Our first post included the vague idea that we'd post about stuff as we learned it - as far as running a record label goes.
We've been bad about keeping that promise but there's something that we did learn; it contains something like advice for someone thinking about starting a record label.
If you set up an actual company to do the label's business then you're going to have to pay taxes on the label's income, as well as sales tax for sales in the state you're based.
Here's the problem - there's a bunch of helpful reasons to set up a company rather than just running the label as your personal income. But hiring an accountant to do the taxes is going to run you a few hundred dollars at a minimum. And given that we're releasing 1-2 things a year, that means we'd basically be sending all of the label's net income to an accountant.
Which is stupid.
So we had to figure out how to do the taxes, which meant figuring out the accounting on our own. This was not easy. I am going to type that again for emphasis. This was not easy.
If anyone out there is reading this and faces the same problem ("I cannot afford to pay someone to figure out our accounting for me") you may find this helpful: the key task was to figure out where the money was coming from and where it was supposed to go.
At the end of this long effort we have developed a database. It can tell us at any given date how much money we have, where it came from, how much we owe and who we owe it to. Corporate types call this a balance sheet.
You do not need a database; you can do this in Excel with some loss in gracefulness but a much smaller headache in setup.
I'd be thrilled to share deeper details if this, so contact me if you want to know more. I would especially appreciate it if you have a time machine I can borrow so that I can go back into 2013 and tell myself what I learned to save a huge headache in figuring this stuff out.
Submitted by Justin on