In this episode of her 2020 Vision series, Wendy Day advises independent artists and label owners on incorporating their business. She explains the differences between LLCs, Subchapter S corporations, and C corporations, emphasizing tax considerations and the benefits of pass‑through taxation. Day stresses the importance of keeping business and personal finances separate by opening a dedicated business bank account to protect personal assets from potential lawsuits or liabilities. She recommends structuring multiple entities— a main corporation, a touring company, and a publishing entity— to further safeguard assets. While inexpensive online incorporation services can handle basic setups, she advises consulting a tax accountant for entity selection and hiring a corporate attorney when investors are involved. The overall message is to research, choose the appropriate entity, and maintain clear financial separation to protect and grow an artist’s career.
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Hi guys, Wendy Day from Rap Coalition here again. Welcome back to 2020 Vision. In case you haven't figured it out yet, this is my series for the new year to give little bites of information about how to build a successful career as an artist, especially one who wants to stay independent or get a deal, whichever you want to do. It all pretty much has the same process in the beginning. So, um, I post these after they appear on my Instagram. I'm posting them on my YouTube channel, which is youtube.com/thisiswendyday, in case you want to, um, go back and see any of the ones that you missed that appeared prior to this. So today I'm talking about incorporating your company if you're an artist, or if you're an artist that wants to own their own record label, you want to incorporate your name and operate as a business instead of operating as a personal entity. So, for example, if you're a rapper and let's just say your name is Vestique, and I'm using the same example that I used from yesterday regarding trademarking, you want to either become Vestique LLC or Vestique Incorporated. I would do a little bit of research if I were you to figure out which is better for for your tax situation, whether you want to be an LLC or a corporation, like a Subchapter S corporation or a C corporation. Do a little bit of research, understand what those different things represent. My corporations are LLCs so that the income from the companies can pass through to me personally. Um, I don't make enough money for it to, um, pass through as a corporation and for me to save money, so I— everything passes through my LLC to me personally, and I just pay tax on it. So if you're Vestique LLC, you want to set up a business, uh, bank account, and you want to make sure that you're paying all of the expenses of your company or your career through that bank account. Do not mingle or commingle your personal funds with your business funds. So what I'm saying is don't go and pay your rent or your mortgage with your business, um, debit card from your business account. Don't write a check from your business account to pay your car loan unless the business owns the vehicle. You don't want to commingle your funds because the reason that you're doing this is to protect you in case something goes horribly wrong, like, um, God forbid there's a fight at one of your shows and somebody gets hurt and they sue you, or there's a sample in one of your songs that you didn't know about and you get sued by the rights holder, you don't want them to be able to attach your personal income or your personal assets like your house or your car, um, if they're in the process of, of trying to sue you. So you want to have a business account that separates all of your business income from your personal income and, um, your assets. You really want to protect your assets. So make sure that you're incorporating incorporated. For my clients, when they come on board, I set up 3 different corporations for them. I set up their main corporation, I set up their touring company, and then I set up their publishing entity, you know, whatever that is through BMI or ASCAP, whichever they choose. I incorporate that name so that that company is protected as well, all for the same reason. It's all for protection. But that's one of the first things that I do for, um, for my new clients. So do some research, figure out if you should be an LLC or a Subchapter S or C corporation. A tax accountant is probably the person that can help you the most, or just Google it and find out what the difference is between those three entities and figure out which is best for you. Um, I use a company that does incorporations relatively cheaply and I do that because I help so many people incorporate every year, so it just makes sense to save them a little bit of money. It's not something you necessarily have to go to a corporate lawyer to do. If you do have an investor who's investing in your, um, career and you've got a corporation that you're setting up with that investor, I highly recommend that you have a corporate attorney because then it's a whole different situation. It's not just you setting up a corporation protect your assets, you're then setting up a corporation because you have a partnership with somebody and there's a large sum of money involved. So definitely in that case, have a corporate attorney help you. Um, but for the most part, if you're just setting up a corporation to protect your assets, if you do the proper research and you learn what that means, you can pretty much, um, do that through one of the relatively cheaper companies that are out here helping to incorporate people. Okay, I hope that helped you today. Again, do the research. Check out my YouTube at youtube.com/thisiswendyday, and welcome to 2020 vision.
