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Organizing band and studio as LLC
Old 22nd January 2007
  #1
Gear Nut
 

Organizing band and studio as LLC

Hey guys,

Hopefully this isn't OT since this forum does include "music biz."

Anyway - my band is currently touring 5 - 6 months per year. I also run a little project studio where I record us as well as other bands in town.

As most of our annual income is now coming from playing and recording, we're looking to form an LLC to write off gas(mainly), gear, and other expenses.

Do I need to consult a tax attorney or a CPA to do this?

Any advice is most certainly appreciated.

thanks!!
b
Old 22nd January 2007
  #2
Gear Nut
 

Go LLC

Hello B

I would suggested consulting with an attorney.

Typically, forming an LLC is more expensive than forming an S-Corp, C-Corp. Each state has particular requirements for forming an LLC. I believe my filing fees were close to $800, compared to the much cheaper S-Corp, and C-Corp fees. Also, accounting for an LLC is slightly tougher than for an S-Corp / C Corp. Each year I have to pay my LLC fees (not $800, but still more than S/C Corp).

All the said, an LLC is the perfect structure for a band. I toured with a band that had the following LLCs

-Crappy Songs, LLC
-Crappy Touring, LLC

So, to conclude, get a good accountant, and get an attorney to help you set up an LLC. MOST IMPORTANTLY, work with your attorney to write an LLC partner agreement. One of the nice things with an LLC is that you have the freedom to write your own partner agreement. This might specify what happens when/if someone leaves. How you "buy someone out". Etc.

Finally (had to add this) ... make sure you guys are willing to do (or pay someone to do) your personal taxes. All the structure in the world wont help a band that can't do its own personal taxes. I've seen too many folks get nailed like this.

John
Old 22nd January 2007
  #3
Lives for gear
 
djui5's Avatar
 

I filed an LLC in Nevada for $200 or so. If you file one, file it in Nevada. Gets you out of all kinds of taxes.

Get a lawyer for sure, and watch what you sign, just because it is for your LLC does not mean you are safe. They have this "personal guaranter" thing that means you are responsible personally for any debts.
Old 22nd January 2007
  #4
Gear Nut
 

$200 ... wow

$200 thumbsup That's amazing. I hate stuff like this that varies state by state. Don't even get me talking about health ... in New York State it is tough to find individual health for less than $200. A friend down in Texas was able to insure her and her daughter for less than $100.
Old 22nd January 2007
  #5
Lives for gear
 
djui5's Avatar
 

http://www.mycorporation.com/llc/info/Nevada.htm

I used this company, guess it's more than $200 but whatever:
http://www.thenevadacompany.com/

This one claims $150...:
http://www.ailcorp.com/

More info on the benefits:
http://www.nvinc.com/llc.htm
Old 22nd January 2007
  #6
You don't need to be a corporation to write off legitimate business expenses.

Anything that is corprorate owned, but used personally can not be written off beyond its actualy business use. So if it's 75% corporate and 25% personal, you can only deduct 75%.

The main point being, the inverse is true when you're not incorporated. You do not gain additional writeoffs by incorprating on matter what anyone tells you.

I know people who've written more stuff off "after incorporating", but that was their perception. In reality they had just ogtten organized and hired an accountant.

Improper, illegal, deductions are harder to catch in an incorprated business, so if you're willing to break the law, it's easier do do it after incorporating, but corprations are solely to isolate you from liabiliy.
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