What's the Deal With Entertainment Accounting?

I'm a fan of being entertained and sometimes I enjoy entertaining others. I also love accounting. Why not mix both worlds?

In the world of multi-million and multi-billion dollar project deals, accounting is an extremely important factor to make sure the artists, writers, producers, etc. get paid what they're due, but also to make sure that the media giants are profitable.....the giants that make everything possible for movies to make it to the big screen and for shows to make it to the small screen. I mean, if there's no money in it, why do it, right?

From the outside looking in, most regular people like you and I probably assume that all of the celebrities that we see all over social media and on our screens, both big and small, simply just have it made. But do they really? Maybe if they have a great team of attorneys and CPAs behind them.  A lot of people never stop to think about the relationships between the movie studios and the television networks. Let me tell you why this can be important if you are interested in entertainment. This is particularly true for a star actor of a TV show or a writer or studio head whose residual compensation is based on the profits of one of their major projects. If you're set to get 3 percent of past and future profits on that project based on a contract with the studio, and that studio happens to own a network that airs your project, the accounting can get pretty tricky. If you are a studio, you don't have to pay Why would you want to charge yourself a high dollar amount for the rights to air something? You wouldn't.....especially if that high dollar amount can result in income to a person that you don't particularly like. There are no politics in entertainment though, right? Wrong. In a 1995 Newsweek article, these types of issues and more were pointed out.

Since situations like those mentioned above can become quite volatile, the importance of accountants in film production companies and recording studios can be critical. Some of the functions that accountants can play in those environments include "distributing royalties, calculating, production costs and budgeting for concert tours" according to Monster writer, John Rossheim. For the opportunity to potentially work near their favorite entertainers, lots of "starry-eyed CPAs" have primarily flocked to Southern California, per Rossheim.  If you're a CPA that handles the personal finances of certain celebrities you might do things like help a client purchase an exotic sports car, sell a mansion, handle their investments, estate planning and even get into much more personal things. As a financial advisor, you're privy to so many aspects of a person's life that confidentiality is critical. Considering that fact, most business of this sort is generated by word of mouth according to Evan Bell, a NYC CPA in this article. He and other business managers charge most entertainers anywhere from 3 - 5 percent of their annual income.

Although everyone probably expects to hear of such "glitz and glam" in Los Angeles and New York, there are many states like Georgia, Louisiana, and even Connecticut, Michigan and Texas that are contenders in the race for revenue from film projects. This is primarily due to large tax credits and lower production costs, i.e. wages. According to the Georgia site, there are production incentives up to 30% available for grabs for qualifying productions. The increased demand has caused a shortage in available crew members in Georgia according to the Wall Street Journal. They quoted Georgia governor Nathan Deal saying, " Georgia cannot afford for another state to do to us what we are doing to Hollywood". His solution: create a state-run Georgia Film Academy as a partnership between the state's university and technical college systems. He has a great reason to put funding behind this film academy since the film industry generated an economic impact of $5.1 billion for the state in 2014 according to the Georgia site. They also mentioned that the Governor has even added training incentives to support getting eligible workers up to speed to be able to work on projects that come to the state. 

So if you're on the outside wondering how you can get in on the fun, what do you do? How do you go about entering this market with no real skills or connections? If you're in Georgia, parties interested in anything from crew calls to locations are advised to search the Georgia Sourcebook. If you want to stay informed about what's going on in the Atlanta film scene, check out CinemATL. Organizations such as Women In Film and Television Atlanta (WIFTA) and sites such as Reel Scout and this one that lists current projects in production are also great ones to start with.