How to turn yourself or your entertainment group into an LLC and why it’s valuable to do so.

So after posting the blog on Passive Value I had a request from my friend Roderick: “This was well written and I found the information valuable especially being in a newer band to the scene. I would like to see an article go even more in depth about setting up as an LLC and how to determine how much to pay your band members (employees) and how much to set aside for fuel, merch, equipment repair, food when traveling, etc.”

In that request I see it as 3 separate discussion topics

  1. How to turn your entertainment group into an LLC (or other business entity)
  2. How to determine what pay for band members is (though I’d see this as your employees in a way, a band is just one aspect of entertainment)
  3. How to prepare financially for tour

I’ll talk about the first section in this article, and why it’s valuable to go LLC, and I’ll discuss the other two topics in other posts. In a nutshell, you can start it by following a few simple steps, and why is it valuable to do so? It’s basically the best way to execute CYA strategies around your profession. What’s CYA? Cover-your-ass.

So to start, forming an LLC is relatively simple, but it’s slightly different in each state, and you have to put in the work to complete some paperwork. Likely the easiest way to do it is to go to a site like and have them set it up for you. You can also look up your state’s info on it simply by using a search engine online. Without reinventing the wheel, the basic steps are as follows:

  1. Choose a business name that complies with your state’s LLC rules, and is available to use.
  2. File all the formal paperwork required, this is usually a document named the articles of organization for your LLC, and you’ll need to pay the filing fee (which can be about $100 to $800, depending on your state’s rules).
  3. Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members.
  4. You may need to publish a notice of your intent to form an LLC (required in only a few states).
  5. Get all the licenses and permits that may be required for your business.

Your other option is to consult a lawyer (which I recommend highly), they can help at any point in this process. I would also seek out lawyers that specialize in entertainment law, but to start and business in general any lawyer can likely help you out.

Other great sites that have WEALTH’S of information on this are as follows:

  1. Sonicbids – for music business info, but a lot of the info can translate to other areas of entertainment
  2. NOLO – for all things law
  3. LegalZoom – for legal documentation

Why start an LLC or legal business entity? Basically it boils down to liability. Up until you’re a legal entity, LLC or otherwise, you personally assume all the risk. That means if anything happens, damage, conflicts, money issues, it could all come back to you personally and you could lose everything. Once you have an LLC, this provides a shield of that can protect your personal life vs. your professional one. In legal speak, it provides a shield from entities that may be going after your personal entities.

In short, registering as a business entity can help CYA on a personal level. If you’re a group your LLC will protect all of you, so long as you do business through the legal entity, using the EIN and all that.

For more information on how to start an LLC, check out this article from Investopedia, it’s lovely: The Basics of Forming A Limited Liability Company (LLC) also has everything you could ever need to know from the governments perspective on small business’s. You could really get lost with all their info

Now to break down those steps with helpful links:

  1. Find a name, useful sites:
  2. File the paperwork and get the licenses
  3. Other general useful links
    1. Blog – all kinds of info
    2. Investopedia Tax articles – It’s helpful to know how to take advantage of taxes as a business entity, you’ll want to know as much about this as possible to maximize your profitability

Hope this helps Roderick, I’ll write more on payments, and another post on tour budgeting soon. Thanks for the ideas!



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