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As a production accountant, you understand the satisfaction that comes with reviewing a polished, freshly completed budget for a new film or TV project.
A crucial component of that budget that doesn’t typically get a lot of buzz? Fringes—and the process of coding them.
We’ve put together a quick overview on the world of fringes to help jog your memory on the basics of this important budgetary element. Let’s brush up on the fundamentals.
We’ll start with a basic overview of what we mean when we say “fringe.”
Fringes can include multiple types of costs from union-related charges to payroll processing fees.
Payroll taxes—including federal, state, and local—all fall under the umbrella of fringe.
As a quick recap, both employees and employers contribute to taxes for each employee. The amount the employer is responsible for per employee varies based on the employee’s wage, your production location, and other factors.
Payroll taxes include FICA (Federal Insurance Contributions Act), which funds Medicare and Social Security. It also includes FUTA (Federal Unemployment Tax Act), which funds unemployment benefits (only employers contribute to this one).
Not sure how to estimate payroll taxes for your employees? Check out Wrapbook’s handy guide to calculating payroll taxes before you start working on your fringe map.
If you employ union members, you’re legally required to make certain contributions to their health and pension benefit plans. The DGA, SAG-AFTRA, and WGA have Pension & Health Funds to which employers must contribute.
For members of IATSE and Teamsters, the production will need to pay a flat fringe per hour per employee. For IATSE members, you should also plan for the production to pay a percentage of gross wages per employee.
The amount that you’ll need to contribute per union employee may vary based on several factors, including their role, the production location, and the latest contracts.
Keep in mind that union contracts are not fixed. In fact, they tend to change a lot. So be sure to double-check at the beginning of each production that you have the right fringes for each union.
Depending on your production and the laws in your state, your project may offer benefits to non-union members of the team as well. These might include health insurance, paid time off, life and disability insurance, employee assistance programs, and/or retirement contributions. These are all considered fringes.
Worker’s compensation insurance is another fringe. Requirements vary by state, so be sure to check the requirements for your specific situation. Generally, the production will need to pay for this insurance to help protect employees in case of work-related injury or illness.
Payroll processing fees are also fringes. These fees are determined by your payroll company, and there are typically different types of fees for above-the-line and below-the-line employees.
Fringe mapping is the process of identifying what codes you want to apply to what fringes on your budget. Fringes generally have their own account code within a budget and within the Chart of Accounts. The coding is set up to match the budget and has a direct impact on the accounting reports such as the General Ledger, Trial Balance, and Cost Report.
Fringe mapping involves identifying what fringes require specific account and tag coding. Rules can easily be set up to apply specific account, location, production/episode, set, and/or free field coding to the fringe types that need to be isolated. Fringe rules can also be set up to apply codes based on how a worker’s timecard was coded.
Every payroll, purchase order, invoice, and expense—all in one place.
Now that you have an overview, let’s break down the steps involved in developing a fringe map for your production.
Determine which crew members, cast, and staff are subject to fringe benefits and taxes. And yes, for some productions, the answer might be “all of them!” For other productions, it may just be union members and other select individuals.
As always, double-check the requirements for your state and city.
Now that you know how many individuals on your team are subject to fringe, determine the percentage of fringe costs relative to gross payroll.
Fringes can be expressed as percentages or as flat rates.
For example:
It’s not uncommon for fringes to have ceilings that you’ll need to factor in as well. A ceiling is the limit for that particular fringe fee—in other words, once you’ve reached the ceiling amount, you won’t pay any additional amount for that particular fee.
In the first example given above, the Federal Unemployment Tax Act (FUTA) is 6% on the first $7,000 of wages per employee, meaning $7,000 per employee is the ceiling.
Time to capture your fringe calculation work in the budget. Allocate each fringe cost to specific employees, departments, or accounts.
Remember that unlike line items, fringe benefits aren’t listed as a separate budget item. Instead, they are assigned to the appropriate budget entries.
Of course, a completed project budget doesn’t mean the work is done!
Allocate time for accurately tracking and reporting fringe expenses throughout production and post. This is necessary both for maintaining the integrity of your budget and for ensuring compliance with tax laws and union regulations.
Self-audits are an essential best practice for production accountants. Regularly update your records and audit periodically to catch any issues early on. The easiest time to reconcile any errors or unknowns is almost always while in production—it’s a lot harder to deal with mistakes post-wrap!
Along the same lines, be sure to retain all documents related to your fringe and tax benefit costs. Staying organized with your records in the short term will save you and your accounting team time and money in the long term.
All that being said, with an entertainment payroll provider like Wrapbook, the need to manually calculate fringes is no longer mandatory. We take care of those calculations for you, giving you back valuable time and energy for the rest of your production.
So why put all this time and effort into fringe coding?
By understanding and implementing fringe coding, your production accounting team can better manage your costs, minimize financial risks, and ensure a smoother production process. Let’s look a little closer at how fringe mapping supports this.
While the term “fringe” might suggest minimal costs, the actual numbers associated with fringe costs can get pretty significant.
The most obvious benefit of an accurate, thought-out film budget is making sure there’s money to get the project made as intended. But there are other reasons to maintain an airtight budget, including being able to adapt to unforeseen costs and get accurate forecasts on insurance premiums and tax incentive programs.
Good fringe coding practices can help make sure your costs are clearly identified.
As a production accounting professional, you’re aware of the serious ramifications of failing to comply with tax laws. Without strict compliance, you and your production could be in financial and legal trouble, as well as face trouble in the court of public opinion.
Failing to comply with union regulations can bring similarly heavy penalties, including fines, legal actions, increased scrutiny from labor and union officials, and in some cases, work stoppages.
Luckily, properly coding your fringe benefits helps ensure that you and your team stay on top of your compliance monitoring.
Finally, a strong understanding of fringes strengthens your team’s reporting and analysis efficiency.
Any reports or analyses will be more detailed and complete when fringe benefit expenditures are captured with the line items. This will set your production team up for success when it comes to forecasting and financial decision-making. You’ll also minimize the risk for human error if you record and report your production’s fringe expenses in a systematic, structured way.
Not to mention, with detailed fringe coding, pulling reports for potential tax incentives becomes faster and easier. Curious how state incentives work or how they may be of benefit for a future project? Head over to Wrapbook’s Production Incentive Center to learn more.
Fringe mapping is detail-oriented work with a lot of moving parts. Like a lot of production accounting, it’s also a pretty high-stakes process, in which even small mistakes can end up being quite costly.
Luckily, Wrapbook has tools to help!
Use Wrapbook’s payroll estimator to instantly estimate fringes like payroll taxes and worker’s compensation. Just plug in your production’s state and total wages, and you’ll have a detailed breakdown to help guide you in your fringe mapping.
Wrapbook’s Customer Success Managers use Wrapook’s new Fringe Mapping Tool (FMT) to quickly configure client fringe coding according to their specific needs. Like many of Wrapbook’s tools, the FMT streamlines a process that was previously more piecemeal and time-intensive, significantly enhancing accuracy.
Our Customer Success Managers are gathering client feedback to make the FMT even more robust and adaptable in the near future.
When you run a production with Wrapbook, dedicated Customer Success Managers and Production Accounting Solution Consultants will quickly configure your fringe coding to your specific needs. Once configured, fringes are automatically coded on every timecard and expense run through Wrapbook which eliminates the need to manually code fringes and streamlines the payroll review process.
Interested in seeing how we streamline the entire payroll process? Get in touch with our team to learn more!
Now that you’ve got the basics of fringe mapping down, it’s time to apply them to your next budget.
Wrapbook’s experts are here to help with your fringe mapping—and with everything else production payroll and accounting! Learn more about Wrapbook in action chatting with a member of our team about any fringe mapping questions for your project.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
Shaudi is a Seattle-based musician, theatre artist, writer and social media marketing specialist. She holds degrees from Berklee College of Music and the University of Washington School of Drama.
