Why Your Music Band May Need an LLC in California

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In the beginning, things are great with your band, spending long afternoons jamming in your living room. The last thing you ever think about is needing a business lawyer for musicians.

One does not need to look too far into music history to find examples of how bands can get themselves involved in complicated legal matters. Perhaps the court case in which Roger Waters battled his ex-bandmates in Pink Floyd throughout the 1980s over the legal rights to the band’s signature inflatable pigs is an extreme example, but there are plenty of times when bands in Oakland and beyond
could use some professional legal advice, such as when it comes to forming the band as a legal entity.

LLC Can Be the Best Entity Type for a Band

When you apply for a federal tax ID for a business, whether you are in Hayward or anywhere else, you must choose an entity type. Common types of business forms in California include partnerships, corporations, and sole proprietorships. California even has the option of a B corporation (in which B stands for “benefit”), where some of the company’s profits automatically go to a philanthropic cause.

A limited liability company (LLC) can be a very good choice for companies that are just starting up and don’t have a lot of capital; this includes most bands. Here are some of the advantages of using an LLC as your bands business entity:

LLC is one of the business entities that allow you to avoid double taxation;

-An LLC can be relatively inexpensive to establish;

-The California LLC may be the most flexible of all the entities. You can structure the California LLC to operate in just about any manner you choose. You can choose the tax status of the LLC and the management structure for the LLC;

-Best of all, the LLC entity can be structured so that it safeguards your band members against heavy personal financial losses. If the LLC goes out of business, as long as the members have not personally guaranteed the LLC debts, the members as individuals cannot be required by law to use their personal assets to pay its debts.

In other words, an LLC is a low-risk, affordable way for a band to go professional. But you should consult with your business attorney to help you make the final decision and to help you get the LLC properly structured so that it accomplishes the goals that you seek.

James H. (Jim) Gulseth was born and attended high school in Devils Lake, North Dakota and graduated with an A.B. degree from the University of California at Berkeley. He earned his JD degree at the University of California Hastings School of Law in San Francisco. He is a member of the Corporations, Business Transactions, Securities and Tax and Intellectual Property Sections of the State Bar of California and is a member of the State Bar of California, the Alameda County Bar Association, and a member and past President of the Eastern Alameda County Bar Association.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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