How to Start a Record Label
Learn how to start a record label step by step — from choosing a business structure and forming an LLC to registering with PROs, protecting copyrights, and signing artists.
Bizee Editorial Staff
Editorial Team
Introduction
Starting a record label means building a business around music — finding artists, owning master recordings, collecting royalties, and getting music to listeners. Whether you want to release your own music or sign others, the steps are the same: form a legal entity, protect your rights, register with the right organizations, and set up distribution.
What a record label actually does
A record label is a business that funds recordings, owns or licenses master rights, handles distribution, and collects royalties on behalf of artists. Independent labels do all of this on a smaller scale than major labels — but the core business model is the same.
The music industry has shifted toward streaming, which means royalty collection and digital distribution are now central to how labels make money. Independent labels that understand this model can build a sustainable business without the overhead of a major.
Most independent labels start with a narrow focus — one genre, one region, or one roster of artists. That focus is a strength, not a limitation. It makes it easier to build a reputation and attract the right artists.
Is a record label right for you?
Running a record label requires more than a love of music. You'll be negotiating contracts, managing artist relationships, overseeing marketing, tracking royalties, and handling the finances of a real business. The creative side is only part of it.
The skills that matter most aren't always obvious. An ear for music helps, but the owners who build lasting labels tend to be strong at relationships, project management, and financial discipline.
- Identifying and developing artist talent
- Negotiating recording and distribution contracts
- Managing recording budgets and release timelines
- Marketing releases across streaming platforms and social media
- Tracking and collecting royalties from multiple sources
- Understanding music licensing and copyright basics
How to choose a business structure for your record label
Most independent record labels form as an LLC. An LLC separates your personal finances from the business, which matters when you're signing contracts, owning master recordings, and taking on financial risk. If your label gets sued over a contract dispute or copyright claim, an LLC means your personal assets aren't automatically on the hook.
A sole proprietorship is simpler to start but offers no liability protection. A C Corporation works for labels planning to raise outside investment, but it adds tax complexity most independent labels don't need early on. An S Corporation can reduce self-employment taxes once the label is profitable, but it comes with ownership restrictions.
For most people starting an independent label, an LLC is the right starting point. It's flexible, protects your personal finances, and doesn't require the overhead of a corporation.
How to form your record label as an LLC
Forming an LLC for your record label involves a few concrete steps. The process is the same regardless of what kind of music you're releasing.
Choose your label name
Your label name needs to be available in your state's business registry and ideally as a trademark. Check your state's Secretary of State database before committing to a name. If you plan to release music under a different name than your LLC, you can register a DBA (doing business as) after formation.
File your Articles of Organization
File Articles of Organization with your state's Secretary of State office. State filing fees vary — most states charge between $50 and $500. You'll also need to appoint a registered agent, which is a person or service that receives legal documents on behalf of your LLC.
Get an Employer Identification Number (EIN)
Apply for an Employer Identification Number (EIN) through the IRS at irs.gov/ein. The online application is free and processed immediately — you get your EIN the same day. You'll need an EIN to open a business bank account, pay artists, and file taxes.
Open a business bank account
Keep your label's finances separate from your personal finances from day one. Mixing personal and business money makes it harder to track royalty income, deduct expenses, and — if it ever comes to it — prove your LLC is a real separate entity.
How to write a record label business plan
A business plan for a record label doesn't need to be long, but it does need to answer the questions that will come up when you're making real decisions — what genre you're focused on, how you'll find artists, how you'll fund recordings, and how the label makes money.
Labels that skip the planning stage often discover their revenue model doesn't work after they've already signed artists and spent money on recordings. A plan forces you to think through the numbers before you're committed.
- Genre focus and target audience
- Artist acquisition strategy — how you'll find and sign talent
- Recording and production budget per release
- Distribution plan — digital platforms, physical, or both
- Revenue model — streaming royalties, sync licensing, merchandise
- Marketing approach for new releases
- 12-month financial projections
How to protect your music rights
Copyright for sound recordings in the U.S. is automatic the moment a recording is fixed in a tangible medium — but registering with the U.S. Copyright Office gives you legal benefits you can't get otherwise, including the ability to sue for statutory damages and attorney's fees.
Register master recordings using Form SR (Sound Recording) through the U.S. Copyright Office at copyright.gov/registration. Registration is especially important before you distribute a release — it's much harder to enforce your rights after an infringement has already happened.
Each recording your label releases should also have an ISRC (International Standard Recording Code) — a 12-character alphanumeric code that uniquely identifies that recording. ISRCs are how streaming platforms and royalty collection organizations track plays and attribute payments. You can get ISRC codes through the IFPI or a national ISRC agency.
How to register with PROs and collect royalties
Performance Rights Organizations (PROs) collect public performance royalties when songs are played on radio, TV, in venues, or on streaming platforms. As a record label, you need to register as a music publisher with a PRO to collect the publisher's share of those royalties.
The 3 main U.S. PROs are ASCAP, BMI, and SESAC. ASCAP is open to songwriters, composers, and music publishers who have written an original musical composition. BMI accepts publishers who control at least 1 musical work. You register with one PRO — not all 3.
Beyond PROs, register with SoundExchange to collect digital performance royalties from internet radio and satellite radio services like Pandora and SiriusXM. SoundExchange collects on behalf of the sound recording copyright owner — that's your label — separately from the songwriter royalties that PROs handle.
How to set up distribution for your record label
Distribution gets your releases onto streaming platforms like Spotify, Apple Music, and Amazon Music. Independent labels typically use a digital distributor — services that deliver your music to platforms, collect streaming revenue, and pass it back to you.
When choosing a distributor, look at how they handle royalty splits, whether they support label accounts with multiple artists, and what they charge — some take a percentage of revenue, others charge a flat annual fee per release. Your ISRC codes need to be assigned before you distribute.
Physical distribution is a separate channel. Most independent labels start with digital-only and add physical distribution — vinyl, CDs — once there's demonstrated demand from their audience.
Licenses, permits, and taxes for a record label
A record label is a business like any other — you'll need a general business license in most states and cities, and you may need a home occupation permit if you're running the label from home. Check your local requirements through your city or county clerk's office.
On the tax side, your label will owe income tax on profits, and if you have employees or pay artists as employees rather than contractors, you'll handle payroll taxes too. Artists paid as independent contractors get a Form 1099-NEC if you pay them $600 or more in a year. A tax professional familiar with the music industry can help you figure out the right structure for artist payments.
Keep records of every royalty payment received, every recording expense, and every contract. Clean records make tax filing faster and protect you if questions come up later.
FAQ
It depends. A record label can be structured as an LLC, a sole proprietorship, a corporation, or a partnership — the label itself is a business, and the legal structure is a separate choice. Most independent labels form as an LLC because it separates personal and business finances and protects the owner's personal assets from business liabilities like contract disputes or copyright claims.
Yes. Forming a record label as an LLC is one of the most common choices for independent label owners. An LLC gives you liability protection — if the label gets sued, your personal finances aren't automatically on the hook — and it's more flexible than a corporation for a small operation. You can always elect S Corporation tax treatment later if it makes sense.
It depends on your goals. An LLC is the right starting point for most independent labels — it's simpler, flexible, and protects your personal assets. A C Corporation makes more sense if you're planning to raise outside investment, since corporations can issue multiple classes of stock. An S Corporation can reduce self-employment taxes once the label is profitable, but it limits you to 100 shareholders and one class of stock. Talk to a tax professional before choosing.
To form a record label as an LLC, choose a business name, file Articles of Organization with your state's Secretary of State, pay the state filing fee, appoint a registered agent, and apply for an EIN through the IRS at irs.gov/ein. Once your LLC is formed, open a dedicated business bank account and keep your label's finances separate from your personal finances.
No formal requirement exists, but a business plan is worth writing before you sign artists or spend money on recordings. It forces you to think through your revenue model — how the label actually makes money from streaming royalties, sync licensing, or other sources — before you're committed. Labels that skip this step often discover the numbers don't work after the fact.
Form a legal business entity — most independent labels use an LLC — by filing with your state's Secretary of State. Get an EIN from the IRS. Register your master recordings with the U.S. Copyright Office using Form SR. Register as a music publisher with a PRO (ASCAP, BMI, or SESAC) to collect performance royalties. Register with SoundExchange to collect digital performance royalties. Get any local business licenses your city or state requires.
Under U.S. copyright law, artists who assigned their copyrights to a label or publisher have the right to reclaim those rights 35 years after the assignment — regardless of what the original contract says. This termination right applies to works created after January 1, 1978. It does not apply to works made for hire, which is why the classification of recordings in artist contracts matters. Talk to a music attorney if you're structuring artist deals.
