Starting A Company

by Sihpesihle Msomi

For various musicians, the thought of owning a company had been seen as a very unattractive suggestion in managing of their careers. This feeling is experienced as something that hinders creativity even though we all know that exercising a bit of self-management is something that is critical to our livelihood. The major shift in consumer demand has affected profit margins for various industry role players and this has led to an even greater number of entrepreneurs in music.

 

Now, starting your company, I have found can be driven by atleast two factors:
1. You are chasing after an opportunity, fast.
2. You have a long life dream of having this type of business
The two ways usually distinguish the route taken by the new entrepreneur. In an attempt to grasp an opportunity, such entrepreneurs are likely to spend more money in getting their company certificate from private service providers like Shelf Warehouse who give you the certificate in just a fewdays (find example of such company here). Alternatively you can go to a SEDA near you on Wednesday morning and attend a workshop where you can be advised on picking a type of company to register e.g Co-operative, Pty (ltd) etc. To offer a brief explanation, a co-operative has a minimum of 5 members and a constitution is created to inform the ways the business is to be conducted. What comes to many beginners as much contention is the percentage split on profits but this provision can also be set in the constitution. The Pty is a private company that can be owned by one or more people. To find out which SEDA offices is closest to you can visit www.seda.org.za.
After having received the company registration certificate you need to open a business bank account. Certain banks may request a letter from a client that is committing to doing business with your company although by far you will not come across such an inhibit suggestion. What will be needed from you to open a business account are the certified ID copies of the owners of the business, R250, R350 or R500 depending on the type bank you have chosen and also your proof of residents.
One of the main reasons for musicians to start up their own companies are the vast opportunities that can be realised with the government or some social aspects of society. In dealing with funding opportunities and also government department, the tax clearance certificate becomes an important item on your list of submissions. Not to say that, in having it, then you need nothing else but you can be sure that it will allows grace the list of items needed from companies that are seeking funding or assistance from government departments. With that said, you have to walk into South African Revenue Services (SARS) to enlist your company in their database, get your company tax number and after some days you will get your tax clearance certificate. It is a process but the queues move quicker if you ask the people on the floor who are there to assist you as opposed to joining the wrong line for an hour only to restart another long queue.
Besides the hurdle of traveling to the various departments like Department of Arts and Culture, Department of Economic Development etc from one edge of the city to another. You still have to get your BEE score card. This positions your company to be a benefactor of the BEE policy that was placed by government to assist previously disadvantaged individuals to gain the chance to empower themselves within the South African economy.
To read up a few things on the Black Economic Empowerment:
http://www.bee.co.za/content/Information.aspx
http://bee-scorecard.co.za/?gclid=CL3zgaWEwr0CFYWWtAod6kAAPA
http://www.standardbank.co.za/standimg/Standard%2520Bank/StandardBank/static%2520files/Business/StdBank_BEE_Guide.pdf
In closing, you need to understand the implications of working for certain company or record label as a musician as opposed to having your own company that manages your business. In working for a certain company you become comfortable with the fact that someone else is taking care of your finances and business operations. Do I need to remind you that your music is the most intricate part of this business? Being the owner takes discipline, but you already have that because you would not have been a professional or good music without such discipline during practise. The same goes for business operations, you start small and grow accordingly when you look back you can see the practise that got you this far. Last but not least, starting up your own company is also a long term investment into your career that will allow you to associate with various role players in the industry. Who knows, as time goes, you might move from being a musician to an owner or a lucrative radio station.

 

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