You can also bring other performers in as members of your LLC, with limited rights (such as not having rights to vote on management decisions) and specified benefits (like being entitled to a specific percentage of proceeds or profits). The LLC could hire the other performers as employees you really should have a bookkeeper/accountant, and this person can set up your employee documents for you.
If the performers have their own LLC, your two LLCs can contract with one another. The LLC can enter into a contract with the performers. Having an LLC provides a great deal of flexibility in how you collaborate with other performers.
Big business band full#
If you do not have a written agreement with other musicians (or actors, such as dancers appearing in a video), signed by those other performers, then those performers will maintain their full copyright interests in their performances, and can make demands for royalties as well as demand that you discontinue distribution of the recording or video if they no longer want it distributed for any reason in the future. That written agreement, signed by everyone involved, should set out who will own the copyrights of the performance, and the terms of payment, including whether the additional performers are getting a flat rate or will be receiving a share of the royalties or other proceeds. If you are going to bring in additional musicians to record a studio track or perform on a music video, you can and should have a written agreement with them even if you are simply a sole proprietor. If you are a sole proprietor LLC, this liability insulation is not enormous, but it does mean that anyone suing your music business has to first go through the assets of your music business before they can attach your home and other income. And you'll have some liability insulation between the business and the rest of your life and family possessions. You can get business property insurance for your instruments that isn't subject to the deductible on your homeowner's insurance. (You’ll use that separate ID number when opening a separate bank account.) You'll get a separate tax ID number that can help ensure that your music business funds and expenses remain distinct from any other household income. If you are seriously trying to make all or a substantial portion of your living from your music, forming a sole proprietorship Limited Liability Company (LLC) has some distinct advantages.
Big business band upgrade#
It may be difficult to obtain credit as a sole proprietor, depending on your personal credit record and financial situation you may be able to get a credit card from one of the commercial musician’s supply catalogs, but a bank loan to fund a world tour or PA upgrade may be difficult. Granted, risk of liability may seem low (what are the odds of someone being electricuted on your speaker wire at a gig?) but if by chance you are sued for anything (copyright violations, for example), you are personally completely liable, and the person suing can attach your house, bank account, and other personal assets. You have absolutely control over your work, but you also have 100% of the risk. You’ll need to consult a tax preparer about whether you can report losses of your music business on your income tax returns. As a sole proprietor, you can do this simply using ledger sheets or a spreadsheet program, but it is much clearer and safer if you have a separate bank account. But if you want to offset any of your music income with your many music-related expenses (new strings and microphone cables, mileage to and from gigs), you will need to keep meticulous, tax-auditable records. The structure is as simple as can be: It’s just you. A sole proprietorship has advantages and disadvantages: If you are making money without any kind of formal business entity, you are what the IRS calls a “sole proprietor”.
Big business band professional#
If, like millions of professional musicians, you are a solo performer, you may not think you need to form a legal entity to carry out your music business. Should I get a written agreement with them? I’m a solo singer-songwriter, but I’m going to bring some back-up musicians into the studio for my next recording session.
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