Music Law 101: Band Partnership Agreements
Many musicians out there are so focused on creating and playing music that the idea that their band is a business just does not sink in. This is ok if you play occasionally or as a hobby. However, if you are getting serious about your music and you are wanting to step to the next level, looking at your band as a business is very important, indeed! Once your band starts playing for money on a regular basis, your hobby has now turned into a business. And like a business, it needs to be set up properly so that disagreements can be avoided. There are many choices of business structure that a band could choose, among them, Sole Proprietorship, Partnership and various types of LLC’s and Corporation’s have been used. Each has advantages and disadvantages as well as different requirements for business formation and renewal. In addition, each business form will have different fees associated with it; both for startup and yearly recurring. Further, tax consequences can be a major item to consider when choosing a form of entity. Having said all that, most bands that have not obtained superstar status can comfortably and reasonably begin with the Band Partnership Agreement. It is much less complex and costly than forming an LLC or Corporation, but can contain provisions that will cover almost any situation that will occur.
So what is a Partnership? In it’s most basic form, a partnership is an agreement among at least two people who agree to work together as partners in some type of business relationship while agreeing to share profits in some way. There are several different types of Partnerships; General Partnership, Limited Partnerships and Limited-Liability Partnerships. As with the form of business entities, each form of Partnership has its advantages and disadvantages. Consulting with an attorney and an accountant is the way to go before forming any Partnership.
What provisions should my Band Partnership Agreement contain? At a minimum, a Band Partnership Agreement should include: Rules for how profit and expenses are split, rules for establishing ownership of band equipment, the right to use the band name and/or songs, how publishing revenue will be split, rules on how to deal with the inevitable disagreements that will arise between members and rules for how members can be fired or added. With a Band Partnership Agreement, all members will be on the same page and disagreements will be fewer and far between and will be less costly to resolve as well. Some examples of where a Band Partnership Agreement can be helpful involve situations where there is a disagreement over who owns the rights to a song, what happens to the assets of the band if the band breaks up and voting rules to determine how new members are fired or added and what gigs to play. It can also spell out who will be responsible for band bank accounts, getting gigs and other duties of band members. In a nutshell, the agreement will spell out all of the important rights and responsibilities of the members.
The creation of a business entity is an important decision for any band that is becoming serious about its music. An experienced lawyer can help you to decide what form of business is best suited to your particular circumstances. In addition, a lawyer can help you decide what important provisions should be included in your Band Partnership Agreement, if that is the form of entity you choose. Here at Intellequity® we have the experience to help make your love of music turn into a business reality. If you have any further questions, feel free to contact us on the button below or call us at 971-930-2143.