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Band Charter?


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One of the nastier aspects of a separate entity is that a disgruntled musician, or even the IRS, can make the claim that the "entity" employed the musician(s) then failed to withhold payroll taxes for the "employee" AND failed to pay the "employers" share of its payroll taxes as well. Now, everyone associated with the entity is on the hook for payroll taxes, penalties, interest......real fun stuff.

 

On the other hand, when each bandmember files his/her own Sch C, there is no reason to assume they were "hired" by anyone....they are sub-contractors by definition.

Hard to know where to start here. Jason, are you still interested in this stuff?

 

First, sole proprietors can have employees, just like partnerships and corporations can. So the IRS or a disgruntled former band member could, in theory, make the "employee" claim regardless of the business structure of the band.

 

Furthermore, handing out 1099s isn't what makes a band member an independent contractor, the nature of the work does. The IRS has guidance on this issue on their website and it depends on the specific circumstances of the business relationship. I have no trouble imagining circumstances where the drummer is an employee or a partner, depending on the circumstances. FWIW, although I know I'm flying in the face of a lot of band tradition, I have more trouble imagining circumstances where a band member in a working band could truly be said to be independent contractor by IRS standards.

 

Likewise, filing a Schedule C is irrelevant to whether a musician truly is or is not an independent contractor, versus partner or employee.

 

In the end, my thought is that if your bandmates look like partners, and quack like partners, they're probably partners. It's really no trouble to set the band up that way, why pretend that they're something else?

 

Larry.

 

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First, sole proprietors can have employees, just like partnerships and corporations can. So the IRS or a disgruntled former band member could, in theory, make the "employee" claim regardless of the business structure of the band.

 

This happened to a local sound company. In this case, the sound people really were independent contractors. He owned the equipment and ran sound at shows, but hired people to run sound on his equipment at other shows. Those people for the most part had other gigs running sound on house rigs, other sound companies, etc. Well one person did not pay taxes in years, and the IRS came after them. He had written 1099's for the jobs this person had worked. They claimed they were an employee (to avoid self-employment tax), and the IRS came after him. He could have been on the hook for 10's of thousands of dollars. He ended up winning, but only after going to court and spending money on legal fees.

Dan

 

Acoustic/Electric stringed instruments ranging from 4 to 230 strings, hammered, picked, fingered, slapped, and plucked. Analog and Digital Electronic instruments, reeds, and throat/mouth.

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What Dan mentioned is one problem for ALL types of employment - if anyone gets something started, the courts are the way of resolution.

 

I've run a business for decades. My recommendations: First, see a qualified advisor (CPA most likely, although some attorneys and some financial counselers know this stuff). The exact best way to do things also varies based on local, county, and state laws and practices. I have also operated as an independent contractor extensively.

 

Second, read up (IRS web site is one place on the LEGAL definition of an "Independent Contractor" versus "Employee." It really doesn't matter when dealing with the IRS and the courts what the band says, or even what the individual says - their determination will be based on the LAW. Even having people sign an agreement that they are Independent Contractors will not fly if the work is done in the manner consistent with employees.

 

iLaw's point is quite relevant - in most band situations that I've ever seen - legally it would much more likely that anyone who worked for the band for any length of time (i.e. not a temp or sub coming in for a limited time) would be legally considered as being an employee, unless the structure was such that the person was considered as an owner or partial owner.

 

The largest problem (to me) with a partnership is that each and every partner is fully liable for anything any other partner may do that can even remotely be considered as something they have authority to do.

 

Next rule: You can do EVERYTING correctly, and still wind up having to pay lawyers and defend yourself in court. Our courts are staffed by lawyers, judges are (usually) lawyers, prosecutors are lawyers, defense counsel are lawyers. The courtroom is the place where all the lawyers on both sides, the judges, the courtroom staff, the deputies, and all the other hangers-on make their livlihood.

 

Your assignment is to optimize the situation so that you are less likely to be helping to provide their livlihood.

 

 

Howard Grand|Hamm SK1-73|Kurz PC2|PC2X|PC3|PC3X|PC361; QSC K10's

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"Now faith is the substance of things hoped for, the evidence of things not seen."

Jim

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Sometimes a guy will find himself unemployed and go to file unemployment. He doesn't intend to get anyone in trouble he just honestly answers a question on where he worked over the last 12 months.

 

He may answer ... I worked at x and worked a little bit at Y ..oh yeah I worked a month at Z.

 

Dad hired a contractor/carpenter to come in and do a job on the farm once repairing hog houses and got a call from the unemployment office several months later when he filed an unemployment claim.

 

It got cleared up without going to court but I suppose it could have gotten messy.

"It doesn't have to be difficult to be cool" - Mitch Towne

 

"A great musician can bring tears to your eyes!!!

So can a auto Mechanic." - Stokes Hunt

 

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Just to add my 2 pennies..

 

We (Escape) are an LLC with all partners equal. We have an accountant. It works for us, especially since 99.9% of the venues pay us with check, and issue 1099's.

 

At tax time we each get schedule K's(i think that's what they're called) from the accountant.

 

As far as leadership structure, everything we do is by majority vote. From what new songs to add, to accepting a certain gig.

 

We don't have any mutually owned equipment like PA or lights, etc.. If a band member leaves, he takes his stuff with him.

 

There are a couple things that two of us own that are used by everyone: a couple banners, and our custom kick drum head.

If one of us leaves, the rest of the band can buy the things from us at an already agreed upon (in writing) price.

 

This has worked for 6 years.

 

That being said, the bass player and I are pretty much the "leaders" insofar as he and I maintain the internet presence, field the gig requests, and negotiate our fees. Again, before we do anything, we always put it to a vote.

 

While it might seem like a minor point, we maintain a calendar on a band member only website where we can go an list our unavailable dates. This has been the biggest help in avoiding conflicts, since we know ahead of time when to book or not book a show.

 

 

David

Gig Rig:Casio Privia PX-5S | Yamaha MODX+ 6 | MacBook Pro 14" M1| Mainstage

 

 

 

 

 

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Just to add my 2 pennies..

 

We (Escape) are an LLC with all partners equal. We have an accountant. It works for us, especially since 99.9% of the venues pay us with check, and issue 1099's.

 

At tax time we each get schedule K's(i think that's what they're called) from the accountant.

 

As far as leadership structure, everything we do is by majority vote. From what new songs to add, to accepting a certain gig.

 

We don't have any mutually owned equipment like PA or lights, etc.. If a band member leaves, he takes his stuff with him.

 

There are a couple things that two of us own that are used by everyone: a couple banners, and our custom kick drum head.

If one of us leaves, the rest of the band can buy the things from us at an already agreed upon (in writing) price.

 

This has worked for 6 years.

 

That being said, the bass player and I are pretty much the "leaders" insofar as he and I maintain the internet presence, field the gig requests, and negotiate our fees. Again, before we do anything, we always put it to a vote.

 

While it might seem like a minor point, we maintain a calendar on a band member only website where we can go an list our unavailable dates. This has been the biggest help in avoiding conflicts, since we know ahead of time when to book or not book a show.

 

My band is very similar to this both in terms of structure and SOP, except we are a partnership and collectively own our PA system. Oh, and we've been together 30 years!

"We don't stop playing because we grow old; we grow old because we stop playing."

- George Bernard Shaw

 

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