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As a musician, sometimes the last thing you want to think about is the business aspect of putting your music out in the world. After all, we’re creatives, and it feels so anti-creative to deal with things like tax forms and liabilities.
However, the majority of the most successful musicians have gained that success because they intertwine business with creativity, and one of the first steps in taking your music to a serious business level is registering for a music LLC, or limited liability company.
What are the benefits of a music LLC?
One of the best music production tips if you want to make a serious living through music is to register for a music LLC, which has plenty of benefits.
Pros of a music LLC
- Protects your personal assets. If, for some reason, someone decided to take legal action against you or your band, any liability would fall on the LLC. In other words, the person seeking damages could only sue your band or artist assets, such as the profits you have in your business/band bank account. If you continued as a sole proprietor, your personal assets could be at stake.
- It creates agreed-upon rules between band members. Most LLCs have a legally-binding agreement, called an Operating Agreement, where you can decide who has what role in your business, as well as the general terms and rules of your band as a business entity. In this case, you and your band members would agree on ground rules and responsibilities, including what happens if someone quits, how royalties are divided up, who owns the rights to the band name, etc.
- It can help with tax benefits. Wouldn’t it be nice to get some tax benefits by being a musician? You can do so when you register your band as an LLC. Otherwise, you’ll be paying self-employment taxes as a sole proprietor. Under your LLC, you can write off equipment, instruments, music lessons — anything that you would be paying that is for the business would run through the music LLC.
- It can allow for profit sharing. You’d need to agree to percentages as part of your Operating Agreement, but having an LLC allows you to provide different members certain percentages of profit and voting rights.
- It creates legitimacy as a band or music professional. When you’re looking to collaborate with other musicians, hire session musicians, or promote yourself as a serious musician-for-hire, being backed by an LLC gives your band or music business a level of credibility that it doesn’t have as a sole proprietorship/partnership.
Cons of a music LLC
There aren’t a lot of cons to having a music LLC, except for:
- Cost. Registering an LLC costs money and may come with additional business expenses if you decide to use a lawyer to draw up the paperwork for you.
- Paperwork. There can be a lot of paperwork to read over and agree on with the multiple members of your LLC, which can be pretty time-consuming.
Should an independent artist have an LLC?
If you’re an independent artist, having an LLC can be beneficial. You’ll create legitimacy with your music as a business, so you’ll gain trust and credibility in collaborations and promoting yourself for hire. Additionally, you’ll get the business tax breaks and protections if you ever find yourself in a situation where someone is seeking legal damages. You really never know what can happen, so it’s better to be fully protected whether you’re operating as a solo artist or in a band.
Does this cover copyright and licensing?
Any content that is written by employees of the LLC is its intellectual property. This means that if your members are “employees” of the LLC (which would essentially earn the members a salary), any content created by members, or employees, is the intellectual property of the LLC.
Ultimately, you can decide as a band whether you want your content to be owned individually or by the LLC and whether you want your LLC members to also be considered employees. This can be spelled out in your Operating Agreement.
As far as copyright registration and licensing, that’s something you’d have to seek out in addition to your music LLC registration. While intellectual property laws cover anything that you’ve created and have put in a fixed format, having additional copyright protection through registration covers all bases.
What to know before registering for a music LLC
There are a few things to keep in mind before registering your music LLC.
- You’ll need a registered agent. A registered agent is an individual whom you designate to receive important documents regarding your business. This can be you, another band member, your mom, whoever. The catch is, this person will need to be home should physical documents regarding your business be delivered. This is why it’s typically ideal to have a professional registered agent service, or your lawyer.
- Expect it to take some time. Typically, it takes about 7–10 days after your paperwork is submitted for your LLC to be registered with the state. However, there are certain times of the year when processing times can take a little longer, such as at the beginning of the year.
- Be prepared for the costs. Depending on what state you live in, registering your LLC can cost anywhere from $40-$500. If you’re using a lawyer to prepare your paperwork and act as a registered agent, this can increase the cost to $1,000 or more.
How to apply for an LLC as a musician
Now that you know the basics about why you should register for a music LLC, here’s how to do it:
- Choose your LLC business name (in this case, typically your band or artist name)
- Choose a registered agent
- Create an Operating Agreement
- File your registration documents with your state OR hire an attorney to do it
- Get an Employment Identification Number (EIN) from the IRS
- Open a business bank account
Take your music business to the next level
Starting a music LLC means that you’re serious about making music your career, which also means you’re serious about getting your new music heard. Check out Disc Makers’ Global Music Distribution Bundle that will get your music on streaming platforms such as Spotify, Apple Music, Amazon Music, and over 150 more services.
Lauren Davish is a writer, singer/songwriter, yoga instructor, and voice coach. She received her MA in Creative Writing with a focus on creative nonfiction in 2019. Her favorite types of writing include blog posts and song lyrics.