Help me Dannyalcatraz!!! Legal questions..

[Thunderfoot]

Hey DA,
Got a couple of music legal questions that I thought you might be able to point me in the right direction on...

There is a group that I feel that I might want to producae on the larger scale - Should I form a LTD partnership, Corp, Inc or Company in order to handle the taxation, legal and profit problems that are bound to arise.

Also, this production company (name for usage not application) would of course draw up contracts to handle merchandising and distribution of sales profits. As an artist I never recieved more than 5% royalties - I am fixing to give these guys 10% each, am I off my rocker or is that the new going rate.

Final question, three of the members are underage (therefore I must secure their parent/gurdian sigs on all contracts) however, I want to ensure that they, not their guardians recieve their rightful profits and are also protected against future parentage piracy, do you have any suggestions.

I realize that you usually get paid for this advice and you frankly can tell me what to do with myself, but I can't afford to walk in the door of a music lawyer in this state (MD) without paying $1000 of retainer and signing long-term exclusivity contracts (something I am not prepared to do at this time.) Thanks for any help or even telling me to heave-ho.
T-foot

 

[tonym]

I am not a lawyer, but I have read a book on starting a home business...so here's my unsolicited thoughts on the matter.

I'd stick with a simple "sole proprietorship" as long as possible. It's easiest, and you can always incorporate later.

In the contract, give the guys the usual %age, rather than double. Then be generous and pay them double as a bonus, if you can afford it. You may need more cash, after all, to market them and do your job, and it may come down to every penny counting.

And, lastly, don't worry about the parents spending their kid's money. Later down the road, if your band is making big bucks, you can hire a lawyer and make a new, fancier contract that covers all your concerns. Until then, such an issue must be VERY complicated and probably not something you want to 'wing' without a lawyer.

I am not DannyAlcatraz.


Tony M

 

[Kormydigar]

I'd stick with a simple "sole proprietorship" as long as possible. It's easiest, and you can always incorporate later.

Tony M

I am not a lawyer either, I am an accountant. The sole proprietor model is the easiest to manage and get started but be warned that there is no legal separation of you and the business. The owner of a SP is legally liable for all debts of the business and personal assets are not protected in the event of a lawsuit.

 

[Thunderfoot]

I am not a lawyer, but I have read a book on starting a home business...so here's my unsolicited thoughts on the matter.

I'd stick with a simple "sole proprietorship" as long as possible. It's easiest, and you can always incorporate later.<SNIP>

But this isn't a "home" business... The sole prorietership isn't an option becuase I will be dealing with others' intellectual property. (The folks that run the RIAA aren't the Boy Scouts)... I have to buy in to the unions and can't do so as a production firm as a single entity.

 

[Thunderfoot]

I am not a lawyer either, I am an accountant. The sole proprietor model is the easiest to manage and get started but be warned that there is no legal separation of you and the business. The owner of a SP is legally liable for all debts of the business and personal assets are not protected in the event of a lawsuit.

Another reason the SP is not an option...

 

[tonym]

But this isn't a "home" business... The sole prorietership isn't an option becuase I will be dealing with others' intellectual property. (The folks that run the RIAA aren't the Boy Scouts)... I have to buy in to the unions and can't do so as a production firm as a single entity.

Well, as a SP I've sold intellectual property many times, and recently bought some, so I don't see what you mean about it not being an option.

Are you saying the RIAA has a policy against dealing with an SP? Sounds illogical, if so. Are you sure, or guessing? After all, any guy can form a corporation--just buy a book and do a step-by-step. I can't imagine the guys in suits being impressed by such a thing.

Tony M

 

[Kormydigar]

Another reason the SP is not an option...

It sounds like your best bet would be an S-corp. It is the simplest way to incorporate without all the hassles and complications of a C-corp. An S-corp would give you the legal protection needed for the business without some of the tax hassles. Your income would flow right to your personal tax return through the S-corp, and the S-corp would still own all the assets, liabilities, ect. You will need a lawyer to find out what the requirements to start up are in your state. Good luck.

 

[tonym]

Another reason the SP is not an option...

It seems to me that SP is the way to go until the money starts rolling in. Then, after you find yourself paying lots of taxes, incorporate. The SP-phase could last weeks, months, years...until you eventually make good money or give up.

But, yeh, if you worry about being sued for some reason, erect a corporation to protect your personal wealth.

Incorporating isn't hard; it's merely a hassle with periodic paperwork. You can do it yourself. Get a book at your local Borders or whatever and read about it.

If you are determined to incorporate, an "S" type corporation is probably what you're looking for.

I am not DannyAlcatraz.

Tony M

 

[tonym]

GAh! Kormydigar beat me to the S-corp tip.

Tony M

 

[tonym]

How To Start a Business in Maryland

Here's a book you could order.
I have one for Missouri, myself. It's good.

Tony M