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Do’s and Don’ts: Building a Solid Foundation

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BUILDING A SOLID FOUNDATION

You wouldn't build your home upon sand, gravel or water without the proper foundation. We all know the affects of building upon unsolid ground, the structure will eventually tumble down. Just as you hire a contractor to make sure each dimension of your home's foundation is sound, so that your family and valuables are protected, you should treat your business the exact same way. If you plan to start a record label, production company, publishing company, modeling agency, shoe store, or clothing line; you want to be sure that your business structure is solid and will protect you and your assets.

If you are like most people, they start businesses to do one simple thing: make money! With this as your main objective, you need to know how to protect your business. The truth is... things do sometimes go wrong even if it's not your own fault and your business may be subjected to lawsuits or even debt. I receive the most questions on the Sole Proprietorship, Limited Liability Company and Corporation business structures. I will give you a brief description of each and why some choose that business structure.

The Sole Proprietorship (SP) is the easiest to form and takes almost nothing to set up, but easy doesn't always mean better. This business structure is owned and run by one person and there is no distinction between the owner and the business. The owner of an SP subjects themselves to unlimited liability... meaning if your company gets sued or owes money, you may be going into your personal account and fixing the problem. Not a great thing to think about, but you should know this now. If you decide to start here, you can upgrade your structure to a LLC or corporation later.

The Limited Liability Company or LLC is the most common choice amongst the clients that I have worked with and what I often recommend. This structure does just as it states, it limits your liability. Owners are called members and the member's personal liability is limited up to your interest in the company, so the profits and losses of the company pass through the company to its owners. Meaning that if you have partners and you all own certain percentages, then you are only liable up to that percentage. For example: KJ owns 40% of Beat Freak Records, LLC, Reshard owns 50% and Jacob owns 10%. Kathy gets 40% of profits and in the event of a loss, Kathy suffers it at 40% and so on. The LLC can be formed in every state, usually through the secretary of state with a minimum filing fee and other renewal requirements each year. You and the other owners may want to consider drawing up a partnership agreement as well.



The Corporation is the most difficult business structure to form. It requires you to file corporate organization forms and submit a filing fee, usually with the secretary of state. You will also need a board of directors, who oversee the corporate business, and shareholders, who own a specific number of shares. Similar to a LLC, owners have limited personal liability for the debts and actions of the LLC. The major difference between LLCs and corporations is how they are taxed. The profit of a corporation is taxed to the corporation and to the shareholders when distributed as dividends, this creates a double tax.

Of course there is a ton more to know, but this should help you get started. Build your company on a solid foundation!

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Written by: LaQuita R. Stokes, Attorney at Law

LEGAL DISCLAIMER:
The articles, opinions and views provided in this column are not intended as legal or financial advice: legal information is not legal advice. All information in this column is for educational and informational purposes only. Features are authored by licensed attorneys. Articles and content contained herein are not to be used as a substitute for professional legal services. As laws, details and personal situations vary from person to person and state to state, articles and content contained herein are not and cannot to be used as a substitute for legal, career or financial advice. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in this column. The writers of this colomn and this website will not be liable or responsible to you for any claim, loss, injury, liability, or damages related to your use of this information.

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ENTERTAINMENT LAW CONSULTATIONS AVAILABLE Corbin Johnson, Stokes & Glass - "A Full-Service Law Firm" Monday-Friday (901) 526-1076 - Saturday (901) 354-0456 www.WeDoEntertainmentLaw.com I am Attorney Laquita R. Stokes, a graduate of Vanderbilt University and the University of Kentucky College of Law. Our law firm covers Entertainment & Sports Law, Corporate Law, Criminal Law, Bankruptcy, Family Law (including Divorce, Child custody and Child Support) and Civil Law. www.corbinjohnsonlawyers.com Feel free to message me on here or at LStokesEsq@gmail.com

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Drumma Boy Launches “House Of Fresh” Streetwear Boutique Clothing Store in Atlanta

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Drumma Boy recently launched his new hip clothing store at a filmed grand opening in Atlanta. The new clothing store is called "House Of Fresh."



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Yo Gotti Signs With Jay Z’s Roc Nation, Drops New Song “Castro” With Kanye West

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It is official, Memphis rapper and businessman Yo Gotti has joined forces with hip hop mogul and also businessman Jay Z and has signed with the Roc Nation.



Roc Nation, an entertainment company founded by Jay-Z, already has quite the roster of artists with the likes of J. Cole, Big Sean, Rihanna, DJ Khaled, T.I. and many others signed with the company.
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The Hip-Hop Entrepreneurship Connection

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The history of the hip hop genre is an underdog story. Its roots go back to the 1970s where few made it out of tough inner cities to experience a taste of professional or financial success. Those who were left behind had little hope to cling to, but they decided to tell their stories through music and the rest is history. Today hip hop has grown to become an industry that generates billions of dollars per year and the top rappers and entertainers within the game have become savvy entrepreneurs. This transition happened because as unlikely as it seems, the connection between the world of hip hop and the realm of business is quite strong. Here's why hip hop became such a big money maker.
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