Tips & Tricks: Basic Building Blocks of a Music Business
Turning your band or other music industry passion into a successful business isn’t just about writing great songs and booking gigs - it’s about setting up the right foundation to protect your assets, manage your money, and create growth opportunities. Whether you’re an indie artist or a full band, taking the right legal and financial steps can save you from major headaches down the road.
In this post, we’ll cover the essential building blocks of establishing your band as a business, including forming an LLC, setting up a bank account, creating a band agreement, managing finances, and more.
1. Establishing an LLC
A Limited Liability Company (LLC) is one of the best ways to protect yourself and your bandmates from personal financial liability. By forming an LLC, your band becomes its own legal entity, separating your personal assets from the band’s finances. Plus, it makes you look incredibly professional and makes payments and tax filings much easier.
Choosing the Right LLC Type
Single-Member LLC: Ideal for solo artists or a single owner managing the business.
Multi-Member LLC: Best for bands with multiple members sharing ownership.
LLC Name vs. Band Name (DBA Requirements)
Your LLC name does not have to be the same as your band name, but if they are different, you’ll need to register a Doing Business As (DBA) name (also called a trade name or fictitious business name). There are a couple of pros to having a separate business name from your band name, such as being able to pursue other creative ventures under the same parent LLC.
Example: Your LLC could be registered as “XYZ Music LLC,” while your band performs under “The Rocking Tones.” In this case, you must file a DBA for “The Rocking Tones” under your LLC.
Why It Matters: A DBA allows you to legally do business, sign contracts, and receive payments under your band’s name while keeping financial and legal protections under the LLC.
Establishing Leadership Roles
For a multi-member LLC, assigning leadership roles can clarify responsibilities, streamline decision-making, and provide structure when dealing with contracts, finances, and legal matters. Common roles include:
President (or Band Leader): Handles high-level decisions, represents the band in contracts.
Vice President: Supports the president, steps in when needed.
Treasurer: Manages finances, oversees bank accounts and bookkeeping.
Secretary: Keeps track of meeting minutes, important documents, and compliance filings.
While not all LLCs require designated roles, having them can simplify contract signings and formal communications with venues, labels, and service providers.
Articles of Organization
Articles of Organization are the legal documents required to officially register your LLC with your state. They outline basic details about your business, such as its name, address, and management structure. For bands, these could include:
The official name of the LLC and the DBA (if applicable).
Names of the band members who are designated as owners.
The purpose of the LLC (e.g., "Managing musical performances, recordings, and merchandise sales").
The structure of decision-making within the band.
Registered agent details (the person responsible for legal correspondence).
Each state has specific requirements, so check with your local Secretary of State’s office for the correct format and filing process.
Operating Agreement
An Operating Agreement is an internal document that outlines how your LLC will be managed and how financial and operational decisions will be made. While not always required by law, it’s highly recommended for bands to avoid conflicts and ensure everyone is on the same page. It’s much better to make this agreement now to prepare for the worst, even if you don’t anticipate it. That way, later on, if situations do arise, there are clear and accepted processes for dealing with them.
For bands, an operating agreement could include:
Ownership Percentages: Defining each member’s share in the business.
Profit and Loss Distribution: How earnings from gigs, streaming, and merchandise sales will be split.
Decision-Making Process: Whether decisions require a majority vote, unanimous consent, or if specific roles have final say.
Membership Changes: What happens if a band member leaves or if a new member joins.
Dissolution Terms: How the business assets will be divided if the band breaks up.
Creating an operating agreement early on can help prevent disputes and provide a solid framework for managing the business side of your band.
How to Register Your LLC
Choose a Unique LLC Name – Check availability in your state and confirm it’s not trademarked. Most Secretary of State websites offer database searches where you can easily see if your desired name is available.
File Articles of Organization – Submit paperwork through your state’s Secretary of State website.
Pay the Filing Fee – Costs vary by state, usually between $50-$500.
Obtain an EIN from the IRS – This is your business’s tax ID, needed for banking and taxes. This is the number identifier that will appear on your W9 for submission to venues you’re playing at.
Register a DBA (if needed) – File a DBA to legally operate under your band’s name.
Create an Operating Agreement – Outlines roles, revenue splits, and decision-making processes (not always required but highly recommended).
2. Setting Up Business Banking
Once your LLC is formed, you need to separate band finances from personal finances. This is essential for tax purposes, financial tracking, and professional credibility.
How to Open a Business Bank Account
What You’ll Need: EIN, LLC formation documents, band agreement (if applicable).
Choosing the Right Bank: Look for low fees, good online banking options, and integrations with financial tools. If you plan to tour often, choose a bank that has locations across the country or even across the world.
Having a dedicated business account helps track income, expenses, and payouts to band members while making tax filing much easier.
3. Creating a Band Agreement
Think of a band agreement as a prenup for musicians—it clarifies expectations and helps prevent disputes.
Key Elements to Include:
Ownership Breakdown: Who owns what percentage of the band?
Decision-Making Process: How are major band decisions made?
Revenue Split: How will income from gigs, merch, streaming, etc., be divided?
Intellectual Property Rights: Who owns the songs, recordings, and band name?
Exit Strategy: What happens if a band member leaves?
Taking the time to draft a solid agreement ensures everyone is on the same page and avoids messy legal battles later.
4. Financial Management & Taxes
Tracking Income & Expenses
Use accounting software (QuickBooks, Wave, FreshBooks) or a simple spreadsheet to log all money coming in and going out. I find the QuickBooks app especially helpful as it allows you to snap and store receipts in the moment, has mileage tracking built in, and includes an easy-to-use expense/income categorization tool. Keeping track of your spending and income as you go makes filing taxes so much easier when January rolls around.
Understanding Taxes
LLCs are typically pass-through entities, meaning band income passes to members for tax reporting.
If you hire session musicians or contractors, issue 1099 forms for tax compliance.
Be prepared to issue K1s to LLC members.
Be prepared for self-employment tax (about 15.3%) on band earnings.
File early so that your members and contractors still have time to file their taxes before April 15.
Form 1099-NEC (Non-Employee Compensation)
Who Needs One? Any individual or business (not an employee) that the LLC pays $600 or more in a year for services (e.g., session musicians, sound engineers, graphic designers).
Deadline to Send to Recipients: January 31
Deadline to File with IRS: January 31
Form 1065 & Schedule K-1 (For Multi-Member LLCs or Partnerships)
Who Needs One? Each member of a multi-member LLC or partnership must receive a K-1, which reports their share of income, deductions, and credits.
Deadline to Send to Members: March 15 (or September 15 with an extension)
Deadline to File with IRS: March 15 (or September 15 with an extension)
For single-member LLCs, profits and losses are typically reported on Schedule C of the owner's personal tax return, so K-1s are not required.
Consulting a music business accountant can save you time and ensure compliance with tax laws.
5. Additional Business Essentials
Beyond banking and taxes, there are a few more steps to protect your band as a business:
State & Local Business Licenses: Check if your state or city requires additional registrations.
Trademarking Your Band Name: Avoid legal issues by securing exclusive rights to your name.
Business Insurance: Protect against liability claims, gear theft, or canceled gigs. MusicPro is a great resource for gear insurance.
TLDR: Conclusion & Next Steps
Establishing your band as a business might seem overwhelming, but taking these steps early can save you from legal and financial trouble later. Here’s a TLDR:
✅ Form an LLC to protect personal assets
✅ Open a business bank account to manage finances
✅ Create a band agreement to define responsibilities
✅ Track finances and understand tax obligations
✅ Consider additional protections like trademarks and insurance
By treating your band like a business, you’re setting yourself up for long-term success. Ready to get started? Check your state’s LLC registration requirements and take the first step today!