Making Money In New York Theater

Whistleblower is the brainchild of an American director, a British-born actor and an international playwright. While all three of us have wide experience of the entertainment industry as a whole, none of us came to the venture with experience in establishing, funding and running a commercial theater company, so the process has already been a fascinating roller coaster of discovery. We thought this blog would be an ideal way of sharing what we discovered along the way, in case it proves of use to anyone else considering the same route for their artistic outlet.

The title of this instalment – Making Money In New York Theater – is a bit of a misnomer because as we write this, at the beginning of our journey, we haven’t yet made any money!! But we intend to and we believe we will be able to.

That resolve influenced the first choice we had to make when choosing the path of our new foray, onto the New York theater scene. Did we want to be a commercial theater company or a non profit? It seemed to us that the majority of the New York theater companies are non-profit, largely funded by charitable and benevolent donations. (The non profit 501 status allows anyone donating to that company to take advantage of tax breaks on their donation.) While it was very enticing to envisage someone just handing us money to put on performances, and not have to worry about making shows work financially, there were certain disadvantages we could see, not least the length of time it could take to secure that status (around 5 months) and the number of companies who would all potentially be competing for the same pool of benevolent funding in New York City.

We did some number crunching and examined our bank accounts and decided we had enough available cash between us to fund our first few performances. An initial two week run at a decent theater would set us back around 25,000 USD.

We had enough confidence in our own publicity and marketing abilities to sell sufficient tickets and concessions to see a return on that initial investment (the playwright is a veteran journalist and PR and Marketing expert), or at least break even, and enough well-off friends around the world who had expressed an interest in short term investment in the arts if it could offer them a greater return than the present minuscule interest rates offered by financial institutions, and comparatively less risk than the volatile stock and commodities markets.

We decided we would not call on them for the first production – we would prefer to make all our initial mistakes on our own ticket – but we would keep them in reserve for longer runs with big name actors. We had lofty ambitions but we intended to start small. We were keen but not daft.

We realized that not being a non-profit company would bar us from renting certain New York theaters, like 59e59 which will only rent space to theater companies with 501 status.

But after some research we decided there was enough choice remaining, so our decision was made. We would start a commercial theater company as a joint venture between the two American-based members of our triumvirate – actor Jack Gilliat and director Zenon Kruszelnicki. Our resident playwright would contribute content from her base in Asia. The focus would be on provocative, controversial and topical stories. Whistleblower would also seek out good plays from other aspiring playwrights who might not have the resources to stage their own productions – a sort of micro-funding facility in New York theater.

As both of Whistleblower’s American residents wanted the freedom to pursue separate projects as well as joint interests, we decided they would each establish a sole proprietorship, and draw up a joint venture agreement for Whistleblower. Theatre production revenue could then be credited to both sole proprietorships and both partners could deduct business expenses from their personal taxes. (It is also possible to set up an S corporation, which is similar to a sole proprietorship but also allows the business owner to deduct his losses from his income when tax time comes around. We decided to keep things as simple at possible from the outset, knowing we could swap to S corporation status later on if necessary).

Setting up a sole proprietorship was also a huge advantage to Jack, who was working on OPT status after graduating from the Company of the American Academy of Dramatic Arts. He would effectively be self-employed for the entire year, and able to employ others on staff or contract, which would help his chances of getting an O1b or E2 visa at the end of his OPT period. It would also allow him to travel outside the US and have no problems getting back in, and avoid the headache of losing OPT status because he couldn’t find a job in any 90-day period. By personally funding the productions it also made Equity look more favorably on his involvement in any productions as a non-resident alien.

Setting up a sole proprietorship in the US is very simple. If you wish to trade in your own name you need to do little more than declare your income and business expenditure retroactively on your annual tax return. If you wish to name your sole proprietorship, trading in what is deemed a ‘fictitious name’, you must register that name using an X201 form, notarized and submitted to the New York County Clerk’s office with the payment of 100 USD plus 10 USD per certified copy. You can download the form or buy it in the lobby of the courthouse at 60 Centre Street, Manhattan. You then need to submit the form at room 109b in the basement of the courthouse, paying the fee by cash or credit card. You will need to check online or at the court that no one is already using the name you have chosen. That’s it! Sole proprietors get paid in their own name and credit payments to their personal bank accounts.

Jack chose the name Eye of a Fly Productions and Zenon chose Zenon Productions, then Whistleblower was subsequently born as a joint venture brand name, rather than a company in its own right, but not until a whole slew of alternative names had been suggested and discarded over a number of weeks. But that is another story………

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