BS: Incorporating the band: What do you do?

Subject: Incorporating the band: What do you do?
From: Naemanson
Date: 26 Oct 00 - 10:50 PM

Roll & Go has been together as a group since the 70's. I joined in 1992. When I joined it was still just a group of friends singing together and occasionally getting paid a pittance to do some performance.

Then about 2 or 3 years ago we decided it was time to get serious (a little) and focus on our sound. We have been working hard and it shows. We're also working on a CD. We've been inducted into the list of Maine touring performers. We are actually fielding calls to perform at various functions. There is even some money coming into the group.

The money and the CD have raised some interesting issues with the legal relationship we have with each other. We have already agreed that nobody has any individual rights to the CD. The money to make it came from performances by Roll & Go and therefore the CD belongs to Roll & Go. If a member walks out they are walking away from the CD too. We agreed to that before we started to work on it.

But we have the money to deal with. And our intentions as regards our music. So far one of our members has been keeping it in a personal bank account. That works fairly well. There are no trust issues here, we all consider each other completely trust worthy. But the money becomes an issue at tax time. All of a sudden it looks like he has more money than he does and it affects his tax return.

We are toying around with different solutions and thought we'd check with other musicians. This seemed like a good place to start.

So what do you do? Divide up the money? Form a legal partnership? Incorporate? How do you handle the legal issues regarding the band?

Subject: RE: BS: Incorporating the band: What do you do?
From: Naemanson
Date: 27 Oct 00 - 11:45 AM

Refresh

Subject: RE: BS: Incorporating the band: What do you do?
From: MK
Date: 27 Oct 00 - 12:00 PM

Even loving couples often have prenuptual agreements. If there are developing and shared assets starting to accumulate, best to talk to an entertainment lawyer and draw up some sort of an agreement, in the event that circumstances change, as the group becomes more successful.

Subject: RE: BS: Incorporating the band: What do you do?
From: Big Mick
Date: 27 Oct 00 - 12:15 PM

You would not find a closer bunch than the lads in my band. But as the money started to enter in, we incorporated and all income comes into the corporation. This makes the corporation a separate entity and all contracts are signed on behalf of the corporation. This puts a wall between personal assets and the band. There are many good reasons for this such as liablity. It also forced us to discuss the distribution of assets, etc. in case someone decided to leave, band breaks up, etc. It leaves very little to interpretation. We had a couple of fans who were attorneys, damn fine ones I might add, and they did the work for us if we agreed to a gig for them. All we had in hard cash was the various filing fees which were less than $100. Works well for us, we even have a checking account and credit card.

Mick

Subject: RE: BS: Incorporating the band: What do you do?
From: Naemanson
Date: 30 Oct 00 - 12:08 PM

Refresh

Subject: RE: BS: Incorporating the band: What do you do?
From: Jim the Bart
Date: 30 Oct 00 - 02:10 PM

Naemanson - I'm not a lawyer, so don't consider this legal advice, but I've been the "corporation" route and found that we spent more money keeping the corporation legal than it was worth. In Illinois, you have to file every year. The papers have to be drawn up by a lawyer, which involves legal fees. It really wasn't worth it for the level of income we were generating.

Formal partnership agreements are also a problem. You can end up paying for your "partners" indiscretions should there be lawsuits.

I have found that having each member declare income as an independent contractor handles tax liability on gig money. One guy collects it as income and distributes a share to each member as an idependent contractor. At tax time, the one who collected the money declares the full amount, less the payouts. I would probably talk to a lawyer about signing an agreement on the CD income/expenses.

Make sure you and the other band members are absolutely clear on your working arrangement before talking to a Lawyer. A friendly entertainment lawyer is a good idea, but any lawyer who deals with independent contractor issues can help you out. He or she will tell you how much of your verbal agreements you should put into writing.

Good luck.

Subject: RE: BS: Incorporating the band: What do you do?
From: Callie
Date: 30 Oct 00 - 05:05 PM

My group has a joint bank account. Because it's still early days, everything we earn goes into it. We will use the money to produce our first cd. If there is enough money, we will also split what's left 3 ways and use it for our overseas trip next year. If (when!!) tons of money starts rolling in, we will probably still put all the money through the account and start paying ourselves. We're lucky because up until now we have all been like-minded about what to do with the money.

good luck!

Callie

Subject: RE: BS: Incorporating the band: What do you do?
From: GUEST,leeneia
Date: 31 Oct 00 - 11:05 AM

The first thing to do is to visit your public libraries and read at least a couple books on these issues. Here are a couple things to check on: 1. I believe that if you form a corporation, then the corporation has to pay its own taxes on profits (if any, of course). Then the shareholders have to pay more taxes when they get their distributions. Why do that?

2. I took a college level accounting course, and one conclusion I reached is that the partnership is a very dangerous way to do business. Yes, it simplifies taxes, but it yokes you to your partner. Read the books to see what I mean.

Subject: RE: BS: Incorporating the band: What do you do?
From: GUEST,leeneia
Date: 31 Oct 00 - 11:06 AM

The first thing to do is to visit your public libraries and read at least a couple books on these issues. Here are a couple things to check on: 1. I believe that if you form a corporation, then the corporation has to pay its own taxes on profits (if any, of course). Then the shareholders have to pay more taxes when they get their distributions. Why do that?

2. I took a college level accounting course, and one conclusion I reached is that the partnership is a very dangerous way to do business. Yes, it simplifies taxes, but it yokes you to your partner. Read the books to see what I mean.

Subject: RE: BS: Incorporating the band: What do you do?
From: GUEST
Date: 31 Oct 00 - 11:06 AM

Subject: RE: BS: Incorporating the band: What do you do?
From: GUEST,Barry Finn
Date: 31 Oct 00 - 11:20 PM

If you don't make $600 or better from one source treat it as cash, spend what you can & go offshore with what's left before you end up paying it all out to Laywers, Ins. companys, Accountants, Fed & state governments who believe that you're actually working for them (which you are), worker's comp, unemployment payments, ss payments, seals, reg. names. Then the corp. has to start collecting the paper to show that you're really paying for what you're claiming, toll receipts, gas receipts, costs for food, parking, laundry, who paid you & who didn't, damaged instruments or equipment, heartburn, heartackes & heartattacks, more kinds of insurances. Are you still having fun, wait for the audit, talk about a song & dance then filing for going chapture 11 is always a good way to proctect what ever's left (usually nothing by this time). If you're small potatoes (you'll even pay big time for those) take cash & don't take any prisoners. This is NOT leagal advise & don't not try this at home & this does not reflect the opinions of this poster. Barry