Band Business #1: What Are You, Anyway?
Hmmm – I haven’t written a “hypothetical” for a while, but here goes . . . 
Crabgrass, a bluegrass band, landed a well-paying gig to play at a fancy wedding. The band drove to the gig in the band’s customized cargo van. Al, the bass player, found the van in a selvage yard, added a few bench seats, and got it running. Billy, the mandolin player, had invested in Apple in 2003 (post-iPod and the return of Steve Jobs, but pre-iPhone and iPad), so paid for the van and parts.
The band members played a few sets, spending a portion of each break at the open bar. At the end of the evening, Carla, the guitar player and usual driver, said she wasn’t feeling well enough to drive, so Dwayne, the banjo player, took the wheel. As they were pulling out of the parking lot, Dwayne’s foot slipped off the brake onto the gas pedal, and the van careened through the rose garden. (Did I mention that Dwayne played the banjo?) When Dwayne finally slammed on the brakes, Carla’s seat belt failed, and she fell out the passenger-side door. Luckily, the bride’s dog broke her fall. Unluckily, the dog, a tiny black affenpinscher which had just won Westminster’s Best in Show, was killed.
Everyone sued everyone else, of course. Who might be liable, and for what?
It’s very possible that all the members of Crabgrass are partners, a legal entity that makes each of them personally responsible for all liabilities incurred by any of them in the course of doing the business of the band. So, it’s possible that they are futui regaliter.
One (especially Billy, the band’s “deep pocket”) would hope that the band had taken the time to form a business entity, like an LLC (limited liability company), that would help shield the members from personal liability.
There are other reasons, besides liability concerns, to consider forming a business entity. Some corporations are willing to hire only bands that are corporate entities, requiring a business entity tax ID, rather than just an individual’s social security number. (And do you really want to leave your social security number on a bar napkin?) There’s some evidence that partnerships and sole proprietorships are more likely to get audited by the IRS, if they take deductions for business expenses. Speaking of taxes, some business entities provide tax benefits. We could go on and on: Do you know who owns your band’s name? Equipment? Does your automobile insurance cover accidents when you’re driving for business? Whew.
If you and/or your band are interested in forming a business entity, there are a number of options.
- The quickest may be to hire a business lawyer. If you don’t know one, the Minnesota State Bar Association has a lawyer referral service. http://www.mnfindalawyer.com.
- If you’re not as well heeled as Billy, there are a few low-cost options you might consider.
- Springboard for the Arts is a wonderful non-profit organization run by artists for artists. Its mission is to “cultivate a vibrant arts community by connecting artists with the skills, contacts, information and services they need to make a living and a life.” One of their regular workshops, Legal Considerations for Artists, is an introduction to issues such as choosing a legal entity for your business, contracts, and protecting your intellectual property. The next workshop will be July 16th, at the Roosevelt Library in Minneapolis (free!) Springboard also offers access to lawyers for brief one-on-one sessions and referrals for longer sessions, both at very reasonable rates. http://www.springboardforthearts.org
- In the Business Law Clinic at William Mitchell College of Law, student attorneys, working under the supervision of licensed attorneys, can help you choose the most appropriate business entity and lead you through any necessary filings. http://web.wmitchell.edu/legal-practice-center/client-representation-clinics/ This is the program with which I am familiar (and the program I used!), but other area law schools may offer similar services.
I’ve optimistically used “Band Business #1” in the title of this article. Let JoAnne, the editor of Minnesota Bluegrass, know if you like it – maybe she’ll let me write “Band Business #2.” If you really like it, you might consider applying to law school; I understand that admissions are down, so it’s a great time to apply.
(This post originally was published in the June issue of Minnesota Bluegrass, a monthly publication of the Minnesota Bluegrass and Old-Time Music Association – MBOTMA. Used with permission.)
 As it turns out, bluegrass is a good path to downward mobility. My attorney license currently is “inactive,” and I’m no longer able to give legal advice (good for us all). Happily, I don’t need an active license to give in to my footnote fetish. Also, K.M. Davis, a great lawyer with an active license, ok’d what I’ve written and helped me with the list of bad-stuff-that-can-happen-to-you. She’s supervising the student lawyer who helped me form an LLC. (email@example.com).
 Latin for “royally screwed.”
 Solo musicians would have similar concerns, since they probably would be personally responsible for any legal liabilities of their sole proprietorships, the legal entity that exists when they haven’t taken steps to create a different business entity.