How To Start an LLC as a Musician

Introduction.

Being a musician is about more than just performing on stage or recording in the studio. It’s about building a career, managing your income, and protecting your work.

One of the best ways to do that is by forming an LLC (Limited Liability Company). But why would a musician need an LLC, and how do you even go about setting one up?

If you’re a musician who’s thinking about taking your career seriously, whether you’re going full-time or just want to keep things professional, setting up an LLC can make a big difference.

From protecting your assets to helping you handle taxes and business expenses, it’s a simple step that can save you a lot of headaches later on.

In this guide, I’ll walk you through everything you need to know about starting an LLC as a musician.

Why Should a Musician Consider an LLC?

First things first, let’s talk about why forming an LLC is a good idea. You might be thinking, “I’m just making music, why do I need all this business stuff?” Well, here are a few key reasons:

1. Protecting Your Assets: One of the biggest benefits of an LLC is that it separates your finances from your business. This means if anything goes wrong (say you get sued or run into financial trouble), your assets like your car, house, or savings are safe.
2. Tax Benefits: An LLC can help you with taxes, especially if you’re making money from different sources like performing, selling music, or teaching lessons. You’ll have more options for deductions, which can help lower your tax burden. Plus, the LLC can be taxed as a sole proprietorship, so you don’t have to file as a corporation unless you want to.
3. Professional Image: Having an LLC makes you look more legit. It shows that you’re serious about your career and running your music business like a pro. This can help you attract clients, book shows, and potentially land deals with record labels or other companies.
4. Easier to Manage Money: When you’re running your music career through an LLC, it becomes way easier to keep track of income, expenses, and profits. This is a big help when it comes to managing your finances and planning for the future.

Now that you know why an LLC is worth considering, let’s get into how you can set one up.

How Do I Start an LLC as a Musician?

Setting up an LLC isn’t as hard as it may sound. Here’s a simple, straightforward guide to help you through the process.

1. Choose a Name for Your LLC

The first thing you’ll need to do is pick a name for your LLC. This name will be the official name of your music business, so it’s important to choose one that reflects your brand and resonates with your audience.

Make sure the name you choose isn’t already taken. You can do this by checking your state’s LLC database online. If the name is available, great! If not, you’ll need to come up with something else.

A good rule of thumb is to pick something catchy, easy to remember, and relevant to your music style.

For example, if you’re a hip-hop artist, you might want something bold and edgy. If you’re a classical musician, maybe a more elegant name would work better.

2. Pick a State to Form Your LLC

You don’t have to form your LLC in the state where you live, but it’s usually easier to do it in your home state.

]Most states have a simple, affordable process for setting up an LLC, and you’ll need to file with the state’s business agency (typically the Secretary of State’s office).

The cost to start an LLC varies by state, but it typically ranges from $50 to $500. You’ll also need to pay a yearly fee to keep your LLC active, which is usually around $100 annually.

3. File Articles of Organization

Next, you’ll need to file something called “Articles of Organization” with your state. This document tells the state that you’re starting an LLC and includes important details about your business, such as its name, address, and who will be running it (you, the musician!).

You can file your Articles of Organization online in most states. The form is usually short and simple, and once it’s approved, your LLC is officially formed.

4. Get an EIN (Employer Identification Number)

After you’ve filed your LLC, you’ll need to apply for an EIN from the IRS. This number is like a social security number for your business.

You’ll need it for things like opening a business bank account, filing taxes, and hiring employees (if you ever decide to).

The good news is that applying for an EIN is free and you can do it online in just a few minutes.

5. Create an Operating Agreement

Although it’s not always required, it’s a good idea to create an Operating Agreement for your LLC. This document outlines how your business will run, who’s in charge, and what each member’s responsibilities are.

If you’re the only member of the LLC, the Operating Agreement can be simple, but it’s still good practice to have it in writing.

If you ever decide to add partners or collaborators to your music business, the Operating Agreement will become more important. It can help avoid any misunderstandings later on.

6. Set Up a Business Bank Account

Once your LLC is formed and you’ve received your EIN, you’ll want to set up a separate bank account for your business.

This will help keep your personal and business finances separate, which is crucial for both tax purposes and personal asset protection.

When you set up your business bank account, you’ll need to bring in your LLC paperwork and your EIN.

7. Get the Necessary Licenses and Permits

Depending on what type of music business you’re running, you may need certain licenses or permits.

For example, if you’re selling music or merchandise, you might need a sales tax permit. If you’re performing live shows, you may need a business license.

Check with your state and local government to find out which permits you need. This step is important to make sure you’re following the law and keeping your business above board.

8. Pay Your Taxes

Now that your LLC is set up, you’ll need to keep up with taxes. The great thing about an LLC is that you can choose how you want to be taxed, but most musicians file as a sole proprietorship unless they have a large business operation.

Make sure you set aside money for taxes throughout the year and consider working with an accountant who understands the unique tax needs of musicians. This can save you a lot of stress when tax season rolls around.

9. Stay Compliant and Keep Your LLC Active

After you’ve set up your LLC, you’ll need to file certain documents every year to keep it active. This might include an annual report or paying an annual fee.

Be sure to check with your state’s requirements and stay on top of these deadlines to avoid penalties or having your LLC dissolved.

FAQs

Do I need an LLC if I’m just starting as a musician?

Not necessarily. If you’re just starting and only making a little money, you might not need an LLC right away. But as soon as you start earning more or want to protect your assets, it’s a good idea to set one up.

How much does it cost to start an LLC?

The cost can vary depending on your state, but it typically ranges from $50 to $500 to file. There may also be annual fees or reports required to keep your LLC active.

Can I set up an LLC if I’m the only member?

Yes! Many musicians set up single-member LLCs, which means you’re the only owner. It’s a great way to protect your assets while keeping things simple.

Do I need a lawyer to start an LLC?

You don’t have to hire a lawyer, but it can be helpful if you’re unsure about any steps in the process. Many online services can help you form an LLC for a reasonable fee.

Conclusion

Setting up an LLC as a musician is one of the best ways to protect your assets, take your career to the next level, and make sure you’re handling your business professionally. It doesn’t take much time or money, and the benefits are well worth it.

So, what’s holding you back from taking this step and securing your music career?