Business Structures

Business Structures

The music industry is increasingly telling us all to treat our band like a business, so to take that suggestion seriously we need to understand government expectations and business structures. For a lot of musicians, being in a band is a hobby and the members all still have day jobs, so is it really fair to expect the band can undertake all the requirements of a profitable business when all we’re doing is earning enough spare change to cover recording costs, flights for tours, and merch printing? In most cases for young upcoming DIY bands this is unreasonable, whereas for commercially successful bands it is a must. Let’s look at some of the basics when it comes to running your band like a business. For me, the keyword here is ‘like’, so we’ll recap that at the end.

 

Why apply for an Business Number

In Australia, you are entitled to an ABN if you are carrying on or starting an enterprise. This is not for employees, so if your employer asked you to get an ABN that is not how it works. Same goes for music, just because someone (venue, promoter etc) asks you to get one, doesn’t necessarily mean you should. Only if you are carrying on an enterprise.

So is your band an enterprise? It depends. Let’s ask some questions and you think realistically about your band’s situation;

  • the activity is a significant commercial activity, involving commercial sales of products or services, and is of a reasonable size and scale
  • there is an intention to make a profit from the activity as demonstrated by a business plan (unlike with a hobby)
  • the activity is repeated
  • the activity is systematic, organised and carried on in a business-like way and records are kept
  • the activity is carried on in a similar way to that of other businesses in the same or similar industry
  • the entity has relevant knowledge or skill.

 

If you decide you want an ABN for your band, you generally can obtain one. You are required to meet a few characteristics (In brackets is how these relate to musicians).

  • I source my own clients (Fans, venues etc)
  • I can delegate my work to others if I choose (Roadies, Sound/Lights, Manager etc)
  • I invoice for my work and set my rate of pay (ie Invoice booking agents for show payments)
  • I have a bank account for the business separate from my own bank account (Band Account)
  • I am responsible for my own public liability, professional indemnity and/or workers compensation/income protection insurance (A bit outside the scope until you’re a big deal)

 

What if I am receiving a payment but don’t have an ABN? You can still submit an invoice without one, just get yourself a Statement By Supplier form from the Tax Office website and tick the box that says the payment will be made without a reasonable intention of gain or profit!

So what are the benefits of a business number? Well, most importantly it’s about being honest with the government and declaring your income. If you’re not making profit or gain, then the main benefit is claiming back business costs, so for a muso this could be gear, travel, rehearsals and so forth.

If this sounds like you, then keep listening.

 

Business Structures

When applying for your business number, you will need to advise what structure your business is set up as.

Sole Trader – Remember you must be carrying on an enterprise. Perfect for solo artists, or if you are the main person with session musicians, in which case it’s your business and your band mates are your employees. It’s easiest to set up, but you are personally liable if any business issues.

Partnership – A partnership consists of two or more people or other entities who jointly carry on business with a view to profit. Perfect for most bands. Essentially the same as a sole trader but with more than one person. You can just choose 2 or 3 of the band members to be ‘partners’. This is typically enough to engage in any business activities that you’ll need.

Company/Corporation – Seperate entities and starts becoming complex. Not necessary until you start to really ‘take-off’. Do this accompanied by an attorney.

 

Business Name Registration

This can get your name on the business name register, so people can look you up and it’s all official.

What if my business name isn’t registered, can people steal my name? I get a lot of questions about copywrite and trademark, it’s nothing to get too worried about in the beginning, and I have 2 options here to cover yourself;

Brand yourself – Get a logo, website, social media, songs online etc… You don’t need to formally copywrite yourself at this point, as it’s pretty reasonable in the eyes of everyone that you’re an established artist.

Sign up with your state or national body – Here you can legally be acknowledged as a registered artist, and formally advise about the songs you have written. You can allocate song-splits for royalties between your band members and even get ISRC codes for your songs. In Australia check out APRA, in USA check out BMI.

 

‘Like’ a business

So when people tell you to treat your band ‘like’ a business, this is what I think is reasonable;

Leadership & Culture – If you’re the main person, then lead by example and delegate jobs. Get the right people in the band because teamwork is a must. Have a mantra, a business statement that everyone is proud of and working towards the same objectives.

Meetings – Have get-togethers where you write an agenda and build meeting minutes at the end. Have debriefs after each gig, look for ways to improve and make sure eachother is happy.

Organisational Skills – Set goals, have a central calendar, know what eachother are doing behind the scenes. Rehease your music and nail it live.

Marketing – No one loves your music more than you do, so you are the person to promote it! Understand how you appear online, advertise your upcoming gigs, get your songs on the radio.

Finance – Financial Plan, Profit & Loss spreadsheets, a dedicated bank account, being wise with your money

Customer Service – Look after your fans and reply to their messages. Contact industry professionals and be polite, reply to their emails and calls promptly.

And so forth….

 

So yes, it is important to treat your band like a business. It is more than just a bit of fun, it’s what you get out of bed for in the morning, take it seriously and aim for the stars. BUT don’t overload yourself with unnecessary tasks or cause unwarranted stress, to take away from the creative side of things. Find that balance and be smart about what you need to do.

 

Need more help with business structures from BandTools? Please reach out to us!

Templates, examples and guides are available in the BandTools database, to access visit our Patreon page to subscribe!

 

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