Another thing you’d want to think about when setting up a record label is who’s music you’re releasing. Will it be just a outlet for only your music, or will you sign and be releasing other people’s music under the record label? If you were planning sign and release other people’s music under the record label, you’ll have a lot more to think about. Such as how this person will get paid (If at all), who’s going to pay the person’s expenses (You or them), and when are you going to release their material if you’re working on your own or other people’s projects.
Big record labels cover all expenses for people under their record labels. They also fund most of the promotional materials for the release (Bar 50% of a released video), and do a large part of promotional work. They also fund the artist’s living costs / wage. This of course won’t be possible if you’re only a small record label.
An option if you’re still quite a small label financially but have a respectable name, is to release other people’s material under your label in a non financial deal. That way the artist still pays for the release of their product, but it benefits them in the sense they’re releasing under your name so have access to your fans. If the artist is good (Which I’m assuming they would be for you to agree a release for their album or single under you record label) it’ll also help further boost your label’s name, showing you have a habit for releasing good material. This will build up brand loyalty for your label and people would be more likely to pay attention to when you release material in future.
Another option is to only fund the pressing up of a release. This may be useful if you have a talented artist but they don’t have the funds to release their own work. You could make their product and take 100% of the sales until you recoup your initial investment. After that you can split the profit with the artist. This way you both win unless the initial investment is not recouped. You may want to put something in place in case this does happen, but it can be hard in these sort of deals considering the whole reason you’re doing it is because the artist doesn’t have the money in the first place.