I asked Mr. Chavers a series of questions regarding my
business plan. My most important question to him was what business entity I
should form my company under. Mr. Chavers stated that I should form my business
under a Limited Liability Company because of the benefits of having the
protection of being separated from the business on issues of liability the
company might endure during its years in business. He went on to discuss the differences of the
entities and stated that later I would be able to switch to an S Corporation
when business starts to pick up and I wanted to involve shareholders.
The one thing he also told me was that I needed to make sure
that was something I wanted to do because once I made the switch to S-Corporation
I wouldn’t be able to switch back to an Limited Liability Company. He also
stated the importance of having an accountant on hand to explain to me the
different tax laws involved with the different business entities to help
solidify my decision. Mr. Chavers told me that the accountant should only give
me advice on tax issues and not legal issues regarding forming a business
entity. Mr. Chavers stated that I
should have employee agreements and non-disclosure agreements drafted for
future employees to sign so that they won’t give away any confidential
company information on how we operate as a business or start their own business
with the same ideas if they decided to work for a competitor or start their own
business in the same field.
The other issue we discussed was the importance of having
artist management agreements for the recording artist we plan on managing after
the development stage. He stated that having these agreements in place would
solidify the artist management relationship. It will also put to rest any issue
about what my job is as an artist manager and what my company expects from the
recording artist we manage. It also takes care of the issue of how much my
commissions are on the artist’s income and what part of the artist’s income is
included in my percentage.
The information that Mr. Chavers gave me can be applied to
my business plan by taking the advice on how I should form my business, the
importance of artist management agreements, employee agreements, non disclosure
and non compete agreements.
