When you’re passionate about your music and serious about taking your band to the next level, treating it as a business is crucial. Looking back at my early days in the music scene, I realize there are many things I wish I had done differently from the start. If I were to begin again, armed with the knowledge I have now, I would approach band management with a more business-oriented mindset. This is what I would do, and hopefully, you can learn from my experiences and avoid some common pitfalls in the music industry, especially when it comes to the Bands Of Money that fuel your musical journey.
Taking Ownership and Leading Your Band
One of the first and most significant changes I would make is to establish clear ownership of the band right from the outset. In hindsight, I should have communicated clearly to my bandmates: “This is my band, and the creative output, including the songs, belongs to the band leader unless we explicitly agree otherwise.” This approach is not about ego; it’s about establishing a functional business structure. As the band leader, I would take responsibility for managing all income generated from gigs and other sources, ensuring fair distribution to band members based on pre-agreed terms.
This model also comes with the responsibility of covering all band-related expenses. From studio time for recording and rehearsal space rentals to promotional activities aimed at attracting audiences to gigs and boosting music sales, all financial obligations would fall under the band leader’s purview.
The cornerstone of this leadership style is establishing transparent and equitable agreements. In my younger years, driven by a romantic ideal of “all for one, one for all,” I shied away from taking decisive ownership. While the spirit of unity is admirable, the reality is that in most bands, business responsibilities often fall disproportionately on one or two individuals. Perhaps your band operates differently, and if so, that’s fantastic. However, in many cases, a few members handle the business side while others primarily focus on their musical performance.
When I say “just play their instruments,” it’s not intended to diminish their contribution. In fact, musicians who consistently show up prepared for rehearsals and gigs and deliver excellent performances are invaluable assets to any band leader. If you are a musician who loves to play and prefers not to handle the complexities of band business, that’s perfectly fine and highly appreciated by a leader who is trying to manage the bands of money.
However, if your band is a true exception and you decide to evenly split every dollar—both incoming revenue and outgoing expenses—ensure this agreement is formally documented. Open a band bank account with all members listed, maintain a shared, transparent spreadsheet (perhaps on Google Docs) detailing all income and expenses, and distribute accounting responsibilities fairly among members. If one member takes on a disproportionate share of the administrative work, they should be fairly compensated for their extra effort. Remember, avoiding resentment is key to band longevity. Establish fair compensation for work done to prevent lopsided obligations from fracturing your band.
Before diving deeper into finances, which is crucial when discussing bands of money, it’s essential to establish the correct band structure. Are you definitively the band leader? If there’s any ambiguity, initiate a band discussion to clarify your role and intentions to step up and lead the business aspects of the band.
Creating Fair Agreements with Band Members
Once you’ve embraced the role of band leader, the next critical step is to create fair and explicit agreements with each band member. Schedule individual meetings to clearly define each member’s role and responsibilities. These agreements should be formalized in writing. While legal jargon isn’t necessary, written agreements serve as a reference point to prevent misunderstandings and address issues that may arise.
Start with each musician, for example, the bass player. Their agreement should outline obligations such as punctuality for rehearsals and gigs, performing the agreed-upon setlists, adhering to any established dress code (which is advisable for a professional image), and any other specific responsibilities pertinent to their role.
Equally important are the financial obligations of the band leader. Clarify payment schedules for band members: Will they receive a percentage of gig earnings, or a fixed fee per performance? If they contribute to songwriting during band sessions, will they receive songwriting credits or royalties? Can they submit their original songs for band consideration?
Agreements are not static; they can and should evolve. If, for instance, the bass player suddenly becomes a prolific songwriter contributing hit songs, acknowledge and reward their contributions accordingly. Be generous and fair in compensating significant contributions. Benevolence fosters loyalty and encourages continued creativity within the band, ensuring the bands of money are shared equitably.
Setting Up Band Finances Like a Business
After establishing clear agreements with each member, the next logistical step is opening a dedicated band business checking account. To open an account under your band’s name, you’ll need to register your band as a legal business entity in your state. This involves choosing a unique business name that isn’t already registered in your state. (Hopefully, “Cosmic Bananas” is still available!)
The registration process will provide you with a tax identification number (EIN) for your band business. Use this EIN and your band’s registered name to open the business checking account. While a physical checkbook can be useful for occasional payments, it’s wise to set up electronic payment systems for all band members. Utilize digital payment platforms like PayPal, Apple Pay, Venmo, or similar services that link directly to your band’s bank account for efficient and trackable transactions.
Crucially, adhere strictly to your payment agreements. Pay band members the agreed amount, exactly when promised. If you committed to paying within twelve hours after a gig, ensure it happens, and for the precise amount owed. Even if a gig’s earnings fall short of expectations, if you promised $100 per gig, you are still obligated to pay $100. Cover the shortfall personally if necessary. Remember, you are the band leader. You reap the rewards when gigs are lucrative, and you absorb the losses when they aren’t. Maintaining your word is paramount; unreliable business practices are a major morale killer. Managing bands of money effectively means being reliable and transparent.
For tax compliance, meticulous categorization of income and expenses is essential. In the US, you’ll need to issue 1099 forms to individuals or businesses paid over $600 annually. You are required to report all band income and can deduct legitimate business expenses to reduce your tax liability. However, deducting losses as an artist is subject to scrutiny. The IRS expects your band to be a genuine business aiming for profit. Deducting band losses against income from other sources (like a day job) is highly discouraged and can raise red flags. Be cautious and ensure your band operates with the intent to generate profit to legitimately claim deductions.
Taxes are a complex area deserving specialized attention, beyond the scope of this discussion. However, understand that registering your band as a business means tax obligations. Either operate your band entirely on a cash basis, or embrace a legitimate business approach, filing separate tax returns for your band or including band income and expenses on your personal tax return each year. Navigating bands of money requires understanding tax implications.
If you’re committed to running your band as a professional business, it’s time to have those crucial “adult” conversations with your bandmates. Establish fair agreements from the outset, and be prepared to adapt these agreements as your band evolves. Ensure that every contribution is appropriately recognized and compensated in some form. After all, we operate in a system that values fair exchange and recognition for effort. Treating your band like a business ensures its financial health and longevity, allowing you to focus on what truly matters: making great music.
