Forming a corporation under New York law is important if you are a musician and/or a performing artist. When formed, corporations come into existence as distinct legal entities separate and apart from their owners. This is true even for corporate entities that are created and owned by a single individual. This “separateness” between the owners and the corporation creates what is known as the “corporate shield.” This shield protects personal and family assets from being seized by creditors to pay for business debts and obligations.
As an example, imagine that you are a performing artist and you form a corporate entity through which to operate your music business. The company owns the songs, signs the venue contracts, etc. Now assume that there is some sort of breach of contract and your corporate entity gets sued. Because the contract was signed by the corporation — not by you, the individual — any judgment from the lawsuit is a corporate obligation. As such, that judgment can only be collected from assets owned by the corporation. In this way, personal and family assets are protected by the fact that the corporation is a separate legal entity.
Corporate law is complex and nuanced, so it is important to consult with an experienced New York corporate and music industry lawyer for advice and consent. As one example of the nuance, there are several types of corporate entities that can be formed including standard corporations and limited liability companies. A good New York corporate lawyer can offer guidance as to which choice would best suit your needs. You should also retain a good New York corporate attorney to form your new corporate entity and conduct the biennial maintenance filings necessary to keep your corporation in good standing. You can leave the “legal stuff” in the hands of a trusted professional while you focus on what you do best — music.
Here is a quick primer on forming corporations in New York:
Corporations are formed in New York by filing a Certificate of Incorporation with the New York Department of State in Albany. All corporate entities must have a unique name. Thus, one of the first steps to undertake is to choose a corporate name that is not already in use. The Department of State has a dedicated Division of Corporations that keeps a list of currently in-use corporate names. The Division of Corporations accepts requests in advance and can provide information on name availability. If your proposed corporate name is already in use, then another name will have to be chosen.
Next, the county location for the corporation must be listed. Essentially, this reflects where the corporation is to be headquartered. Next, the certificate must list the number of shares that are authorized by the corporation, the number of shares that are to be issued and the par value or non-par value of the shares. Stock shares are the way corporations are owned. As an example, a single-person corporation has one person who owns all the shares of the corporation. A two-person corporation might split the shares between the owners 50-50 or 60-40 or in any other combination.
Finally, the certification of incorporation must list what is called an “agent for service of process.” This is the person or business that will receive court papers if the corporate entity is sued. The completed certificate is filed with the Department of State along with the filing fees (currently $125).
After the Certification of Incorporation is filed, the owner (or owners) must meet and select (via voting) who will serve on the board of directions. Corporations are run and operated by their boards of directors. There can be one member on the board (for single-person corporations) or more members. Often, three directors are chosen for a new corporate filing. There are certain requirements for the members of the board such as all must be at least eighteen years of age. Once elected, the new Board of Directors will then approve corporate Bylaws and other governance documents and otherwise begin operating the corporation.
Contact an Experienced New York City Business Lawyer Today
For more information, contact the business, entertainment and IP lawyers at Cordero Law. Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Our entertainment law practice focuses on the music industry. Contact us via our online Contact Page or by calling (212) 960-8890.