Over the holiday break I took advantage of the days off to complete a few tasks that had been hanging over my head and which I really didn’t want following me into the New Year. First and foremost, I finally registered what is called in the state of Maryland a “trade name” (otherwise known as a DBA), and opened up a business checking account under that name. Why does this matter? Well, for almost a year I’ve had a respectably sized royalty check from ASCAP that I have not been able to cash because it’s made out to my publishing company. When one receives royalties from ASCAP, 50% goes to the individual (that’s me), and the other 50% goes to the “publisher” of the individual (composer John Mackey has a very good essay on this topic). As a self-published composer, the publisher is still me, but when you join ASCAP you have to declare a publishing name in order receive 100% of your royalties. So I receive one check made out to my name, and another check made out to my publisher name. The check made out to me is, needless to say, long gone, but the other check has been languishing on my desk, whispering, “cash me…please?”
You know what? It was so ridiculously easy to do this! I cannot even believe how long I’ve been putting it off. Composer Alex Shapiro has written about this process for NewMusicBox in the past, but there appear to be even fewer steps involved now than just a few years ago. Keep in mind that the actual forms and departments that one visits to register a DBA differ from state to state, so some preliminary research will be necessary (it did take a while to hunt down the proper form online). Once I had the very simple one-page form filled out, however, I went downtown to the Department of Assessment and Taxation (you can also do it by mail but it takes at least eight weeks), and was in and out the door in less than 30 minutes! From there I took my new trade name confirmation paper and that ASCAP check over to the bank, and opened up a business checking account right there. I was home in time for lunch.
In many ways, this has not changed life much at all—I have been running a business for years as an individual, using my social security number, filling out a Schedule C with my yearly taxes, and paying quarterly taxes, all of which will continue since this new “business” is a sole proprietorship, and will continue to have my social security number attached to it. The thing that has changed (besides having another ATM card to fit into my wallet) is that I finally have a way to keep my business money separate from my personal money. In the past it has all been thrown in the same bucket, and while I am quite organized about keeping track of what’s what, some of that burden has been lifted now that there is a new bucket. It will be much easier to keep track of business income and expenses, and make things clearer for the IRS as well. Plus, if the business grows, there are plenty of tools and resources available to help make expansion possible.
There are other business structures that one could choose in place of a sole proprietorship—one could incorporate, start an LLC, or for those interested in starting a non-profit organization, register a 501c3. Each has advantages and disadvantages, so it depends what your needs and goals are.
Composers and performers out there who own businesses—please do share what type, and any advice you might have for others!