Should I Start an LLC for My Live Band?

Starting a limited liability company (LLC) for your band can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a band, lawsuits can arise from things like playing copyrighted music, nuisance complaints, or medical damages as a result of ear damage.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your band seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Live Band?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Live Band

By starting an LLC for your live band, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Live bands will benefit from liability protection because of the risk of trademark infringement, libel, property damage, and even workplace accidents.

Example 1: A song your band has recently released is very similar to that of a very popular artist. When this artist discovers this, they decide to sue your band for copyright infringement, arguing that their property has been used without their permission. Should you be required to pay damages, you would only be liable insofar as your business assets allow. In other words, your personal assets could never be used to satisfy business liabilities.

Example 2: During your band’s live performance, a bandmate instigates a moshpit in the crowd that becomes uncontrollable and seriously injures a number of crowd members. The injured crowd members sue your band for its negligence, arguing it is responsible for inciting this incident. In this event, limited liability would prevent damages you may owe from being imposed on your personal assets, instead limiting them only to those of your business.

Example 3: While leaving a venue, your band’s van rear-ends into the car of someone in the parking lot, causing irreparable damage to the vehicle. This causes the owner to sue your band for the property damage he suffered. Limited liability would protect your personal assets from ever being required to meet this liability of your business.

Example 4: While setting up for a show, your sound person damages some of the venue’s equipment. The owners of the venue ask your band to cover the repair costs.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Live Band

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a live band owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Live bands rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

Your LLC needs to own business insurance in order to protect its assets.

Your personal assets are protected by the limited liability of the LLC structure, which ensures that none of your business’s liabilities shall ever extend to your personal assets.

Common Situations Business Insurance May Cover for a Band

Example 1: While setting up for a show, your sound person damages some of the venue’s equipment. General liability insurance should cover the cost to repair or replace the damaged property.

Example 2: During band practice, a friend trips over a cord and breaks his wrist. Your general liability policy should cover his medical bills.

Example 3: Your band is hoping to play at a local outdoor festival. The festival owners require evidence of liability insurance from each band. General liability insurance should help fulfill the festival’s terms.

Example 4: Your drummer uses the house drum set for a show. A fan jumps onstage, destroying the set as he crashes into it. The venue has named the band in a lawsuit, claiming you partial responsibility. General liability insurance should cover your legal fees and pay awarded damages, up to the limits of your policy.

Other Types of Coverage Bands Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all bands should obtain.

Inland Marine Insurance

Bands often invest in equipment that travels with them to each show. If the equipment gets damaged while on the road, commercial property insurance will not cover your losses. An inland marine policy covers business-owned property while off-premises, either on a customer’s property or in transit.

Commercial Auto Insurance

If you use a business vehicle on public roadways, state law requires that a commercial auto policy be in place. This coverage pays the cost to repair or replace third-party property, the company’s damaged auto, and lost/damaged equipment. State-mandated minimums leave many entrepreneurs under-insured, so you should discuss policy coverage with an insurance professional.

Commercial auto insurance is generally purchased as a standalone policy.

Workers Compensation Insurance

State law mandates coverage for employees under a worker's compensation policy. This coverage pays medical bills stemming from an on-the-job injury and/or illness and a percentage of the employee’s lost wages when they are unable to work. For injuries that result in lawsuits, it also ensures the business owner defense in court and pays awarded damages.

Workers' compensation is often purchased as a standalone policy.

Crime Insurance

Standard business owner's policies exclude employee dishonesty, fraud, and forgery losses. Crime insurance provides coverage for such a loss occur, reducing the chances of a gap in coverage.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance.

Read our Live Band Business Insurance article for more info.

At almost any level, getting your band started has a very low startup cost. At an entry-level, this may only include the cost of instruments, though if you are interested in forming a band you most likely already own them.

At more serious levels, you might decide your band needs a van, which can be purchased as cheaply as $7000, and rented for even less.

Visit our How to Start a Live Band guide to learn more about the costs of starting and maintaining this business.

The main operating expenses for a live band include travel costs as well as equipment purchases and maintenance.

Learn more about running a live band.

Live bands make money by playing at events. They also can sell merchandise like T-shirts and digital or physical copies of their music.

Learn more about starting a live band.

Live bands earn money from playing gigs. A live band isn’t likely to start as a full-time business. Yet, a band’s profits can increase steadily as its popularity grows. The amount a live band can charge varies widely, depending on its popularity and the event.

Learn more about starting a live band.