If you are new to accounting with Label Engine, things can seem a little daunting, especially if you've not done accounting before. Let's strip things down to the absolute basics to get you started.
So how does money flow through a record label?
Each time you put out a release, you sign a contract with the artist of the track (even if it's just a verbal agreement). That contract states the terms by which the artist or other parties involved can expect payment. These terms could specify a flat fee, a percentage, or an advance.
To put out the release, you may have some expenses such as mastering, artwork or promotion costs.
You then send the release to your distributor or to some stores, who sell the track and give you back some money along with a royalty statement detailing how many copies of each track you sold or were streamed.
The role of accounting is to bring together these royalty statements, expenses and contract terms and figure out how much money you owe each person involved, and then pay them.
So how do you do this with Label Engine?
Although there are several different options for how you use our system, we recommend using it as follows:
Ensure 'Suggest Contract Accounts' is ticked on the accounts menu page.
Enter your Release into the system.
Once you know the terms of your contract, set your Pre-Allocations.
If you need to, pay your artists their advance or fee using the 'Payments' section, being sure to have selected the correct Contract Account if you are paying an advance.
Enter in any expenses for the release as they occur into the 'Expenses' section and allocate them using your Pre-Allocations.
Once you receive your royalty statements from your distributor or stores, upload them to the 'Royalties' section and allocate each royalty using your Pre-Allocations.
Enter any additional Sales into the 'Sales' section and allocate them using your Pre-Allocations.
Each quarter send all artists / companies a statement using the 'Payments' section. Pay them once they return an invoice to you.
Obviously, each of these steps requires a little more explanation, we recommend reading each of the help topics within the accounting section for more information.