If you are serious about your band, then you may want to treat it as if it is its own business, and form it as an LLC. An LLC is a legal business entity, and is short for limited liability company. By setting up a band as an LLC, it becomes its own legal entity separate from any of its individual members. LLCs have long been the preferred business structure for many small businesses, as they are relatively easy to set up, have few requirements, and give their members a level of separation between the band’s assets and an individual’s assets.
Check with your secretary of state’s office for the requirements, since every state is slightly different. While many requirements are the same, states will differ primarily in terms or filing fees and certain filling requirements. It is best to check these before you begin to save time and frustration.
Choose a name for your business. This is often the name of the band, although it doesn’t have to be. It is important to note, however, that the name you choose will be the name that bank accounts and checks will be opened under. In most states, LLCs are required to end with an LLC designator, such as “LLC” or “Limited Liability Company” and often cannot include the word “Incorporated” in the name of the business.
Check to see if the name is available in your state. Most states won’t allow you to register an LLC with the same name as another business in the state. You can search to see if your business name has already been taken by doing a business entity search on your state’s division of corporations website.
Draft your LLC articles of organization. This is often the only legal step to starting an LLC. The articles of organization often only require the business name, business purpose, principle business address, the person responsible for receiving legal documents, or “registered agent,” and the names of the initial members. You can often write up the articles of organization yourself using a readily available template. However, it is best to obtain the template from your state’s secretary of state. Most secretary of state websites have forms that you can download.
Publish your intention to form an LLC in your local newspaper if it is required by your state. Not all states require this, so it is best to check before you waste your money.
Send the LLC articles of organization and appropriate filing fees to your secretary of state. State filing fees vary greatly.
Draft an LLC operating agreement. An operating agreement outlines who is responsible for the various aspects of the business, how profits are distributed, how the LLC can dissolve, and anything else that is important to operating your band as a business. Its important to be outline everything in writing now, so that problems don’t arise later on.
While the articles of organization are usually the only legal requirement, it would be best to actually draft the operating agreement first.
Be very specific in your operating agreement and outline every possible contingency. It is important that every member of the LLC is comfortable with the operating agreement.
While forming a basic LLC is something that can be done on your own, for more advanced corporate structures or situations you should consult an attorney.
Since LLCs are technically not corporations, they have members, not shareholders.
While people often talk of the tax benefits of forming an LLC out of state, it is often best to form in the state in which you reside.