Do you have a passion for music? Do you love discovering new and original bands and solo artists? Perhaps you should start your own record label and present your new finds to an equally appreciative audience. With the Internet, it can be easier than ever to start at least a tiny independent, or indie, label and generate a response.
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We have put together this simple guide to starting your record label. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
Luckily we have done a lot of this research for you.
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Record Label Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
It's very important to secure your domain name before someone else does.
Your largest ongoing expenses are likely to be the costs of pressing new physical units (CDs and/or vinyl, mostly) and promoting new releases. Most of your other costs will be reflected as a percentage of sales (ie: the cut of the recording artists, composers, and distributors).
Go to bars, clubs and other performance venues where your signed bands are playing and find out who your customers are in terms of age, fashion, education level, and lifestyle. This will help you determine how to target and communicate with your audience.
Music is sold today in a variety of ways, including through both digital and physical channels. Fans buy vinyl records, compact disks, MP3 files and streams from websites such as Spotify. In addition, labels can earn money through licensing deals involving use of the music in soundtracks in film and television, and in commercials and video games and other commercial outlets. Additional income might be generated from digital and satellite transmission, such as by Sirius Radio. And finally, some indie labels sign their talent to what’s called 360 deals, in which the label takes a revenue split for booking the talent in live shows, selling t-shirts and other merchandise and generating other associated income streams.
Prices are pretty much determined by the market. Vinyl records generally sell for $18 0r $20, while compact disks sell for a bit less. Streaming services such as Spotify might pay a fraction of a penny per play and iTune downloads might sell for $7 or $10 for an album or a dollar for a single. Because manufacturing and packaging costs are so high for physical units, the label might only make a dollar a unit once the manufacturer, artist and music composer/publisher are paid. On the other hand, the label and its talent can snag more than half the cost of an iTune download.
Consider XL Recordings, the small British indie label that discovered and released music for the likes of Adele, Radiohead, Vampire Weekend and other wildly popular national acts, selling million of units in the process. Almost 40 percent of music today is produced by indies. That’s because much of it can be streamed or downloaded, which greatly reduces physical material costs. Distribution is also easier online -- at least theoretically. The downside of all of that potential is that competition is steep. Many indie labels only sell a few hundred units, and much of the business is conducted on a part-time basis.
Consider producing compilation albums as samplers of your label’s artist roster. Also, explore opportunities to record music or other indie labels or consult in the distribution of their output. And finally, get the full involvement of your artists. They should perform frequently and sell records and merch at shows.
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
One crucial aspect that cannot be overlooked when starting your record label is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they're a far less stable and advantageous option than LLCs.
This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business's debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business's liabilities.
In practice, this means that if your record label were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.
More than 84% of our readers opt to collaborate with a professional LLC formation service to kickstart their venture. We've negotiated a tailored discount for our readers, bringing the total down to just $29.
Note: If you're interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Besides being a requirement when applying for business loans, opening a business bank account:
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Certain state permits and licenses may be needed to operate a record label. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits .
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
A record label is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Record Label needs and how much it will cost you by reading our guide Business Insurance for Record Label.
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
Today’s young music buyers (and young describes the typical consumers of new music) are very savvy to the web and to social media. Make your music and band news available on Facebook Groups, YouTube, SoundCoud, Pandora, Spotify, and other venues where fans hang out or find new tunes.
Try to get to the point where your label means something to an audience. Many music fans can’t even identify a single label, but if yours is identifiable with a certain genre, sound, attitude and level of quality, you can get to the point where they buy your latest release not because of the unknown band or performer, but because it comes from your house.
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
You must love and recognize your definition of good music. Your communications skills are equally important since you’ll need to get unsigned bands to share your enthusiasm and be able to sell your music to listeners and possibly distributors, entertainment venues and other players in the field.
Take our Entrepreneurship Quiz to find out!
There are many facets to this business, so each day is exciting and different. Here are a few of your key responsibilities.
You must have an ear for music and not be easily discouraged. You’ve got to be your talent’s biggest fan and be tenacious at getting the word out.
Today’s music market is splintered, with more channels and sub-genres than ever. The cost of entering the market is also relatively small, with online-only distribution possible. However, unit sales can be modest. According to this source, about 90 percent of released music fails to break even. So you might want to keep the day job until your music breaks.
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
Learn all you can about the music business, and remember that it’s both music and business. You’re probably well motivated to hang out at performance venues listening to music and discussing the topic with fans, but don’t neglect the business side. Legal contracts are boring to read and learn about, but they’re critical. So is a thorough understanding of the various revenue streams and distribution channels involved.
You can run your label alone until you have the cash flow and need to draft talent scouts or a support team. You should expand your roster slowly and efficiently enough that you don’t lose focus. Try to form working partnerships with trusted producers, engineers and sound studios to rein in production costs and deliver a consistent sound.
