I Started a Band How do I Make it a Business?

Congrats on starting your career in music! It can be intimidating, but know that everyone has to start somewhere! Even if you have been in the music industry a while starting a business is an important part as you need it for taxes, applying for credit, and protecting your assets from liability.

What Type of Business Should Your Band Be?

If your band is starting to bring in money, it’s worth considering registering as a business. You’ve got three main options for structuring your band’s business:

1. Sole Proprietorship/Partnership: If you haven’t officially registered, your band might already fall under one of these categories by default—sole proprietorship if you’re the only “owner” or partnership if there are multiple “owners.” The downside? You’re not protected if someone sues your band. Your personal assets, like your car or savings, could be at risk.

2. Limited Liability Company (LLC): This is the most popular choice for bands. Forming an LLC protects your personal assets if the band gets sued, and it’s flexible, straightforward, and often comes with tax benefits.

3. Corporation: This option is more complex and involves more paperwork and ongoing requirements, so it’s not usually the right fit for most bands.

Do You Need an LLC for Your Band?

It depends on where your band is at. If you’re just jamming for fun or testing the waters, forming an LLC might not be worth the cost or effort yet. But if you’re serious about making music your career, here’s why an LLC might be a smart move:

• Liability Protection: If your band gets sued—for example, over a copyright dispute—you won’t be personally on the hook. Your band’s assets (like your gear) could be taken, but not your personal savings or car.

• Appealing to Record Labels: An LLC can legally own the music your band creates, making it more attractive to labels. They know they won’t have to mediate ownership disputes if your band ever splits.

• Clear Roles and Responsibilities: Through an operating agreement, you can spell out each member’s roles, rights, and responsibilities, avoiding future disputes.

• Easier Equipment Leasing: As an LLC, your band can lease gear directly, instead of pinning financial responsibility on one member.

• Tax Benefits: An LLC often makes it easier to write off expenses and save money during tax season.

How to Start an LLC for Your Band

Starting an LLC for your band is similar to starting any small business. While the exact process varies by state, here are the basic steps:

1. Appoint a Registered Agent: This is the person or service responsible for handling official legal notices on behalf of your band. It could be a band member, your manager, or a professional service.

2. Choose a Name: You can use your band name as your LLC name, but you’ll need to check if it’s available in your state. The name must include “limited liability company” or “LLC” and comply with state naming rules.

3. File Formation Documents: Submit your LLC Articles of Organization to your state and pay the filing fee.

4. Get a Tax ID (EIN): Apply for an Employer Identification Number through the IRS.

5. Create an Operating Agreement: This outlines each band member’s roles, responsibilities, and ownership stakes.

6. Open a Business Bank Account: Keeping bank finances separate from personal finances is crucial for maintaining liability protection.

7. Handle Ongoing Requirements: Many states require annual reports and have varying tax obligations for LLCs.

Setting up an LLC might feel like a lot of work, but it’s a key step for bands aiming to grow professionally while protecting themselves. If you’re serious about your music, this could be the foundation for your success.