I want to start two short film projects but I don't know what equipment I need to get a good professional quality result. I've been saving some money so I hope budget is not a problem. Also, what's most commonly used to record audio in this kind of project? I want to get the sound from two people talking with the camera placed far away from them. I'm trying to make an independent production company so I'm seeing this as an investment. The cheaper the better though.
For videography, the best bang for your buck is, hands down, going to be an entry level DSLR and a decent lens. For audio, if your budget can allow for it, I suggest getting a stand alone multi-track recorder. The Zoom H4n is a particularly popular model with videographers for its low price and decent (though not superb) audio quality.
There are far better options and values as you get more skill in the field, however for starting out, you probably don't want to invest too much until you get some experience under your belt. It's easy to spend upwards of $10 to $15 grand on a nice videography setup as you get more and more professional, but a $1500-$1700 setup with something like a Canon T4i or Lumix G2 with a moderate level lens and an H4n or similar for recording audio (with some basic shotgun or lavaliere mics) is a decent start.
Also, be sure not to skimp on a tripod. You'll want a solid, sturdy tripod (probably aluminum) with a good fluid tripod head to make sure you can get steady shots. Just a solid tripod alone can run you in to the $350 to $500 range.
If you'll be shooting indoors, you may also need a light kit. A cheap 3 point lighting kit can be had for a couple hundred dollars, though depending on what you intend to shoot, you may be able to get by without this initially.
So overall breakdown I'd recommend starting out is around $500 to $600 on an entry level DSLR, $150 to $300 on a lens (if your DSLR body supports video auto focus, such as the Canon T4i, a stepper motor lens is needed), about $280 for an audio recorder, about $100 to $200 on mics, about $400 on a tripod and optionally about $150-$250 on lights. Altogether, that's about $1600 or $1850 and you should be able to make some pretty solid professional looking stuff.
It does add up quickly, but the good news is that you can improve on the gear incrementally over time once you have the basics. If you do have more than 2 grand to start out with, I'd spend a little bit extra on the lens or the camera body to get better low light performance and better background blur. Better mics or mic boom arms also couldn't hurt and if you do go with lights, light modifiers or more powerful lights is also never a bad investment, though the best place to spend any extra money is going to depend on the kind of shooting you are planning on doing.
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Zoom H4n is a pretty good unit for audio
Clean up your recordings (if req'd) in Adobe Audition using the Noise Print feature and you can remove a lot of extraneous noise.