Helpful Guidelines on How Artists Can Protect Themselves

by Donald R. Simon, Esq.

Originally published in Billboard, March 13, 2004, at 9.

If you’re serious about making in the music business, then you’ve got to start thinking about running your band like a business.  There are important benefits to setting up and maintaining a business structure for your band.   This article discusses some of those benefits and the procedures for making your band a business enterprise.

1) Protect your band’s name. Before investing a lot of time and money into your band’s name, you should investigate whether another group is already using that name.  Start by doing an in-depth Internet search.  Also, check out Billboard’s annual International Talent & Touring Directory.  Once you are reasonably sure that no other group is using your band’s name, consider applying for federal trademark protection.  A federal trademark (or in this case, a service mark) gives your band exclusive rights to the name throughout the United States.   Online registration is available at www.uspto.gov.  

2) Make sure all of your band’s songs have copyright protection, especially ones used for demo shopping.  Full federal registration with the U.S. Copyright Office is always advisable.  Yes, you can do the "poor man’s copyright" and mail yourself a CD of songs to prove the creation date.   However, federal copyright registration, among other things, allows you to bring suit in federal court, get reimbursement of attorney fees and court costs, and receive certain statutory damages if infringement is proven.   You can get more information and download forms at www.copyright.gov.  Use Form SR.

3) Obtain a business license and a federal tax ID number. The exact procedure for acquiring a business license is available by contacting the city or county licensing agency near you.  Most forms are available online.  For a federal tax ID number (or FEIN), go to www.irs.gov and download Form SS-4.  File it with your local IRS office.  Having a business license and tax ID number allow you to open a band checking account.

4) For tax purposes, keep track of all the income the band earns. Gig money must be reported to the IRS.  Keep track of all the band’s expenses, too.  This includes everything from promotion costs to equipment to tour expenses—all can be tax deductible. If taxes and finances are not your strong suits, you may want to seek out an accountant.  Don’t worry, the accountant’s fees are usually tax deductible, as are lawyer’s!

5) Consider taking out insurance. If your equipment gets stolen or damaged, an insurance policy can help get the band playing again.  Also, if you have a band vehicle make sure the driver has auto insurance. In most cases, insurance is tax deductible.

6) Become an affiliate of either BMI or ASCAP.  Each time your band’s music is played, either live or recorded, on the radio or at a club, you are eligible for a performance royalty.  Without getting too deep into copyright law, the "right of performance" is one of the exclusive rights afforded a copyright holder.  BMI and ASCAP, so-called performing rights societies, get performance royalties for you.  Of course for a new band, the royalties will be minimal, if at all, but as things get rolling, it can become a significant revenue stream.   Go to www.bmi.com or www.ascap.com for more information.

7) Execute a written partnership agreement. This is an important, yet often overlooked, facet of performing in a band.  The general law of partnerships presumes that when a group of people act together, they are a partnership.  Without a written agreement to the contrary, the law will assume various things about your band.   First, everyone will be liable for everyone else.  The law presumes that each partner will be bound by the actions of all the other partners.  Also, if you break up, the law presumes that all the band members own the band name equally.

A written partnership agreement should, among other things, address several important points: 1) who owns the right to the band’s name; 2) who owns the band’s songs; 3) what to do when someone leaves the band; 4) who can spend money on behalf of the band; and 5) the procedure for kicking someone out of the band.   Anything can go into a written partnership agreement.

By now you should see the important reasons for running your band like a business.  This article however, merely scratches the surface.  An accountant and an attorney with entertainment business experience can help get you through these and other business and legal issues.