Have an informal meeting with the band you are signing. Before the record contract even gets written, it is important that the label and the band that is being signed have a healthy relationship. To make sure each party's wants and needs are addressed, sit down with the band you are signing to your record label and discuss what they expect from you and what you expect from them. Take notes on what is discussed to stay organized.
Write up a rough draft of the record contract. The record contract will include a variety of items including how many years you want the band signed to the label, how much the band will receive in royalties from the CD and digital sales, other services such as tour help and marketing that you will provide, and how many records you expect the band to record while under contract. Most contracts will run for five to seven years, with several records expected from the band, and most major labels pay a royalty rate of 10 to 15 percent of sales.
Present your contract to the band and have them take it to a music lawyer. Now that you have a rough contract assembled, present the contract to the band you are signing. Go over all of the details as best that you can and make sure that everyone is still pleased with the outcome. It is advised that you have the band consult a music lawyer to make sure that they fully understand what they are getting into and that they have the ability to negotiate properly themselves.
Revise the contract. Now that the band has consulted a music lawyer and brought back the changes they wish to make, rewrite the contract with the updated agreements. Present the contract to the band. Hopefully they will find the new contract satisfactory; if not, repeat steps one through three until everyone involved is happy.