Some bands on the local level are quite successful and dream of moving on to stardom, or at the very least, higher paying and bigger shows. Some bands have staying power, and others fade away. Sometimes really great bands falter because they make some mistakes and fail to protect themselves.
A sad fact of life is that you must pay taxes on any money that you earn. In most cases, anything over six hundred dollars in earnings must be reported to the IRS at tax time. When people fail to do this, they get into a lot of trouble. Band earnings are no exception, and this is one mistake a lot of bands make.
You have two options when it comes to paying taxes on your band earnings. You can report your personal share of the earnings on your own tax return, and take any personal deductions as well. This can include your equipment and other necessary expenditures.
Your second option is registering a fictitious name (a business name) and getting your own tax ID for your band. If you choose this route, you may want to have a lawyer and/or an accountant help you with the details.
In either case, it is wise to have a professional prepare your taxes for you. This way you can avoid underpaying your taxes, and the resulting penalties. A good tax professional may also find tax breaks for you that you may have missed. The bottom line is that you should report your income. Paying the taxes is a lot simpler than dealing with the IRS if they come knocking.
Your band name should be copyrighted; along with any original music and lyrics you create. It’s your property so you should protect it. You should also register your newly copyrighted creations with ASCAP (American Society of Composers, Authors and Publishers) or BMI (Broadcast Music, Inc).
These measures will protect your band. This stops people from using your material for profit without your consent, or ever worse, claiming it as their own.
Almost every band that plays live shows will run into the need for a contract at some point. One mistake bands make is not realizing that every transaction with a value of five hundred dollars or more should be put into writing.
If Uncle Joe is loaning you two thousand dollars to record your band’s CD, have all the details of repayment and interest put into a contract. If you think Uncle Joe is a wonderful person who would never sue you, and there is no possible way you’d really need a contract, take a few hours to watch some daytime TV. Watch any small claims court show and rethink your answer. You cannot predict any relationship will remain favorable over time.
If you find the need to have a booking agent, a manager, or anyone else who is getting money for services rendered to you, sign a contract. Usually they will have one for you to sign to secure their services. Another big mistake bands make is signing these contracts without reading it in its entirety. If you are confronted with such a contract and any part of it is confusing, have a lawyer look it over for you before you sign.
Many bands learn a hard lesson when their equipments is lost, or even worse, stolen. If you have sound equipment and your own lighting system, you have a lot of money invested in your project. Don’t make the mistake of leaving this investment uninsured. You should be able to get your equipment covered on your homeowners or renters insurance.
If you dream of a record contract and hitting the big time, your band may be putting away every cent of their earnings to move forward towards this goal. While this is a great idea, it can also be somewhat of a morale buster.
On occasion, take your earnings from one show and split them among the band members so they can spend it as they wish. It won’t hurt much in the long run, and may help everyone remain positive about your future as a band.