Band Inc. ?

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satta
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Band Inc. ?

Postby satta » Mon Oct 20, 2008 1:46 pm

Has anybody made their band into a corporation or any other type of formal business relationship? Some friends of mine are starting to get some higher paying gigs and are concerned about the tax ramifications. Somebody has to give their SS number or a business ID. Any advice/horror stories....LLC,
partnership, sole proprietor, etc...

rrnate
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Postby rrnate » Mon Oct 20, 2008 3:37 pm

My ska band had to go pro a few years ago because of taxes - we went the LLC route which has worked out very well for us. I don't know that it's worth it if you're just getting paid cash/"under the table" but once you start seeing larger checks there's a certain point where you should do it.

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Postby Archipants » Mon Oct 20, 2008 4:00 pm

I've been playing with a band steadily for a little over 10 years. Throughout our history, one band member has been designated as handling the books and thus is the actual business entity - a sole proprietorship. The rest of the member treat themselves as independent contractors to the business entity and receive a 1099 from the band leader every tax season. I end up paying estimated taxes on this income throughout the year so I don't have to pay a lump sum at tax time.

Checks are generally made out to the business entity; the business entity or band leader then pays us independent contractors.

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Postby rick » Mon Oct 20, 2008 4:44 pm

Archipants situation is a workable one, especially if the one taking all the responsibility is the principal member of the band and the other members are happy with that. Sometimes disagreements arise with control issues, both creative and monetary.

Being a sole proprietor like that may subject him to sole liability, however.

An LLC is a hybrid of a partnership for tax purposes and a corporation for legal liability protection.

Becoming a single-member LLC can be done online for something like $80 with the state of WI. This will protect his personal assets from being attached in most cases. So, for instance, he wouldn't lose his car or home in most lawsuits where negligence or criminal activity aren't involved.

Multiple-member LLC's are a little more cumbersome but are cheaper than incorporating.

Musicians should always remember that as soon as you or your band have earned $600 from a single source, that payor is required to issue a 1099. If these aren't dealt with an IRS or WI notice is likely to be generated to whomever supplied the ID #.

Making matters worse, the IRS is reportedly focusing on Schedule C filers at this time. Unfortunately, the word "musician" is undoubtedly a red flag.

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Postby fisticuffs » Mon Oct 20, 2008 4:47 pm

I thought this was a thread about some new video game where you drive across country in a plastic van and eat garbage and sell plasma between shows.

Archipants
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Postby Archipants » Mon Oct 20, 2008 5:00 pm

rick wrote:Archipants situation is a workable one, especially if the one taking all the responsibility is the principal member of the band and the other members are happy with that. Sometimes disagreements arise with control issues, both creative and monetary.

I can see how a sole proprietorship can be an issue in a some cases. Fortunately our band has been together for twenty years with the founding member handling the books - so there really aren't any control issues, etc. Trying to get the ten musicians in my group, who regularly gig and sub with other groups, to incorporate or form an LLC might prove cumbersome. However, I can see the LLC or incorporation route being ideal and more manageable for a smaller group.

I'm not sure if our fearless leader has considered becoming a single-member LLC. I'll have to ask him about it.

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Postby ilikebeans » Mon Oct 20, 2008 5:06 pm

fisticuffs wrote:I thought this was a thread about some new video game where you drive across country in a plastic van and eat garbage and sell plasma between shows.

SimBand?

Bonus points if you arrive home with all of your gear, more cash than you left with, and the van is still firing on all cylinders.

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Re: Band Inc. ?

Postby benfury » Tue Oct 21, 2008 11:49 am

sounds like a douchebag move.

unless you are totally gonna make it dude.

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Re: Band Inc. ?

Postby charliedon'tsurf » Tue Oct 21, 2008 1:14 pm

benfury wrote:sounds like a douchebag move.

unless you are totally gonna make it dude.

Or a move for hard working bands made up of working class folks who don't want to give more of their tax dollars than need be so our government can send it down the rathole in Iraq or other retarded shit.

Any band that tours at least a couple weeks a year and intends to exist at least a couple years would be fucking idiots to not incorporate. Mileage write-offs are at $.585/mile not to mention writing off meals and any hotels bill provided you can actually afford that luxury. Yeah it means you need to hire an accountant to do your taxes, but your fattened tax return will do more than pay for that expense.

Thursday I fly out to New York city to booze hard for three days and see bands at CMJ. I do have a couple legitimate meeting and business, but 80% of my waking time will be spent just partying with friends on vacation. I get to write off the plane ticket and basically all my other expenses that are not intoxicants. Then add an annual trip to SXSW in Austin every year with a similar ratio of partying to actually doing business and numerous out of town trips I combine with record store consignment runs that allow me to write off my mileage and meals.

I like the fact my tax returns are about 1 K fatter than before I was part owner of a record label. In fact it is about the only form of monetary dividend it actually pays for many hours of my labor a week. Write offs and loopholes don't have to be limited to tie-wearing corporate douche bags, Ben.

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Re: Band Inc. ?

Postby chainsawcurtis » Wed Oct 22, 2008 9:13 am

charliedon'tsurf wrote:
benfury wrote:sounds like a douchebag move.

unless you are totally gonna make it dude.

Or a move for hard working bands made up of working class folks who don't want to give more of their tax dollars than need be so our government can send it down the rathole in Iraq or other retarded shit.

Any band that tours at least a couple weeks a year and intends to exist at least a couple years would be fucking idiots to not incorporate. Mileage write-offs are at $.585/mile not to mention writing off meals and any hotels bill provided you can actually afford that luxury. Yeah it means you need to hire an accountant to do your taxes, but your fattened tax return will do more than pay for that expense.......Write offs and loopholes don't have to be limited to tie-wearing corporate douche bags, Ben.


You don't really need an accountant. Just regular old Turbo Tax can help you a lot. If you are taking in more than $2500 a year as a musician you should be filing a schedule C. You can write off anything music related for the year (save your receipts). Even the tax application. Unless you are really raking in the dough you can probably write off enough where SS and Medicare taxes aren't that big of an issue.

Plus the IRS isn't looking for schedule C'ers like us. They're looking for folks for which they might actually be able to justify the expense of putting an auditor on the case.
Last edited by chainsawcurtis on Wed Oct 22, 2008 12:12 pm, edited 1 time in total.

Mean Scenester
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Re: Band Inc. ?

Postby Mean Scenester » Wed Oct 22, 2008 11:41 am

benfury wrote:sounds like a douchebag move.

I guess coming from someone who routinely sounds like a douchebag, this qualifies as expert advice, huh?

Not that you care, but yours is the user name I most frequently associate with the phrase, "Grow the fuck up!"

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Re: Band Inc. ?

Postby Archipants » Wed Oct 22, 2008 12:44 pm

chainsawcurtis wrote:You don't really need an accountant. Just regular old Turbo Tax can help you a lot. If you are taking in more than $2500 a year as a musician you should be filing a schedule C. You can write off anything music related for the year (save your receipts). Even the tax application. Unless you are really raking in the dough you can probably write off enough where SS and Medicare taxes aren't that big of an issue.

I've been using Turbo Tax for years now and find it quite easy to use even with my schedule C stuff. My wife thinks I'm a geek, but the software makes it so easy that I actually enjoy doing my taxes... plus I can do them on a Sunday morning in my pajamas.

I agree with chainsawcurtis, just save your receipts, keep track of your mileage, and you should be fine with using Turbo Tax... I'm not opposed to using an accountant, especially if it is someone you trust - I just feel confident doing it myself.

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Re: Band Inc. ?

Postby oranger » Wed Oct 22, 2008 1:10 pm

The write offs add up, especially when you add up all the nuts and bolts of a bands operation. If the band has a dedicated practice space, the rent can be written off. If the band buys equipment (speakers, vans, instruments) on credit the depreciation and the interest can be written off. All gas receipts can be written off, business entertainment expenses (buying drinks at the bar and meals while talking band business, going on outings discussing band business). The key is documentation. You can do your own taxes, it isn't exactly rocket science. A band working on weekends can very easily spend over 10 grand traveling around the Midwest over the course of a year.

It is not a douche bag move to protect a bands assets by writing off necessary expenses. Paying unnecessary taxes instead of paying your band members (who are working for jack squat by the way) is a douche bag move.


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