Despite the artistry involved in writing music and lyrics, music can quickly become a business once you're paid to perform. When you start getting paid well, and then start buying and maintaining better, more expensive equipment, music transitions into a very serious business.
Just like owners of brick and mortar stores, many musicians choose to protect themselves and their bands by forming a Delaware LLC or corporation. However, there are even more incentives for musicians to incorporate, one of which involves signing with a label. Harvard Business Services, Inc. has more than three decades of experience forming Delaware companies for people who want to protect their assets, including musicians. However, we are not a law firm and cannot give legal advice. Please consult an attorney if you need legal advice on this matter. We can, however, explain why a number of musicians choose to protect their assets, and point out some important factors to consider.
Many musicians choose to incorporate their bands for asset protection. Without incorporating the band, often each member can be held personally liable for any debts or legal disputes the band may encounter. This means your personal assets—cars, house, bank accounts, music equipment and other personal assets—may be at risk. However, you can protect your personal assets by forming a corporation or LLC for your band. Placing your band into a corporation or LLC creates a barrier between your band and your personal assets; your band is considered an entity unto itself, and therefore the band—not its individual members—is generally held responsible for its debts and liabilities. This makes it more difficult for a plaintiff’s attorney to pursue your car, home, personal bank account, music equipment or any other personal assets, in the event of a lawsuit against your band.
Forming a company is also beneficial for establishing the rights and responsibilities of each member of the band. If you form a Delaware LLC, your Operating Agreement will state ownership, operation and management for the company, along with procedures for removing a member, and requirements members must accept if they choose to leave the band.
If you're lucky enough to be offered a recording contract by a record label, then incorporating your band will be pivotal before a contract is signed. Most record labels want to contractually engage with other companies, not individuals or groups of individuals. In addition, having the abbreviations "LLC" or "Inc." appended to your company name implies you are serious professionals. In the future,incorporating your band can also protect both you and the label against breakups and disputes over music and ownership.
Many musicians opt to form a Delaware LLC because it has fewer corporate formalities than a corporation and allows you to operate your business as you see fit. The LLC's Operating Agreement also allows you to clarify the rights and responsibilities of individual members, which could help in the event of a dispute among bandmates.
Ready to protect your assets and incorporate your band? Harvard Business Services, Inc. makes the process easy for you. Simply click the button below and fill out our order form. If you'd prefer to speak with someone, we're also available to help via phone (800-345-2677), email and live chat.Incorporate Your Band Now.
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