Business Structure

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AudiniAudio
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Business Structure

Post by AudiniAudio » Tue May 25, 2021 7:14 pm

Those of you who run your (successful) composition endeavors like a business, how do you structure it? Are you sole proprietorships? Do you have licenses? Which ones? Did you create a fictitious firm name and open a business account at your bank? Are you paying federal, state and local taxes? Do you have insurance for all your stuff? Am I missing anything like EIN numbers or somethung else?

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Re: Business Structure

Post by AudiniAudio » Mon May 31, 2021 5:54 pm

Bumping this baby kuz still no replies. Hello?.....Hello? ....Crickets. Chirp Chirp.

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RPaul
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Re: Business Structure

Post by RPaul » Mon May 31, 2021 10:10 pm

AudiniAudio wrote:
Tue May 25, 2021 7:14 pm
Those of you who run your (successful) composition endeavors like a business, how do you structure it? Are you sole proprietorships? Do you have licenses? Which ones? Did you create a fictitious firm name and open a business account at your bank? Are you paying federal, state and local taxes? Do you have insurance for all your stuff? Am I missing anything like EIN numbers or somethung else?
Saw your "crickets" reply to your own message. I didn't respond to the original question because of the "successful" qualifier. While I've had some minor successes here and there (e.g. a top 5 hit for both radio play and video play in Mongolia, a number of indie/DIY artist cuts of my songs, etc.), I've never managed to actually make a profit. But since no actual successful types have answered, here are my responses:

I just do the sole proprietorship since I'm the only person working on my stuff, and doing an LLC costs money (quite a lot of it here in California). The main reason for doing an LLC would be if you're in a situation where you could stand to get sued and want to protect your personal assets (e.g. your home). This could especially be a consideration if you're touring.

I've done my own licenses, but based on some fairly standard ones that I've encountered over the years. I should note that, though I did do one sync license for the Mongolian video, most of the licenses I've done have been mechanical licenses, both for other artists to record my songs and for me (i.e. as a recording artist) to record co-written songs. I've also done co-publishing deals with my cowriters whose songs I record. Those are specifically geared to letting any of us license the songs in question for non-exclusive uses without having to have the other sign off. I did that mainly due to knowing there can be extreme time pressures in sync uses, and out of concern for cowriters who might not respond in a timely manner (and situations where, even if they would, it might not be fast enough). In practice, I'm the only one exploiting the songs, though. If I remember correctly, my co-publishing deals were originally based on a fairly detailed collaboration agreement that the SGA (Songwriters Guild of America) was putting out at some point.

I do have a publishing company name (Closet Cowboy Music), really only because ASCAP requires a publisher account to collect the publishing share of performance royalties. I did a Fictitious Business Name after first setting that up, but I later found it really wasn't necessary for this purpose (and it was a hassle with fees and having to publicize your information and getting increased spam phone calls), so I haven't done that in years. ASCAP, the MLC, and others will pay me directly, even if, technically, it is for my publishing share. I never did the separate bank account thing for financial reasons, but I do account for music business expenses separately in my financial program so I can easily determine what costs are business-related versus personal. (I also do some IT consulting, and I account for that in the same way, but I don't have any equivalent of my publishing company name in that area.)

Yes, of course, I am paying any relevant taxes. At one point, when I was selling CDs at shows, I had to collect, account for, and pay sales taxes, but I haven't done that in years. While I do have some CDs available still, these days it is purely on a manufacture on demand basis, and I am paid royalties, as opposed to the retail price. And most of my business is either streaming or, occasionally, mechanical licenses from artists who record my songs. Sometimes some production fees, too, but these days it is mostly my own recordings and whatever they get through streaming, downloads, and limited other licensing (e.g. I've gotten a little money from use of one of my songs in a music-for-retail context from some company in Poland via Songtradr).

E.I.N. numbers are something you need if you have employees. I don't, so they aren't applicable.

I don't have any special music business-related insurances. I also don't claim my home studio/office as a business expense because it is not dedicated to business, even if that is mostly what I use it for.

One other thing that may be worth mentioning is that I did develop my own Microsoft Access-based database, initially for managing my song catalog, then expanded for my recording catalog and royalty tracking, mainly to be able to create periodic royalty reports for cowriters. It's not the sort of thing that would be applicable to anyone other than me using it at this point, but it does do the trick for reading in royalty reports from CD Baby, Tunecore, and others, merging that data into a master sales table, matching to songs and cowriters, and preparing individual royalty reports. If you're just writing on your own, this may not be the sort of thing you'd need, but quite a few of my songs are cowritten, so I need to be able to track the usages of songs I've essentially (based on co-publishing deals) licensed (i.e. as a publisher) to myself (i.e. as a record company/recording artist) to be able to report back to collaborators.

I am mainly doing songs (i.e. with lyrics), as opposed to instrumentals, and, at least to date, I really haven't had much in the way of sync, other than a bit through CD Baby and the one I licensed directly.

Rick

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Re: Business Structure

Post by melodea » Tue Jun 01, 2021 2:55 am

I'm working as a self-employed composer and I register all my stuff in my countries PRO. Where ever your compositions are placed, whoever places them has to register them under your name and they also have to properly pay your sync fees etc. I don't think it's necessary to found a company. As far as taxes are concerned the PRO income I'm generating has to be declared for tax purposes in my country. I'm not sure if that answered your question?!
[glow][/glow]Melodea a.k.a. Chris Moser

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Re: Business Structure

Post by AudiniAudio » Tue Jun 01, 2021 5:50 am

Sounds like Sole Proprietorship and pay your taxes is the winner. :D

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