Business License, LLC, Ect.

[brianhood]

I've been putting this off out of sheer laziness, but i've gotten to the point where I have to get a business license, and to do that, i have to register my business with the government in one way or the other.
Everyone seems to think i need to form an LLC for 456 Recordings, but i'd like to know my other options(if any), and the pros/cons for them.

Also, i called my local courthouse, talked to some older lady, and she didn't seem to understand what it is that i do at my studio. She told me that i need a "manufacturing license" because i "take and unfinished product and turn it into a finished product". I guess this could be true in a sense, but it seems like there would be a more appropriate license to get.

anyone care to share some info from experience?

 

[NSGUITAR]

Been wondering the same thing man.

 

[arv_foh]

I'm an LLC. The requirements could be different in your state, but in Ohio, I just had to fill out a form and send $125 to the state. You should also get a federal tax id (EIN), which is free to do.

 

[006]

Every state is different, I have been a registered business in Texas since 2009, my papers are filed away and I'm too lazy to get them out but I'm definitely not registered as anything specific as far as I can remember, as in not a manufacturer or anything. Damn $125 is steeeeep, I paid like $20 or something for my license...

 

[Wolfeman]

I'm an LLC. The requirements could be different in your state, but in Ohio, I just had to fill out a form and send $125 to the state. You should also get a federal tax id (EIN), which is free to do.

Does your county make you pay as well? Cuyahoga county is ridiculous when it comes to owning a business, so far I've refused to pay them anything.

 

[Joshua Wickman]

I would go the sole proprietorship over a llc. llc is more for if you have multiple employees and or a business partner and things like that. I always felt sole proprietorship fit a studio better. Here is some info....

A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. This means that the owner has no less liability than if they were acting as an individual instead of as a business. It is a "sole" proprietorship in contrast with partnerships.
A sole proprietor may use a trade name or business name other than his or her legal name. In many jurisdictions there are rules to enable the true owner of a business name to be ascertained. In the United States there is generally a requirement to file a doing business as statement with the local authorities.[1] In the United Kingdom the proprietor's name must be displayed on business stationery, in business emails and at business premises, and there are other requirements.[2]

 

[brianhood]

Im also curious as to the tax benifits for LLC's that i keep reading about. I looked at some forms to create an LLC, and there was a lot of info i didn't have a clue about.

 

[arv_foh]

Im also curious as to the tax benifits for LLC's that i keep reading about. I looked at some forms to create an LLC, and there was a lot of info i didn't have a clue about.

The business profits/losses pass through to your personal income. If you were a corporation for example, you would be double taxed. The corporations income gets taxed, then the income that you receive as a salary from the corporation would be taxed.

The main benefit in an LLC over a sole proprietorship is limited liability. You have the liability protection of a corporation; you cannot be held personally responsible for the companies liabilities, only the amount you have invested in the business. Say someone slips on your studio sidewalk, breaks their neck, and sues the shit out of you. It bankrupts your business but your personal assets will not be touched. If you're a sole proprietor, they can take everything. Your car, your house. You name it, if it's worth money it's game.

Does your county make you pay as well? Cuyahoga county is ridiculous when it comes to owning a business, so far I've refused to pay them anything.

No, I haven't had to pay anything to the county

 

[fatalforce]

I'm not sure you would file as a LLC (limited liability corporation). I would get a hold of the Better Business bureau in your state and ask them.

 

[nwright]

most of the people I know around here working in music (engineers, studio owners, promoters, etc.) are all LLC's. The main benefit I've heard about is pretty much what arv foh has already posted.

 

[egan.]

Just to clarify something ARV said, the corporation gets taxed on net profit (not gross income).

Also,

http://biztaxlaw.about.com/od/limitedliabilitycompanies/tp/formanllc.htm

 

[fatalforce]

I see. Thanks for clarifying guys. This is good information to know. I can see a benefit from being an LLC from the link above when you start to get bigger clients/business and have people working with or under you. I wonder what Andy or Fredrick Nordstrom have their papers filled as.

 

[brianhood]

yeah that's basically what i figured. I talked to my accountant today and she seemed to think a sole proprietorship should work for now. Once things get a bit more intense here(working with labels full time, and especially when i settle down with a family), i'll start looking into setting myself up as an LLC

 

[Wolfeman]

yeah that's basically what i figured. I talked to my accountant today and she seemed to think a sole proprietorship should work for now. Once things get a bit more intense here(working with labels full time, and especially when i settle down with a family), i'll start looking into setting myself up as an LLC

That's probably the best way to start. Don't forget to file your trade name registration as well, and get a vendor license.