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How do I set up my band as a business in order to sell our recordings and merchandise?

Austin, TX |

Thanks for taking the time to respond.

My band has been together for about a year now, and we're ready to start selling our products and make sure that all band members have equal ownership of the material for royalty dispersion purposes. We're not sure which route would be best to go in order to keep our start-up costs minimal. Forming an LLC seems like the best way to go, but I'm not sure exactly how to find all of the necessary documents to file annually, or where to start to make sure that we don't gloss over something important and end up in legal trouble later.

Is an LLC a good way to go, or is there a better option for establishing a band as a business? What is the best way to keep aware and on top of necessary documentation?

Thanks again for taking the time to help.

Attorney Answers 6

  1. What you are asking is for legal advice which is outside the scope of this forum. I suggest that you consult with an entertainment attorney to make sure that you do everything correctly. You are very smart take care of these things early on rather than wait until later which can get messy. Use Avvo to search for an entertainment attorney.

    Ivan Parron, Esq

  2. YOU don't. You get an entertainment attorney to do all this for you so it is done right. How this is all done depends on your particular situation. Before you do any of that, you need to get a band agreement drawn up and signed by all the members while you are still friends, because you can rest assured that there will be a split in your future. If not a split up of the band itself, there will certainly be issues relating to how you split the proceeds. Solve those issues now while you are still friends. Band split up's are like divorces, very bitter and personal and all too often very expensive. And, it's very tough to get an agreement once they occur.

    I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.

  3. A LLC is a good option for bands because the structure is extremely flexible. Basically most of the rules in your state LLC statute can be overridden in your Operating Agreement. This Operating Agreement should encompass the terms you would find in a band agreement so my suggestion would be to contact an attorney like myself that handles both entertainment/copyright issues and business incorporation. Also finding an attorney that knows about bands from personal or industry experience , again such as myself, will be helpful as they will know how bands at your level arrange their business endeavors. That way you can save money by developing these two things in one document. You should be able to get an initial consultation and a quote for these services.

    The above response is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry. less

  4. I represent bands regularly and help them organize their business operations. Some bands operate successfully as partnerships pursuant to partnership agreements---there are many advantages to this in the music industry, particularly with regard to ownership of rights in songs, and termination rights upon dissolution of the band. Other bands operate as corporations or LLC's pursuant to operating and/or shareholders agreement. You need to find a music/business/IP lawyer (or law firm) with experience in setting up band agreements. The most important issue tends to be what happens to the compositions, recordings, and name of the band when it bands or when one or more band members leave.

    You absolutely must use experienced legal counsel to prepare the paperwork. And this is not cheap if done correctly. Don't take the cheap way out by using forms found on the internet---you need to lay the foundation for this business, because operating a band is a rather complex business, with many moving parts, streams of revenues, and potential for disputes.

    Every successful band of which I am aware develops a close relationship with music counsel, who sometimes serves as the band's agent at least to some extent. Many bands consider their counsel to be band members----indeed, that is how some lawyers and law firms get paid--a typical deal involves payment of legal fees at a reduced flat rate in exchange for a share of the band's profits. You need your lawyer with you all the time----issues arise with bands every day that require legal input.

    Of course, I am somewhat biased. I am a lawyer and pianist, playing three or so gigs weekly, but keeping my day job. I am known to go into the studio with bands I represent and lay down tracks so I am in an unusual spot. But because I am a musician, I understand the needs of my clients better than most, and understand how important it is to pick up the telephone at midnight when the inevitable band crisis arises---often some lying promoter who refused to pay for the gig or pick up the cost of hotel rooms etc. You need much more than someone to watch over your documentation---you need someone to deal with the legal issues that arise on a daily basis for every successful band (and even for young, fledgling bands).

  5. You are getting a lot of good advice from the other attorneys regarding hiring counsel to set up the business for you. Yes, an LLC may be the best way to go, but as a non-lawyer you don't have the knowledge to craft the operating agreement and any other agreements with the band. You could end up with a legally-formed LLC, but you don't have the experience to know which provisions are important to customize and what kinds of things could come back and bite you in the you-know-what. Here is the essential thing that you need to understand about LLCs: the mere act of having an LLC will protect you from liability to the outside world; but having a well-crafted LLC operating agreement and other necessary agreements among the band members will give you internal rules for running the business of the band, and the rights and responsibilities of the members. It's like if you were a country -- you'd want both a Defense Department against outside threats and a Constitution so that there are rules under which the country operates. Good luck!

    If my answer was helpful to you, I would appreciate if you would mark it either "helpful" or "best answer" if you feel that applies, as AVVO gives us rating points based on feedback. Thank you! Please note that the above answer is not to be construed as legal advice. It is my personal opinion based on your question, and it was given without obtaining the detailed information that I would normally request in order to render comprehensive legal advice. I advise you to consult with a local attorney of your choosing to obtain specific legal advice. The fact that I answered your question does not create an attorney-client relationship between you and me.

  6. As has been suggested, an LLC is fine, but you should get that, and other paperwork done by a lawyer. Yes, that means spending a little money, but I am sure you have read horror stories of how badly this can go if not done properly.

    Good luck.

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