Many are called; few are chosen.  Do you have what it takes to know how to run an independent record label?  There are a lot of musicians and producers who have dreams of forming their own record company, but most don’t have the knowledge that is required and they don’t know about what is required for record company startup.  I am not a lawyer or an accountant, but I have gone through this process and here is some very basic information that you can use to start the process.

There are different legal entities that are used to form a business and these depend on who is involved in the project and how you want to position the company.  If there is only one person who wants to run a company and record their own music or sign other acts, you would be a sole proprietor.  This means that all income and expenses are considered on your personal taxes.  A partnership is formed when there is more than one person involved in the company.  The profits (and losses) and expenses from this arrangement are divided proportionally between the partners.  The third option is a corporation.  There are different kinds of corporations, but basically a corporation is its own entity and pays its own taxes, unlike the proprietorship or partnership where individuals are responsible for the taxes and liabilities.

One of the basic precepts about how to run an independent record label is that there will be income (hopefully) and expenses and above all a tax return must be filed.  You will need the services of a lawyer and an accountant to set up your business properly.  Don’t forget also that you will need music contracts, you can get some downloadable record company contracts.

Get a name for your label and be very careful that no other company is using the name or you will have to change it later.  You can search corporate names through a corporate registry service.  When you have decided on your name, be sure to have it trademarked so that nobody else can use it.

You will need to have a record label business plan to set your objectives and to have a document that you can present to your bank and investors.  In this plan you will describe what your label does and who does what.  Things like who publishes the songs, who is responsible for financing the recording and who is to do the promotion and distribution are important parameters to set right at the beginning.

There are some other things to consider at first as well.  You should get some accounting software to keep track of your income and expenses.  You may want to get a UPC code for your product to help track sales.  A bank account will be necessary so that you can keep your business and personal finances separate.  You will also need a website so that you have the ability to sell your product online.

This information should help you to learn how to run an independent record label.  These are just basics and obviously it is a lot more complicated, but these are the initial steps.  Get a music business book for more details.  Don’t forget about the product, make sure that you have good product.

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