, make sure to request the following documentation to stay compliant with all applicable privacy laws and regulations:
- I-9 forms – Employment Eligibility Verification
- W-4 forms – Employee’s Withholding Certificate
- State tax withholding forms (if applicable)
- Direct deposit authorization
- Union membership forms
- Contract or deal memo
- Personal information
Accurately classifying workers as employees or independent contractors has crucial legal implications for your production. Misclassification can lead to hefty fines, back taxes, and even legal action.
To determine the correct classification, you need to consider a series of factors, including the level of control over a worker’s activities.
2. Collect and Process Timecards
When you have a large cast and crew working on different schedules and locations, manually collecting and managing timecards can be a daunting task, not to mention if you have to track different pay rates and overtime calculations. Film productions often involve a mix of union and non-union workers, each with their own set of rules and regulations regarding pay rates, overtime, and other compensation factors.
So, what’s the best approach? Working with specialized payroll services, such as ABS payroll, can give you access to industry-specific software and expertise, speeding up the process, reducing the risks of errors, and ensuring compliance with labor laws. Specialized solutions often provide advanced timekeeping features, such as geofencing and biometric time tracking.
3. Calculate Work Hours, Wages, and Ensure Compliance
As filmmakers, you must navigate a complex web of federal, state, and local laws.
The Fair Labor Standards Act (FLSA), for example, establishes standards for minimum wage, overtime pay, recordkeeping, and child labor laws. In the context of film production, you need to accurately track the working hours of all employees, including those classified as non-exempt (hourly workers) and exempt (salaried workers). Non-exempt employees must be paid overtime for any hours worked beyond the standard workweek, typically defined as more than 40 hours per week.
Once the work hours are recorded, you must correctly calculate wages based on the employee’s classification (exempt or non-exempt), pay rate, and any applicable overtime or premium pay rates. Production accounting software like ABS enables you to automate these calculations, ensuring accuracy and compliance with labor laws.
Additionally, you should be aware of any union agreements or collective bargaining agreements that may impact wage rates, working conditions, and other employment terms for your cast and crew members. Consulting with experienced payroll professionals can help you reduce the risk of non-compliance.
4. Withholding and Filing Taxes
Withholding taxes is a legal obligation for employers, including film productions. It involves deducting a portion of an employee’s wages to cover their income tax liability. The amount withheld depends on factors such as the employee’s filing status, number of allowances claimed, and the applicable tax rates.
Film productions often involve a diverse workforce, including residents and non-residents from different states or countries. This requires understanding tax laws and withholding requirements for each jurisdiction. The employment status of workers, whether classified as employees or independent contractors, also impacts tax obligations.
Simplify your Production Payroll with a Reliable Partner
With so many moving parts, it’s no wonder that production payroll can feel overwhelming. But what if you could delegate the time-consuming administrative tasks and just focus on bringing your creative vision to life?
ABS Payroll’s production accounting software has been designed specifically for the film industry and the unique needs of indie and low-budget productions. This solution streamlines financial operations, automating repetitive tasks (otherwise, highly prone to error), while keeping your production compliant with all applicable regulations. Armed with strong reporting capabilities, it helps you keep track of costs and ensure you stay within your budget.
Your production team needs expert support setting up and processing payroll for your cast and crew? ABS payroll offers a dedicated payroll service that helps you deal with complex payroll rules, manage tax and reporting, and ensure accurate calculations for any kind of production in the entertainment industry.
Contact us today to request a personalized demo of our production accounting software.
