Skip to main content

I know this technically isn't the right section (or forum) but it's related and this seems like the best section.

I'm about to release my first record under a new moniker where I'm pretty much doing everything as far as producing and recording the CD and I was curious about the possibility of releasing it under my own label which I'd create, as well. I'm not sure what goes into creating a label, but if I'm not interested in releasing anyone's music but my own I feel like it should be pretty straight forward. Can I just make up a name for my "label" and say that my record is being released on it, putting that name on the CD casing and such itself or is there a lot more to it?


audiokid Wed, 12/07/2011 - 16:49

I think you can do pretty much anything you want until you start involving people. Until you actually start signing people, there is no reason to spend money on legalities. But you may want to be sure you aren't calling yourself something that is already taken.

Why do you want to start your own label?

BobRogers Wed, 12/07/2011 - 17:10

At this point, this is almost exclusively a tax question. (I am NOT an expert.) How are you dealing with taxes for yourself as a musician? US tax laws are different than Canada's, but I think audiokid's answer applies in the US as well. As long as this is just your business you should be able to roll it up into one sole proprietor business with you as the sole owner and fill out a schedule C tax form. All of your income and expenses as a musician, recording studio, CD distributor (label), songwriter, etc. get put into one basket. Now if you have partners, or if your income situation is complicated, you need to see an accountant and/or a lawyer. Even if you are just doing this yourself there may be advantages to forming an S corporation or another type of business organization.

Now if you are releasing your own CD, I don't see any reason to distinguish your recording studio, your label, your band. It's all really one entity, and if people want a copy of the CD they need to contact you. If you don't want to record other people don't form a studio. If you don't want to promote and distribute other people's music don't form a label. Unless you want to expand in the future there is no reason to create what are essentially fictitious entities (other than, perhaps, tax reasons).

dvdhawk Wed, 12/07/2011 - 20:24

Income tax is one issue, sales tax is another. I'm not an expert either, but I agree with Bob - a Schedule C (along with all the requisite paperwork and record keeping) should pretty easily handle the income tax at the Federal, State, and Local levels of a sole proprietorship. Partners do complicate things to the point you would be wise to consult a professional accountant/lawyer - or better yet tax attorney if you can find one in your area.

If you are physically retailing your product (CDs) you should check with your state's Dept. of Revenue to see what paperwork and record keeping they require. Fines and penalties can be steep if they find you've been selling merchandise and not collecting and paying them the sales tax you should have collected.

If you are wholesaling, having a Federal EIN (Employer Identification Number), even if it's just you will be beneficial when dealing with other, larger distributors. Otherwise, it will all come back on your SS# as your tax ID.

If you are just selling via iTunes and other online retailers etc. you may not have to worry about either.

dvdhawk Wed, 12/07/2011 - 23:15

It's not that bad.

If you're going to be recording / publishing other artists and selling the resulting products with all that entails, I don't see any way around jumping through certain hoops to make sure everything is above board and accountable.

Another way to look at audiokid's point. If the OP isn't prepared to do a certain amount of paperwork, it's probably true they are not prepared for anything like starting ANY kind of business. With most states you can find everything that you need to register your business online. Have a look at the forms and see if you're up for it.

If you're doing your own thing, keep it simple until you start making some money.

BobRogers Thu, 12/08/2011 - 03:59

But if you are working with music and getting paid for what you do, you really ARE running your own business. If you aren't doing the paperwork required by the government, or not using that paperwork to your best advantage then you are simply running it badly. (I can give a Ron Swanson rant against intrusive government along with the best, but you have to deal with the situation as it exists.)

dvdhawk Thu, 12/08/2011 - 09:09

I agree 100% Bob.

A word of warning though to someone new at this, once you see all the income and expenses tallied up side by side you are likely to have one of those 'hit-upside-the-head-with-a-brick' moments. The accompanying thought might be something like, "I've been knocking myself out all year... for THIS??!!" You'll find out real quick if you're doing it because you love it, or if you're doing it for the money. And hopefully you can use those numbers to make better decisions and make that thing you love more profitable too.

I know in my case for the last 20+ years, my bottom line at tax time is waaaaay better since I started keeping track of all the allowable expenses and equipment purchases that could be offset against the income - and doing the appropriate paperwork. "The Man" has made it very difficult to play steadily in a band without getting a 1099 at the end of the year, (often with the full amount in my name, even though that money was divided among by as many as 8 band members) I know I didn't put all that money in my pocket, but the burden of proof is on me. So, I have to start applying some minuses to all those things that will look like pure taxable income to the IRS. Is it a royal PITA, as audiokid says? Absolutely. But as Bob aptly points out, if you're out there getting paid for any service - you're running a business whether you realize it or not. And to be perfectly clear, you are on the hook for any income that they can trace back to you.

One of my old bandmates worked for the state auditor general tracking down people who were cheating the welfare system. Even 15 years ago, he said it was hard to get paid without it showing up on somebody's computer somewhere. If you become a blip on their radar they will likely find every dime you've ever made. I will leave you to ponder for a moment whether computers/networking and the availability of information has improved in the last 15 years. All together now... Holy Crap!

Back in the 90's my band gigged a LOT regionally, formed its own publishing company, record label, sold a bunch of CDs regionally and around the world. We had a friend who was a tax-attorney, schooled in both accounting and law. He got us set-up and started in the right direction when we started getting serious. We had a couple very good years. Subsequently, I had the IRS contact me saying 'our records indicate you earned $_____ more than stated on your Form 1040'. To which I could calmly and confidently reply, 'that additional $_____ of income is completely and correctly accounted for here, here, and here'. To which the IRS says, 'thank you, have a nice day.' Did any of the other band members get contacted? Nope. If we didn't have our ducks in a row BEFORE we got serious, I would have been toast.

For most musicians just trying to legitimize their hobby, it's not hard to spend enough money on equipment to make the whole venture a 'loss on paper'. If they have a steady 'day job', that loss on paper may be a very beneficial and a totally legit (and fun) way to reduce their total tax.

When bands begin to understand that certain mileage, guitar strings/drum heads, blank CDs, posters, postage, etc. are all legitimate musician expenses - to name a few. And that mics, instruments, speakers, recording equipment, and things of that nature, are now tools of the trade that you can write off in a variety of ways (thank you Section 179 Depreciation) - they can play by the rules and really come up with a very manageable negative number. Again, this is only useful if you're using it to offset other income - because it should go without saying, operating at or near a loss is completely unsustainable as a long-term business model.

So back to the OP, as far as putting a made up record label name and logo on your CD - as long as nobody else is using the name and you don't steal someone's logo - you should be clear for take off.

However, if you will actually be behaving like a real label and you will be selling product either retail, wholesale, consignment, or online: do you have a business plan? any business background? any other means of supporting yourself? any start-up capital? or better yet, personally know a tax-attorney?

Topic Tags