Why You Should Turn Your Band Into an LLC

It may sound unusual, but there are plenty of advantages to turning your band into a limited liability company (LLC). Posting your tracks on Soundcloud, paying for Facebook business ads, and even using LinkedIn to have a more professional presence can only do so much for your band. If your goal is to play music as a long-term career, here are several reasons why you should consider registering your band as an LLC.

You get tax incentives

This is the single biggest advantage of turning your band into an LLC. It’s basically the most flexible business structure you can register as, and it legally designates your band as a business entity. This means that you have the option to write off the costs of certain instruments, recording equipment, and other essentials as business expenses in your tax returns. As explained by The Balance in its run-down on how to register a band as a business, tax laws are generally more generous in terms of what can be deducted or written off as business expenses. The more you can write off, the more will be left in your pocket after tax season. Not only can this save you a lot of money, it can also simplify how you file taxes for anything related to your band, including concert tickets, streaming revenues, and other revenue streams. So, find an accountant that deals specifically with musicians' taxes.

It’s not as complicated as you might think

In Florida, for example, LLC formation is pretty straightforward. After picking a name for your company and appointing a registered agent in the state, you need to file your Florida articles of organization and your operating agreement. These documents will allow you to include certain speculations in the band’s structure and how it operates. Thanks to the inherently flexible nature of LLCs, you can draft these documents towards the equal divvying up of profits, losses, and liability responsibility. This guide to creating an LLC in Florida by ZenBusiness outlines everything you need to know in order to start and complete the process. According to ZenBusiness, you can even use the operating agreement to specify which equipment or other assets are personal and which are part of the business. Even the percentage ownership of future works can be specified in this initial document, which brings us to our next point.

Band members get legal protection

As mentioned before, turning your band into an LLC legally separates it as a business identity. Apart from tax breaks, this means that LLC members have legal protection, which prevents their personal assets from being seized in lawsuits against the LLC itself. This may not sound all that appealing now, but think of it as a safety net. Should you unwittingly violate contractual agreements by failing to bring enough audiences to a concert or turn up to a concert to perform, it’s your LLC that tackles the liability – not your personal bank accounts or other assets.

Your band will get more professional

By turning your band into a shared legal and financial responsibility, band members are more likely to approach everything with a bit more professionalism. Record executives, event organizers, and other people in the music business will also be more willing to work with your band. With the income and losses of the band being accounted for in your LLC’s tax returns and other financial documents, each band member knows exactly where they stand. While turning your band into an LLC will come with certain fees, including hiring a business law attorney, it’s also a big investment in your long-term career as a musician.

This guest blog should not be construed as legal advice. Always consult an attorney and/or certified public accountant before taking these types of actions with your business.

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