Should a Musician Form an LLC?

Despite the artistry involved in writing music and lyrics, music can quickly become a business once you're paid to perform. When you start getting paid well, and then start buying and maintaining better, more expensive equipment, music transitions into a very serious business.

LLCs for Musicians

Just like owners of brick and mortar stores, many musicians choose to protect themselves and their bands by forming a Delaware LLC or corporation. However, there are even more incentives to form a corporation or LLC as a musician, one of which involves signing with a label. Harvard Business Services, Inc. has more than three decades of experience forming Delaware companies for people who want to protect their assets, including musicians. However, we are not a law firm and cannot give legal advice. Please consult an attorney if you need legal advice before forming an LLC or corporation for a record label or music publisher. We can, however, explain why a number of musicians choose to protect their assets, and point out some important factors to consider when creating a corporation or LLC for a band.

Why Incorporate Your Band?

Many musicians choose to incorporate their bands for asset protection. Without incorporating the band, often each member can be held personally liable for any debts or legal disputes the band may encounter. This means your personal assets—cars, house, bank accounts, music equipment and other personal assets—may be at risk. However, you can protect your personal assets by forming a corporation or LLC for your band.  Forming a band LLC or corporation creates a barrier between your band and your personal assets; your band is considered an entity unto itself, and therefore the band—not its individual members—is generally held responsible for its debts and liabilities. This makes it more difficult for a plaintiff’s attorney to pursue your car, home, personal bank account, music equipment or any other personal assets, in the event of a lawsuit against your band.

Forming a company is also beneficial for establishing the rights and responsibilities of each member of the band. Registering a band as a business will help create a clear legal structure with defined roles for everyone involved. If you form a Delaware LLC, your Operating Agreement will state ownership, operation and management for the company, along with procedures for removing a member, and requirements members must accept if they choose to leave the band.

Incorporating a band can give the impression of a more professional and established entity, which can be important when seeking out gigs, signing contracts, or attracting investors. Most record labels want to contractually engage with other companies, not individuals or groups of individuals. In addition, having the abbreviations "LLC" or "Inc." appended to your company name implies you are serious professionals. In the future,incorporating your band can also protect both you and the label against breakups and disputes over music and ownership.

Tax Benefits for a Musician's LLC

A corporation or LLC for musicians may often provide some tax benefits for the members of the group. With an LLC, a band has flexibility in how it is taxed. Circumstances will allow a musician's LLC to be taxed as a sole propreitorship, a partnership, or a corporation. Generally, the band may benefit from deductions for business expenses and tax rates. For more information you will want to speak with a tax professional or Accountant.

How to Incorporate a Band

Many musicians opt to form a Delaware LLC for their bands because it has fewer corporate formalities than a corporation and allows you to operate your business as you see fit. The LLC's Operating Agreement also allows you to clarify the rights and responsibilities of individual members, which could help in the event of a dispute among bandmates.

Ready to protect your assets and incorporate your band? Harvard Business Services, Inc. makes the process easy for you. Simply click the button below and fill out our order form to start registering your band as a business. If you'd prefer to speak with someone, we're also available to help via phone (800-345-2677), email and live chat.