In my various dealings with clients, I’ve come across surprisingly few bands that have taken the plunge… no… not getting married -or maybe it is- but forming a legal business entity. If your group is serious about being professional and being the sole source of income for all the members, than maybe a legal business entity is the right step.

Signs you might want to incorporate (or organize as an LLC):

• You purchase equipment for band use only
• You advertise, spend money on studio rent, drive to/from shows, maybe tour around the country, etc.
• You purchase and sell CDs, t-shirts, stickers, 1″ buttons,  and other merchandise.
• You are a solo act and/or have been with your current band mates a while –or you are new but intend to do so

While there may be many other good reasons to incorporate (or organize as an LLC), many people feel lost or like it’s WAY over their head. Legally speaking, you are already operating as a Sole Proprietor or Partnership. Taking the steps to incorporate will not only make that official, but it can add a layer or two of protection if you should get sued for any reason. It also can create a legal and fair method of distributing income and expense among various members.

Businesses also provide a good tax shelter in their early years. In addition to the standard expenses and deductions you can already take now, your new LLC/Corporation can pay for your cell phone, internet, and other costs associated with promoting your band. Because you business writes off the expenses, you might not have to pay tax for those items you normally use anyway. This is like getting between a 15-33% discount (depending on your tax rate).

Here are some steps you should take:

1. Talk to your band mates and make sure it’s the right move
2. Go to your Secretary of State’s website and check to make sure your name is available. Finding an available name might be a little easier for you starting up a band than it would be for a man named “Al” trying to start up “Al’s Plumbing”
3. Find a good accountant and a good lawyer to help you through the process. Their fees are deductible and their advice is priceless. hint: find professionals that specifically deal with musicians or music business
4. Get a Tax ID# and a Federal EIN#. –the added benefit is that with certain purchases, having an EIN/Tax ID will entitle you to pay less than retail for some items.
5. Purchase good accounting software (I use quickbooks). It will keep your band’s finances separate from your personal finances. It will also give you a great tool to create and send invoices to clubs, bars, event promoters, etc.
6. If you don’t already have a stellar logo/graphic identity, contact us to get that going ASAP!

BOOM! You’re in business.

Even though you’re a band, you should consider seeing yourself as a “lifestyle” or “entertainment” business. Your business model is highly brand-centric. In addition to your music, you should have plenty of well mixed merchandise for sale. You should also consider strategic partnerships with other bands, selling advertising at your events, collaborating with product repping companies, selling music to movies and commercials, and a host of other non-traditional (dare I say, “guerrilla”) styles of seeking revenue.