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Selling band music online - LLC or EID/Federal Tax ID number?
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chiimba
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#1
2nd March 2012
Old 2nd March 2012
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Selling band music online - LLC or EID/Federal Tax ID number?

Hey guys I'm hardcore new to this stuff so bear with me. I searched around and have done various research on the logistics of selling music online but for some reason can't find the specific information on this.

For me to sell music through an online distributor to do an itunes/etc release via CD Baby, Tunecore, Reverbnation, IODA, or whoever; do I need a federal tax ID number or Employee Tax ID? Also, can I just get an EID # & new bank account to tie the band revenue / sales to (without forming any sort of corporate entity)?

I am not planning on making a lot or any $$ right now off this..it's just an 8 song demo. However, I know a lot of people already around the country that told me they wanna buy a copy; and so I'd like to release on itunes to make this possible as well as learn how to do it for the future. We're also planning on ordering some packaged profesisonal looking CDs and t-shirts / other merch for selling at shows (which we're finally booking now after being in recording hiatus for a long time).

Some people are saying I'm way overthinking this when I've told them I was gonna file an LLC and speak to an accountant; and to worry about that when I actually make any decent $$. Then I read online and some people seem to make a big deal about building a good business foundation from the beginning.

The band is just me and my brother essentially. I write all the music with him; and there is one other position (bass) that we don't have an established long term member for (we've got a guy now but subject to change and their role is more in learning our songs to play than writing with us at this point). So there isn't a very complex structure of people involved and I'm also handling promotion/management and hiring out friends for help with artwork/websites/etc.

Forming an LLC will require a couple hundred bucs it looks like along with yearly fees...so it doesn't seem like that big of a deal and it'd be cool to officially own my own company; but I'm trying to decide if it's worth the trouble or whether I can just get my tax ID and accomplish all the same things I'm currently trying to do.

Thanks
#2
2nd March 2012
Old 2nd March 2012
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I don't think you need a tax ID unless you're going to be paying other people. If you want to get a bank account that can accept checks made out to "chiimba records" or whatever, then you can just create a DBA. I think you could set up a DBA as a partnership so that you and your brother are both owners.
chiimba
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2nd March 2012
Old 2nd March 2012
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Quote:
Originally Posted by initialsBB View Post
I don't think you need a tax ID unless you're going to be paying other people. If you want to get a bank account that can accept checks made out to "chiimba records" or whatever, then you can just create a DBA. I think you could set up a DBA as a partnership so that you and your brother are both owners.
Thanks for the reply.

DBA as in "doing business as"? Wouldn't I essentially be setting up / filing a business then?

I may just talk to my bank and an accountant to get advice.

I was originally planning on just putting the business in my name as an LLC and paying out my brother a % of sales (maybe via written contract); because making him a partner is just not worth it at this point since this business stuff is all over his young head and he seems very content with just being a drummer and letting me deal with the boring/tedious/less enjoyable side of things.

My cousin in Nashville owns his own small record label and sells through IODA. Looking at our last texts he told me i need a business license & bank account and federal tax ID # so I think I might just go that route. I'd probably have to do it eventualy so might as well get it over with.
#4
3rd March 2012
Old 3rd March 2012
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Dude...you don't need anything to sell through itunes etc...Just get tunecore/cdbaby etc and get it up there..
#5
3rd March 2012
Old 3rd March 2012
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Go to your County Clerk. They'll be able to answer alot of your questions (which are mostly area specific), you'll be able to get your DBA papers there as well (you need those in order before opening a DBA bank account.. though the whole process sounds more complex than it really is).

As of current (AFAIK) there's only a small handfull of states that you need to keep track of online sales taxes (NJ, Illinois , + a couple others, i think Cali just adopted this.. though there will probably be more to come...)

Personal income tax, otoh, you do need to keep track of. And that's where your Federal Tax ID comes into play (as you'll need it to file as self employed)
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3rd March 2012
Old 3rd March 2012
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Quote:
Originally Posted by chiimba View Post
DBA as in "doing business as"? Wouldn't I essentially be setting up / filing a business then?
Yes, it's a "business" but as a legal entity it's just you. So Chiimba Smith is "doing business as" Chiimba Records for example. Your taxes and everything would stay the same but it basically just means that you can legally use a fictitious name to do things like accept checks. It's the simplest thing to set up. It doesn't limit your liability in any way, so if somebody sues "Chiimba Records" they can go after your personal assets rather than just the company's assets.


Quote:
Originally Posted by chiimba View Post
I was originally planning on just putting the business in my name as an LLC and paying out my brother a % of sales (maybe via written contract);
That gets a little more complicated and then you probably do need an EIN.

Quote:
Originally Posted by chiimba View Post
I'd probably have to do it eventualy so might as well get it over with.
Sounds like a plan.

Quote:
Originally Posted by AwwDeOhh View Post
Personal income tax, otoh, you do need to keep track of. And that's where your Federal Tax ID comes into play (as you'll need it to file as self employed)
You don't need an EIN just for being self-employed though. Only if you're an employer. So he'll need one if he's paying his brother in a formal way, but as far as I know he wouldn't need one if he set it up as a partnership and they just each took what they needed from the bank account. Or he could just pay him under the table.
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