Your New Business
Now that you have set up your band and are going around playing music, putting on concerts and setting products that you've made to promote your band, you are a business. It may not seem like business to you, but it definitely seems like one to the government and that is how they will view your new band. Because of this it is important that you change your band into a legal business. When you do this you will have more things that you will have to track, like sales, wages, gigs and several other dates, fees and numbers, but it comes with some serious perks that you won't want to look over. To start with you will need to get a license to do business. Picking a name to put on your new business is a serious matter, because this will be the name that is going to be following you and your band around for the entire life of the band. It will be the name that will be submitted to the clubs and bars that you will play in and will always be with you, so choose carefully.
Getting a business license is pretty simple. You simply have to go to your city hall or wherever your local government is located and acquire the forms for starting a business. You will have to fill these forms out and turn them back in. Again, you don't have to pick a business name that includes the band name, but you can. Let's say you call your band BandUSA and your company BandUSA Touring, Inc. You license will state that BandUSA Touring, Inc is operating as BandUSA at, wherever your band address is. So you pretty much have free reign over what you name your band and the business, but remember, be sure no one else is using the name before you send in your business forms.
Dealing with the government may seem intimidating, but it is necessary. Even if you feel like the amount of money that you are bringing in is meaningless, your band needs a tax ID to become a business. The government will want to know how much you are making or losing each year and you will be taxed on any sold merchandise. This comes as a shock to many up-and-coming bands, but when you view your band as a facet of the music industry, it makes more sense. Skipping this step and not reporting your income and losses to the government can put you in some serious trouble later on, no matter how insignificant you think your income actually is.
Now that you have a Tax ID number, you need to start functioning more like a business. You will need to assign someone to the task of documenting every expenditure the band takes on. This would include, but not be limited to, instruments, fliers, shirts, sound equipment, hotels, meals while traveling, gas, van, storage and anything else connected in some way to your band. Each of these items can be deducted when you file your taxes at the end of the year. Keeping detailed records is incredibly important and will ultimately save you money, so be sure you have someone you trust and you know will do a good job with the record keeping. When it is time to file your taxes it may be in your best interest to work with an accountant. Tax laws can be confusing and doing them on your own, especially with a business can be challenging. When you talk with your accountant, you will also want to ask about sales tax forms. Remember, you will be required to pay the tax on all of your sold merchandise, so don't blow it all as you go along.
As your band becomes bigger and bigger, a tax ID number will become more and more important. Thinks like national contests and concerts will require you to have an ID number since they will have to report their paying you. That said, you will also have to report them paying you. If one of these gets done and the other doesn't, someone could end up in some serious trouble.
If you want people, and that includes club owners, publishing companies and others, to respect and take your band seriously, you need to as well. This means treating it as thought it is your business from the start. Doing this will teach you the ropes in the early stages and allow you to progress in your business knowledge as you band grows in both popularity and territory. Having everything under control will actually help you get more gigs, easier times finding a publishing company and overall make things less complicated down the road. So put the little bit of extra effort into it now, and save yourself the hassle later.
More info
Music business
What kind of Business should my band be?
Protecting the name of your band
Band management
