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July 20th, 2009

Incorporation (Part 1)

The idea of incorporation can sound pretty daunting, but really it really shouldn’t be that intimidating.

 

Why should I incorporate my band, you ask? Well let’s talk about the reasons for doing so. The first reason to incorporate would be to alleviate personal liability on any legal claims against the band or its members. This is also one of the primary reasons we recognize corporate entities as a society to begin with.

 

Let’s say that while the group is playing at Tom’s Bar & Grill (if such a place actually exists its purely coincidental – I picked Tom because that’s my business partner’s name – and he’s also my brother-in-law), something goes wrong with the band’s electrical wiring, a fire starts and Tom’s burns to the ground. Fortunately, the huge crowd gathered to see you perform all escapes unscathed, but that doesn’t solve Tom’s problem. The insurance companies get involved and when it’s all said and done, everyone is suing you. If the band has been properly incorporated and business has been conducted as a corporation, any liability on the part of the band will be limited to the band’s assets, and your personal assets will be protected from any successful claims. That’s a good reason to incorporate.

 

Another reason might be tax benefits. Everyone’s tax situation is different, so consult a tax professional before doing anything solely for that reason, but there are certainly many tax benefits that a business may bring along with it.

 

All of the band’s activities, expenses, revenues, contractual agreements and the like can be conducted under the band’s corporate umbrella. This can often ease a number of administrative burdens by consolidating all of these concerns under a corporate form.

 

And let’s face it – it looks more professional to be doing business as a corporation of some kind when you are dealing with record labels, venues, etc.

 

But it’s expensive and complicated and comes along with a whole slew of additional burdens, you say. As a whole this just isn’t true. For the remotely savvy individual, it’s not that hard to setup a basic corporate entity on your own. You’ll need to register with the secretary of state in your given locale, pay a small fee and then depending on the type of corporate entity you choose, do a few simple tasks to put some corporate governance in place. Now that’s not to say, that it might not be worthwhile involving an attorney or other professional in setting up your corporation to give some advice on the form, structure, documentation, etc. But really, if you want to take a little time to educate yourself, it’s not that hard. And then on an ongoing basis, you’ll need to file a federal and state tax return for the business. Some corporate forms may require some additional level of record keeping and recording, but these are easily managed.

 

Well what type of corporation should I form, you ask. This is a very good question, and one that I will answer on another day. In the interim, if you have direct questions, post them, and I will try to respond.

 

 

Q: What is the difference between a lawyer and a hooker?

A: A hooker will stop trying to screw you once you’re dead.

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Greetings Music Quench Community!

I’m supposed to write about (blog about?) music and the law. As an attorney, I have to say, I like music a lot more than I like the law. My personal life theory says that art is one of the only truly important experiences in an individual’s existence (and I have plenty of personal philosophies on what does or does not constitute “art,” but generally I apply the term fairly broadly and music certainly falls under that umbrella). While the application of the law in certain circumstances can rise to an art form, the law is primarily more science than art – particularly in the entertainment industry. I have always enjoyed science, but what I am passionate about is art. Unfortunately, I’ve never been very good at creating art. I’m better at appreciating it – my BA is in art history.

So all that leads up to: I’m looking forward to blogging about the application of the law to music as it gives me the opportunity to apply the science that I have learned to something that I truly enjoy and appreciate.

So what should I write about? My first instinct is that MQ readers’ initial interest in the law will be in how to protect themselves from various threats lurking in the business of music. The threats are real, and I certainly intend to talk about some of these. And the ways in which indie artists can protect themselves against them. The obvious topics in this vein are copyright and trademark issues. We’ll need to talk about contracts, the various forms they come in and the things to be watchful for in them. Negotiation skills and tactics are essential as well. We should talk about incorporation, the pros and cons of incorporating, the various forms that can take and the steps required in doing so. And there are dozens of other potential subject areas.

But what I’m really looking for is some input. If you’re reading this, and believe me I have my doubts that anybody besides my girlfriend and my mother will read this, then you potentially came here looking for something specific. What do the MQ readers wanna (Can I use this type of shorthand in a blog? I have no idea. I know nothing about blogging. But I always use this shorthand in my informal emails, so whatever, I’ll use it here too. There are no rules, right?) know about the application of law to the music industry? What can I blog about that will be interesting to you?

I am actually working on a fairly interesting indie artist project at the moment. I can’t say too much about it at the moment, but as that project moves forward and gains some momentum, I should be able to provide some detail on what we’re doing and the steps we’re taking to release some fantastic music. More on that to come.

Perhaps I’ll blog on my thoughts about other truly important life experiences at some point as well, but that’s for another day.

And I need to get a better photo up here. All of my fellow experts have these great professional images of themselves looking all “artsy” & “musicy” (I think I just made that word up), and I have the stiff lawyer thing going on. I am feeling some photo envy. I did provide that photo though, so I suppose I can only blame myself. I’m gonna (more of my informal shorthand) work on that.

Q: What do you have when a lawyer’s buried up to his neck in sand?
A: Not enough sand.

14 June 2009
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Bio

Michael C. Frilling, Esq. is principal and senior legal counsel for FKSM, a full service global entertainment agency. A registered attorney with the Connecticut Bar, his expertise encompasses sports and entertainment law, including contracts, endorsements, licensing, merchandising, touring logistics, copyrights, trademarks, incorporation, public relations and marketing in both traditional and modern media.

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