Your Band as a Business

April 21, 2011

On Friday, April 22, Aaron Zeamer, Derek Dissinger and I are looking forward to hosting a workshop at the Launch Music Conference and Festival at the Lancaster County Convention Center. In our workshop we will be discussing the advantages of forming a limited liability company. This 30 minute workshop called, "Your Band as a Business: How to Set Up an LLC and the Benefits of Doing So," will begin at 3:45 P.M.  I wanted to highlight in this post some of the benefits for a band to form an LLC.

For the uninitiated, "LLC" stands for "limited liability company", which is one of several types of entities that can be formed by people to run a business. While most bands think of themselves as artists first but  it is important to address the business issues as well. Forming an LLC takes some effort and time in the beginning but in the long run, particularly as you achieve additional success, it will enhance your credibility and take away some of the hassles that can arise when trying to do business as individuals.

The owners of the LLC are called "members", and the structure of the business is less complicated than that of a corporation. The members can run the LLC themselves or hire a manager. An LLC is formed by filing a Certificate of Organization with the Pennsylvania Department of State’s Corporation Bureau. Ideally, the members of the LLC then sign an Operating Agreement, which works as the rulebook for the LLC.

Although an LLC may not be the best solution in every situation, there are several advantages: 

  •  Limited Liability – In most cases, the personal assets of members are protected from the liabilities of the LLC.
  • Tax Pass-Through – Unlike a corporation, an LLC is not taxed at the business entity level. The taxes generally flow through to the individual members.
  • Expenses and Losses – Members of the LLC can take advantage of tax deductions for business expenses and losses that may not be available to individuals.
  • Consolidation – Because an LLC covers all of its members, it streamlines the logistical process of many business activities, such as filing documents with government authorities, entering into contracts and leases, initiating lawsuits on behalf of the members and maintaining company bank accounts.
  • Song Rights and Company Property – The Operating Agreement for the band can be tailored to address who owns the songs and other items of company property and whether a departing member will retain any ownership of the band’s music. It can also address how and if a departing member is compensated.
  • Dispute Resolution – The Operating Agreement can also be specifically written to anticipate and provide solutions for disputes among the members that may arise.

The Launch festival starts on April 21st and will run through the 24th. There will be over 200 bands performing over the course of the weekend at various venues throughout the city. In addition to performances there will be various panels and workshops, like ours, for artists to attend. We are looking forward to checking out some of the bands are performing this weekend.