# From "individual" composer to publishing/production company: Why?



## Mike Marino (Aug 7, 2011)

At what point did you move from an "individual" composer to a publishing and production company? I'm sure my accountant would have some definitive, numerical values that go along with moving in that fashion....but was there a threshold point where it only made sense? Why did you make the move and what are the pros and cons of this?

Thanks!

- Mike


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## midphase (Aug 7, 2011)

Talk to your accountant. Show him what your annual revenue is from composition work and he'll be able to advise you when the right time is to incorporate.

I'd say anywhere from the high 5-figures to the low 6-figures is a good time to get more serious about your business.


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## Mike Marino (Aug 7, 2011)

Yeah, that's what I was thinking. Not even in the same zip code in terms of that.


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## José Herring (Aug 7, 2011)

At the point of where you have to pay taxes on income it makes sense to incorporate. Corporations have tax benefits. At least for now. So if I can remember the cut off for taxes was around 10,000 annually.

As far as publishing get into it right away. I was stupid and I didn't actually set up a publishing company until really, really late even though I owned publishing on things that actually play on cable. So now I'm trying to collect on back due publishing which is turning out to be a little tricky. As well as trying to get publishing on things that were promised to me many years ago, but since I didn't have a company other more saavy people took the cues for themselves which is even more of a nightmare to straighten out.


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## Mike Marino (Aug 7, 2011)

@ Jose: So you'd then have two separate entities: the composer corporation AND a publishing company as well???


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## rgames (Aug 7, 2011)

I don't think you need to establish separate companies but you need to make sure you register with your PRO as both writer and publisher - they're separate revenue streams. You'll collect separate royalty payments but they can both go to the same company or individual.

I think that's what Jose is saying - am I right Jose?

It's the same for any business - there are all sorts of things to think about when considering incorporation vs. sole proprietorship vs. LLC. If you're not making tons of money and don't have a lot of legal commitments via contracts then there's nothing wrong with staying a sole proprietor.

Best advice I can give is don't take advice from anyone on a web forum  Like Kays says, get an accountant and attorney or find some references on running a small business - in terms of the taxes and legalities, it doesn't really matter that you're a composer. It's the same for anyone operating a small business.

It all comes back to the money. Once you understand where the revenue streams are, you can have confidence in how you structure your contracts. That covers the legal side. On the tax side, well, it's really hard to give advice without knowing specifics. That's where an accountant can help.

rgames


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## Mike Marino (Aug 7, 2011)

Hm. So simply just registering with my PRO (BMI in my case) is all I'd need to do to cover the publishing side of things?


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## José Herring (Aug 7, 2011)

Mike Marino @ Sun Aug 07 said:


> Hm. So simply just registering with my PRO (BMI in my case) is all I'd need to do to cover the publishing side of things?




Yes. Unless you plan to print and distribute sheet music.


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## Mike Marino (Aug 8, 2011)

Gotcha. Perfect. Thanks!


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## MichaelL (Aug 10, 2011)

There are tax advantages to incorporation or forming an LLC. But, when considering incorporation or forming an LLC, the relevant issue is your level of risk / exposure. How likely are you to be sued? It's not so much how much you make, but how much you owe, or how much you could lose. You want to shield your personal assets from liabilities incurred by the business. 

As a composer / small business owner, why might you be sued?

1) Someone could be injured at your place of business. If you work at home, your homeowners' policy might not cover injuries that a client or musician incurs during the course of "business" at your home. (I carry separate business insurance)

2) You may borrow a lot of money to build the studio of your dreams, and then not make enough money to pay the debt. If the business goes under, you don't want to lose your personal assets.

There are other reasons, but those are two off the top of my head. I have an LLC. I do business as a composer, and will ultimately have three publishing entities, as divisions of the LLC. 

I remember from another thread that you've uploaded tracks into some libraries. I would be really hesitant to do business with an online entity, using my social security number. Prior to forming an LLC, I considered operating d/b/a under a fictitious name to get a Federal EIN number.

As the others suggest, consult with your attorney and your accountant for YOUR best solution. 

Best of luck.

Michael


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## Mike Marino (Aug 10, 2011)

Great feedback. Thanks!


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## Dominik Raab (Aug 14, 2011)

I'm not a pro composer and I certainly don't have a production company, but here's a reason I could think of (not a financial one):

As a composer, it's important people know you. Producers, editors, directors.
If you're two, three or twenty guys with the same goals, a company is ONE name to remember instead of two, three or twenty.

"Look, Guy2 is in the same company as Guy1. Guy1 doesn't have time, let's hire him" can lead to "Guy2 is great, let's hire him again."

If you're a cooperative kind of person (not filmmaker-musician-cooperation, but musician-musician-...-musician-cooperation), a company is also a fair way to give credit.
"Music by Blah Studios" sounds a little better than "Music by Guy1... Guy2, Guy3 and Guy4 helped as much, but we HAVE to put a name there!"


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## mac4d (Aug 17, 2011)

MichaelL @ Wed Aug 10 said:


> I remember from another thread that you've uploaded tracks into some libraries. I would be really hesitant to do business with an online entity, using my social security number. Prior to forming an LLC, I considered operating d/b/a under a fictitious name to get a Federal EIN number.


I have an EIN number as a sole proprietor musician/media person with my real name. Easy enough to get after filing the right form with IRS. d/b/a fictitious name not needed.


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