Increasingly, in this post-major record company musical landscape, the buzzword “independent” and the epithet “corporate” are no longer mutually exclusive terms.  (Heck, even in the same old, same old realm of Music Industry 1.0, lots of so-called “indie bands” – bands with that stereotypical “indie band” sound – are the property of the big four or five record labels.)  Last time, we looked at veteran band Pearl Jam’s various business entities that work for the band, and not the other way around.  This time, we’ll look at how a lesser-known band can incorporate (pun intended!) a similar business model.

Before I continue this rant, I must write this disclaimer:  I am neither an attorney nor an authorized financial adviser, so be sure to do your own homework and get actual professional advice if/when you pursue these concepts.  This rant is meant for entertainment purposes only, not as legal or financial advice.  So there you go – let’s continue.

Now that you’ve settled with a group of friends to form a band, you might want to cement this lineup formally – in the eyes of “The Man.”  By default, if the hypothetical Smith brothers, Ms. Brown, Mr. Jones, and Mr. Johnson form a hypothetical band called the Fabulously Generic Surnames, this arrangement is a general partnership (in many American jurisdictions, at least).  In formal business documents, they would be listed as John Smith, William Smith, Jane Brown, Robert Jones, and Fred Johnson, Partners (or some order thereof).

To actually cash checks as “Fabulously Generic Surnames,” these partners probably have to file a fictitious business name (FBN) statement with their county registrar, and run this notice for a handful of weeks in a local newspaper.  Prices vary according to locality, but this whole registering and publicizing process might cost about $100 (but don’t quote me on that!).  With this FBN statement, they can open a Fabulously Generic Surnames bank account.  Business contracts would state the partnership as John Smith, William Smith, Jane Brown, Robert Jones, and Fred Johnson, Partners, doing business as (or d/b/a) Fabulously Generic Surnames.

While they bandmates are formalizing their partnership, they might as well hammer out a partnership agreement, which primarily states how the money pie is split amongst them.  These bandmates should also be realistic about who actually writes most of their songs, when it comes time to divvy up royalties.  That’s a sticky issue in the beginning of the band’s career; it’s a soggy issue when the momentum speeds up; it’s an acrimonious issue when the band is on top of the world.  In other words, it’s an unavoidable issue.  It might be a good idea to give the primary songwriter slightly more of the pie, with room open for discussion if/when the band dynamics change.  Then again, consult with a real professional in these matters.

When solidifying the partnership as a business entity, the band must enumerate who exactly qualifies as a partner:  Just the musicians?  What about their hypothetical manager Mrs. Barnes?  She gets them all the cool hypothetical gigs, but does she get a slice, or is she just on the payroll?  Again, consult some professionals.

Anyhow, a financial adviser might inform this partnership to get a Tax I.D. number from the government, and all that number-crunching non-jazz.  Again, consult those who know and are licensed to advise.

For a several dollars more in fees, plus a few more forms and documents, this partnership could organize as a limited liability company (Fabulously Generic Surnames LLC, perhaps?) or incorporate as a corporation (Fabulously Generic Surnames, Inc., maybe?).  Among other handy legal and financial nuances, the partners (members if an LLC; shareholders if a corporation) get to use a handy company name (the band name, in all likelihood) for all contracts.  Depending on the region, this hypothetical Corporate Rock 2.0 band would have to file an FBN statement to drop the “LLC” or “Inc.” suffix, so that contracts would read:  Fabulously Generic Surnames LLC d/b/a Fabulously Generic Surnames.

It gets a little nitpicky and hairy, but I’m sure that their hypothetical manager Mrs. Barnes can honestly help the band out in these matters without screwing over Smith, Smith, Brown, Jones, and Johnson.  Maybe the band should consult hypothetical attorney Mr. Noble and hypothetical financial planner/CPA Ms. Borders.  (And you, the reader, could read some books, so that you can have meaningful conversations with your own set of professional advisers.)

Anyhow, that’s the rant for this week.  The moral of this rant (if any) is that a band that is also a solid business entity theoretically would be a cohesive group both on stage and when dealing with bigger companies.

If any of this rant applies to you, then I wish you the best of luck navigating these waters.