Why does Drake have over 20 shell companies? As an artist, you might find yourself doing the same thing someday. Let me break this down...
Shell Corporations
Shell corporations usually don't have active business operations or significant assets, even if their owners do. While they're often perceived as tools for illegitimate dealings, many are legally used for various legitimate reasons, such as raising funds, going public, or maintaining confidentiality. From large conglomerates to private individuals, shell corporations are widely used.
The Companies
LLCs:
Dream Crew Management, LLC
D Crew Management LLC
Dream Crew Operations, LLC
ADG Pages, LLC
Entrada Travel Services, LLC
OMERTA Creative Agency, LLC
Drake Related LLC
Away from Home Solutions, LLC
More Life Investments, LLC
Graham ADG Investments LLC
ADG Vanguard IP, LLC
ADG Merchandising U.S., LLC
ADG Holdings, LLC
Silence Policy, LLC
Corporations:
NOCTA FREEHOLD, INC
Dream Crew Holding Co, Inc
ADG Songs, INC
ADG Merchandise, INC
ADG Entertainment, INC
ADGBR, INC
ADG SOUND, INC
ADG IP, INC
Dream Crew Entertainment, INC
Having an LLC Does Not Automatically Make It a Shell Company
"The vast majority of celebrities have LLCs. Some may have 1-10, some have hundreds," they explained. "There are legal, tax, confidentiality, and privacy benefits to having these. Having an LLC as a celebrity is like having a seatbelt in your car. It doesn't necessarily mean anything nefarious is going on."
"In addition, having an LLC does not automatically make it a shell company. Being that it was incorporated and terminated within two years more likely means it was established for a particular purpose and was no longer needed. Establishing an LLC in the U.S. isn't the greatest idea if you're trying to be private because it's public record and easily accessible by normal folks."
Top LLCs Created by Music Artists
(Use the graphic from previous videos)
LLCs vs Corporations Pt.1
Ownership and Structure:
LLC = Members; INC = Shareholders that elect board members
Formation and Documentation:
LLC = Articles of Organization + Operating Agreement
INC = Articles of Incorporation + Bylaws + Board Meetings
Taxation:
LLC = Pass-through taxation
INC = Double Taxation (can be S-Elected)
LLCs vs Corporations Pt.2
Legal Protections:
Both LLCs and corporations offer liability protection.
Compliance and Formalities:
LLC = Not required to hold annual board meetings
INC = Required annual meetings
Fundraising and Growth Potential:
LLC = Personal funds, member contributions, or private loans
INC = Issues stock for investment
LLCs vs Corporations Pt.3
Duration:
LLC: Can have a limited lifespan depending on state laws and the company's operating agreement.
Corporation: Typically have a perpetual existence, continuing to operate irrespective of changes in ownership or management unless dissolved.
Choosing between an LLC and a corporation depends largely on the specific needs of the business, including its size, number of owners, need for investment, and desire to avoid double taxation.
Would You Put Your Name on the Entity?
Yes and no. It depends on what the entity is doing, how much risk it's taking on, and the charging protection order laws of the state.
When is the Right Time to Diversify My Companies?
You'll start to feel it around $120k in revenue. It will feel like eyes are watching you, and you’ll want to protect yourself.
How Would I Have Time to Manage These?
You wouldn’t—you'd need a legal staff of accountants, tax, corporate, and entertainment attorneys and lawyers.
Check This Out!
If you're a music creative or executive looking to build your label or publishing company in 60 days or less, with a step-by-step foolproof process, grab the 60 Day Record Label Course and get it done today! You’ll gain the ability to get real funding, avoid contractual pitfalls, and keep the middleman out of your pockets. Click the link below to get started now! If you’re skeptical, grab the free guide, "10 Ways to Increase Your Record Label Profits," which comes with a free split sheet download.
Building a Company
Allows you to practice and understand asset protection and business management. Whether your music career is big or small, you can capitalize off your art to the fullest extent possible.
Never Building a Company
Leads to huge amounts of financial risk that may ruin the income you depend on as a musician.
Conclusion
If you're seeking to secure your financial future as an artist, understanding the importance of establishing multiple LLCs and corporations is crucial. By doing so, you can protect your assets, manage your income effectively, and capitalize on your success while minimizing risks.
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