How to Record Film Production Expense Accounting

As a filmmaker, you might or might not consider yourself a number’s person. Whether you do or not, there’s almost guaranteed to come a point in time in which you’ll find yourself trying to figure out how to record film production expense accounting. Thus, you’re going to have to turn on the numbers side of your brain. Things could get complicated. Figuring out how to record film production expense accounts is certainly a big deal, and it’s something that every filmmaker needs to understand.

Here’s what you need to do.

Create a Purchase Order Log

The first step to figuring out how to record film production expense accounting is to create a purchase order log. Otherwise known in accounting as a PO log. The purchase order log is the document that tracks payment details that relate to your production.

Your PO log is going to include information regarding who you pay, when you pay them, and how you pay them. You’re also going to notate why you paid this particular individual and from what account they were paid from. 

Separating Logs

Large scale productions will have an accountant that handles the POs and payables. But if you’re just starting out and working on a limited budget? You might have to handle recording the film production expenses and appropriate accounting yourself.

For best results, consider separating your PO Logs based on:

What was paid each day, what needs to be paid, and the voided section that allows you to confirm deposits that are returned or payments that are made.

Film Costs

Once you create your PO log, you’re going to begin tracking your expenses. Figuring out how to record film production expenses can be an accounting nightmare if you’re new to the process.

The idea is to come up with specific allocations for the various types of expenses. And to properly record them in your logs.

You’ll have direct costs, overhead costs, capitalized interest costs, and compensation costs. As well as things like construction, wardrobe, location costs, and other fees.

Direct Costs or Direct Expenses

How you record your expenses is ultimately up to how organized you intend your accounting to be. Generally, you’re going to label most costs as direct costs or direct expenses.

Those associated with producing your film are going to be considered direct expenses. You can include a detailed note in your PO log that dictates what the expense was for exactly and to whom you paid.

Consider Hiring an Accountant

Figuring out how to record film production expense accounting is something that you’ll need to focus a lot of time and effort on, especially if you do not have an accounting background.

Therefore, if you’re new to accounting, you might find it more affordable, and feasible from a time perspective, to consider hiring an accountant to help you out. 

Entertainment industry accountants, or film accountants, with a CPA can help you to properly track, monitor, and adjust spending to maximize revenue for your film production. This is certainly a top consideration for most filmmakers.