The Benefits of Incorporating Your Band as an LLC

As an up-and-coming musician who is looking to make it in the world of music, you want to make sure that you make all of the right decisions so you will have the legal protection you need in case there is a problem in the future. As a member of a band, you will likely encounter disagreements and disputes both within and from outside of the band, and you should take steps to mitigate your band’s risks.

Most band members do not view their bands as businesses, but that is exactly what they are. You are likely in the music business to create art, but from a legal standpoint, your band is a business. Thus, it has the potential to obtain the same legal protections as any business, such as incorporation. There are several forms of incorporation that a band can adopt. One popular form is the Limited Liability Company. Below we have detailed a few of the specific benefits your band could achieve with an LLC designation:

1) Liability protection

The number one reason most businesses seek to incorporate is to protect themselves from personal liability risks. The more money your band makes, the higher the potential that you will get sued at some point. Whether the lawsuit is frivolous or has some merit, an LLC designation can keep the lawsuit from impacting your personal assets.

2) Define how band members are paid/what share each person receives

How does your band pay its members? Does everyone receive an equal share, or do certain members who might contribute more deserve a greater share? There is a high risk for disputes over money amongst band members, and by incorporating as an LLC you will have the opportunity to legally define exactly how band income will be divided before a dispute can occur.

3) Define roles of band members

As with income, it is important that every band member understand his or her role within the band. Incorporation allows you to define roles and expectations so everyone can be on the same page moving forward. This limits the potential for disputes over misunderstandings between band members about one another’s role in the band.  

4) Tax benefits

As an incorporated band, you will be able to get a few tax breaks that you may not have been eligible for before. You may be able to treat numerous expenses of operating your band as business expenses and claim useful deductions that can save you serious money. For example, you may be able to write off the devaluation of your instruments and other band equipment or deduct touring expenses.

Sometimes it can be difficult for musicians to view their band as a business. For most, their music is more an artistic venture than a profit-making venture. Nonetheless, when it comes to protecting your art, it may well be worth it for your band to form an entity that protects the band and its business. To learn more, contact the Kelley Law Group today.  

Written by Kelley Law Group

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