How do small bands do the finances?

[dang]

My band and I are looking at the schedule we are playing this spring/summer and a lot of local gigs are coming together. I was a late comer to the band and I have never had to get involved in the financial side of what we do. Of course with more money coming in from the gigs it is creating problems...

I am hoping for some resources or general advice on how to successfully manage the financial side of a small band. We have been working up the pay scale, but on average are really only getting somewhere around $100 each per gig for a 5 piece band (plus tips). Occasionally it's better but that's part of the struggle...

Do most bands get a bank account in their name? Sometimes we get checks made out to the band name. I don't want to run all that money through my own account. Does this require some sort of business paperwork?

What sort of documentation do we need to do for tax purposes? How do people declare this income?

I know big bands have administrative costs and fees that get covered in contracts, but for the small bands basically we do all the booking and often sound reinforcement or whatever else we need. I was hoping to somehow get an agreement within the band on how to handle these things in the future and set up a framework of how that would look. Like we couldn't do 10% for booking the gig but getting a flat $20 for bringing it in would at least establish a starting point. The bass player running the sound from the tablet should get something extra, and we can't do the normal sound guy rate for him but I know he would appreciate an extra $20 for the extra work... I feel like now is the time in our growth as a band that we need to agree on how to do this.

Your opinions are appreciated, I am sure I am missing a ton of stuff, please share your band stories - good or bad!

Thanks,
Dan G.

[Greg P. Stone]

My trio always got the same amount in the various venues in this area. Therefore we rotated who got the payment. this simplifies the bookkeeping and had the added benefit of often keeping total payment from a venue to an individual/entity under the $600 which triggers a 1099 filing with the IRS.

[gfury]

We all have day jobs. Personally, I'm not in it for the money.

At the moment, the wife of one member is our "manger". She is holding the money in a band fund that we use for expenses and equipment purchases.

I'm sure things are likely to change if we get more gigs.

From the the book "The Magic Strings of Frankie Presto by Mitch Albom "

"Music and money are not friends"

[Drew Egerton]

We could probably use something along the lines of what you're talking about, but we don't right now. The banjo player and I split the cost of the sound system and if we get paid for a gig we split it evenly.

[UsuallyPickin]

OK …. if the venue supplies the sound equipment it is equal shares. If I have to pack and setup a PA, which I paid for in it's entirety, it gets an equal share . R/

[onassis]

OK …. if the venue supplies the sound equipment it is equal shares. If I have to pack and setup a PA, which I paid for in it's entirety, it gets an equal share . R/

This (or variations thereof) is what bands that I am in have always done. I've done fill-in gigs with other bands that have the band set up as an independent financial entity, and folks get a check for each gig from the band bank account. Money is set aside for sound, taxes and expenses, and people are paid via some algorithm that is a mystery to me. I imagine that bands that get enough work eventually end up with some system like this.

[gspiess]

When I played in a country rock band back in the 00's: Manager responsible for bookings and contracts = 12% off the top, but we were already well established when we hired him, roadies/cartage company were paid a flat fee/hourly rate based on time and mileage. We had our own sound system, but would occasionally have to rent additional amps and speakers for outside venues. There are a lot of ex-band guys who set up small companies to rent out sound equipment on a cash basis. Many times venues had their own system. I had my own cartage company because I also did studio work (drums), so I would get reimbursed by the band for gigs. We also had our own sound board guy who originally worked for beer, but we ended up giving him a flat fee for each gig. All this would be taken off the top.
Then the band got paid from the net, usually split evenly five ways. We did not have a bus or a driver but used private vans and would usually all chip in for gas and food. When I was exiting the band, we were talking about incorporating and hiring someone to do books and taxes, which would have been a flat fee. Originally I had been the "business guy" but backed out when things got busy to focus on the band and the music, but I remained the "liaison" with the manager to keep him honest. I didn't get any extra for that.
Some of the bands we opened for had much more elaborate contracts/arrangements, often where you had one frontman and the rest of the band were essentially employees.

[dhergert]

Probably the best thing to do first is make sure all band members have similar goals for the band. If some people in the band are trying to make a living at it and others are keeping their day jobs, there can be some conflicts when it comes to acceptable gigs and money.

My current main band is just a local part-time band, and has been going with the majority of the same players for about 12 years now. We all have our day jobs (although I'm now retired). We are not in it for the money, we're in it because it is fun to do, but we do like to have our expenses paid for. We are pretty selective about venues (usually no bars, etc...).

What started our band is we played as a fairly random friend-jam for an old-town street festival and a number of people said we should make some albums. We decided to do that, and have basically become an ongoing band. We initially went the direction of trying to setup an LLC, but very early on we decided to scrap that idea because the yearly costs were too high. So now we simply split the income among the players and leave it at that.

For full-time bands that really want to make a successful living at it, tours are pretty much a requirement in order to get sufficient attention from listeners, promoters and producers. And tours often mean playing at any venue that will pay. So a band needs to be willing to be away from home and on the road for long periods, and to play any venue, from churches to festivals to bars, etc., in order to pay for transportation and housing. Ideally the band will have a manager who lines up the gigs and does the business end of things, and if successful enough, a sound guy to setup and run equipment for gigs. And then, the band has to be good and a little lucky in order to really make it.

Realistic chances of success for an excellent sounding full-time band that wants to make a living at it are pretty low -- probably about 20% of these bands actually make it past 2 years. Less for any genre that is not mainstream (like bluegrass).

[foldedpath]

OK …. if the venue supplies the sound equipment it is equal shares. If I have to pack and setup a PA, which I paid for in it's entirety, it gets an equal share . R/

That's a good system, I've been in bands that work that way.

It works best if one person in the band owns all the PA gear. All the mics, cables, everything. The extra share per gig when the band PA is used won't even begin to cover the initial investment in gear and continuing maintenance/replacement, but it makes it much easier when someone leaves the band, or a new member comes in. Having to split up gear when former members have put some of their money into band gear, can be a nightmare.

Exceptions might be made for things like a personal favorite mic someone pays for, and might leave with. The extra share also covers the time the PA owner has to spend in prepping the gear ahead of time, and getting it back into storage (unless you use a trailer or truck for storage between gigs). The least amount of fun I've had in playing in bands has been unloading PA gear by myself, early in the morning, dead tired from a gig.

Of course this assumes there is one band member who can fund the band PA alone, and also run it. Those two things usually go together. But it's a system I've seen used successfully. Informal group ownership of the band PA where different members have put money into it over time, can end in tears.

There are different ways to handle this in bands that are making enough money to set up an actual business entity, an LLC or something. The business owns the PA, pays taxes on income and can depreciate the gear, and band members own shares. That makes it much easier for the band to say "hey, let's agree we need to upgrade the PA mains, get better mics, buy a truck to haul this stuff" as a group decision. When a band member leaves, their share of the business can be bought out by other members. I'm assuming that's outside the realm of the OP's "small bands" question.

[foldedpath]

BTW, the "who owns the PA" issue can also be dealt with in other ways, when responsibilities are balanced well enough.

In my last band, it was just a duo. Me on mandolin and a guitar player. I supplied the PA, and the guitar player did all the promotion, got us gigs, handled collecting the money after the gig. I felt that was well worth a 50/50 split between us to balance my providing the PA gear, and not have to deal with the promotion and money side. That would be more difficult to arrange in a larger band, but it worked well for a duo.

[Randi Gormley]

We're a community band and a 501(c)(3) non-profit (paperwork filed and updated according to whatever the law says). all the money we make playing gigs goes into the band account and one of our members, who happens to be a CPA, manages the account. so whatever pay we get is also a tax write-off for the people who hire us. And we use the band account for projects -- house concerts, CDs, books, repayment for workshops, etc. Any tips we get we split among the members of the band who played that specific gig. This is how we do it -- one option if you have other fish to fry than getting paid for your work; we're essentially all volunteers.

I haven't actually played in a for-profit band that did more than gig occasionally and then we all just split the take evenly, but that wouldn't work for a band that played on a regular basis. What i do know from my brother-in-law, who plays around and about, is that money and ego don't mix. So if you have a band that looks to be something that'll last longer than a weekend, I'd suggest you all sit down when you all are still speaking to each other and hash this out and get it on paper: whether you split the take or put it in a single bank account you all can access, whether you give a premium for owning the equipment, who pays for parking or food if it's not included, if there's an allowance for strings or replacing gear, who has the ability to speak for the group to a venue or the press, whether you'll allow filming, what part of the take goes to purchasing merchandise to sell, how much you pay someone to sit in as a single gig substitute (flat fee or percent of the take?). Think of it as a pre-nup agreement.

[allenhopkins]

1. Whatever arrangement you settle on, make sure you get complete agreement of all band members. There aren't ideal one-size-fits-all arrangements, but no arrangement will work if all involved aren't on the same page.

2. In most of the groups I've worked in, I've been the main "management" guy (not always by choice). I would make financial arrangements, and would personally accept payment for the band -- checks made out to me, deposited in my personal "music account." I would then pay the other members. I kept detailed records, claimed the band's revenues as my personal income for tax purposes, and claimed the payment shared with other band members as business expenses. This was at my accountant's advice.

3. I also generally owned all the PA equipment, which was fine, since I also used it for my solo performances, and for other gigs where I was hired to provide sound. Sometimes I'd add a bit to the band's fee for providing amplification -- with the knowledge and consent of the other band members -- and would retain that "extra" after the other members were paid their shares. Other times I'd just take an equal share. I'd also claim any PA purchases or repairs as business expenses.

4. I also claim all instrument purchases and repairs as business expenses, as well as mileage to and from gigs. The new tax law dicks around with claiming business mileage, but as a sole proprietor I can still write off the miles I drive. Bands should also consider what they might need to do to claim legit business expenses -- what records they need to keep, etc.

5. Formally incorporating as a band, has its pros and cons. Get good legal advice. Depending on the state you live in, you may need more or less documentation and formal organization. In many cases, a DBA ("doing business as...") filing with your local county clerk may suffice, to establish your existence and prevent some impostor from stealing your gigs or whatever.

6. Don't let the details and intricacies of organization drive wedges between band members. Many a band has played for years with no formal rules at all, just a general understanding among friendly members of how things ought to work. I've seen issues arise that no one could have anticipated, handled with varying degrees of cooperation and consensus. The "politics" of small associative groups can be as intense and confrontational as in any larger organization, where there is more at stake in actuality, but not as much emotional investment or risk of egos. Often it goes well, sometimes it doesn't.

[Astro]

Different people bring different things to the band. And, some people care a lot and do more, and some dont care that much and will do less. BUT, they contribute to the sound and it will be hard to replace them. Dont expect fairness and equity. Doesnt happen in life and doesnt happen in a band.

If you are a 5 piece getting 100 each for local bar gigs, you are doing well. Thats about what we get here except most bar gigs have a max of 300 or so. For that reason, bands have dropped to duos or trios. But for corporate gigs or weddings, you can still get 1000 plus total for the same time. If you are a party/dance band, you can get 2 or 3 times that for weddings. But those gigs require top performance and delivery and there is a whole lot more waiting around time and are more demanding and less fun sometimes. Such is life.

We have usually rotated who gets "the check" that some bigger venues stick us with, for the tax reasons listed above. We try to get cash, and most mom and pop bars/restaurants understand and pay us with cash-- which we then just split evenly. One band I was in tried to get in the studio to record originals and we also sold Tee shirts and CD's so we tried to hold back a little of the distribution to go to those efforts. Those efforts were marginally profitable. But it took time.

I am just a hack doing this for passion and creative outlet. But I have gotten to know a few really creative and talented musicians doing this for their life's profession. I have tremendous respect for them. I would think most of them have a formal LLC and track their expenses. But that just doesnt make sense for a small local band doing bar gigs.

[dang]

Thanks for the responses, sounds like this isn’t a unique problem! Lol

And yeah, I have a day job and so do the others, but everyone else’s day jobs are in music, I am the only one who makes enough that the band income doesn’t matter. That’s probably why I am ending up dealing with the financial situation....

We had a terribly unproductive band meeting about this that almost immediately devolved into old arguments, so please keep the ideas coming!

[re simmers]

no one told me there was money involved! 👓

I’ve always played where we split equally. Usually $100 each, sometimes $200. Church or nursing home stuff, usually no money.

[Mandobar]

I suggest you spend some $$ and get a licensed tax professional to address your group (band members). They will go over the rules, explain the process, etc.

There are special rules for Qualifying Performing Artists. While the rules for employee business deductions changed for 2018 for those artists receiving w2 based income, business expense deductions for those artists with self employment income remain intact. Some informative reading:

http://www.artstaxinfo.com/tax_act_creative2018.shtml

Again, hire someone who is knowledgeable, licensed, and adept in this area of tax. Once you know all the rules, etc. it will be easier to come up with a plan.

[fredhicks]

Every time I read the title to this thread I see "How do small hands do the finances". Crap. I have small hands, but luckily they don't cause money problems.

[David Lewis]

I’d only get a bank account if it’s a long term proposition.

If you do, split the money -10% which stays in the account to cover fees, but also to cover pa hire, or taxi fares, or petrol, or tax or whatever. Those expenses that cause friction.

[Timbofood]

Typically my band simply spends the gig money at the bar anyway, :))
Well, not necessarily but, the rotating “responsible party” thing has worked well enough for us.

[Hudmister]

I played guitar with a popular country rock band that played sometimes four nights a week. The venues were usually larger hotel facilities that included a restaurant and a dance hall type lounge. Places like this have professional tax accountant type people who maintain records and file complete disclosures with the IRS.. I also worked a regular day job. All money you earn from the band must be reported at tax time as part of your gross income. If you fail to do this you might find yourself in a awkward situation with the tax people. I know. When you add the money you earned with the band to the income from your day job it can put you in a higher tax bracket and when all is said and done the band thing may hardly be worth the effort unless it's for your personal satisfaction.

[f5loar]

From 1939 to 1996 there were 149 official Blue Grass Boys in Bill Monroe's band. There were also about 250 fill-ins or one weekers as I call them. The reason so many fill-ins? Monroe didn't have to worry about the taxes on those boys and he didn't have to pay the union rates either. Money was the number reason they left so fast. Some even returned only to leave again with a shorter stay. They say Monroe set the standard for bluegrass bands. If most bluegrass bands did it right on the taxes, the IRS would owe them money after they deducted their expenses.

[Mandobar]

From 1939 to 1996 there were 149 official Blue Grass Boys in Bill Monroe's band. There were also about 250 fill-ins or one weekers as I call them. The reason so many fill-ins? Monroe didn't have to worry about the taxes on those boys and he didn't have to pay the union rates either. Money was the number reason they left so fast. Some even returned only to leave again with a shorter stay. They say Monroe set the standard for bluegrass bands. If most bluegrass bands did it right on the taxes, the IRS would owe them money after they deducted their expenses.

That would have depended on their overall tax position; other income, filing status, etc. How many of those players filed taxes in all the states they played in? And yes, like professional sports, if you perform out of state you are required to file a tax return for every state where you are paid to perform.

Win an instrument in a contest, or receive one from a builder as an endorser, this is taxable income (based on fair market value). There are a lot of pitfalls in the tax code for performing artists.

This is the advice I give people. Keep good records, and hire an adept professional to do at least a quarterly review of your books. Don’t wait until March of the following year to worry about your taxes.

[gspiess]

I remember reading a Ludwig newsletter when I was a teenager that quoted a metric: Less than 2% of performing musicians make enough money to pay for their equipment.

[allenhopkins]

I remember reading a Ludwig newsletter when I was a teenager that quoted a metric: Less than 2% of performing musicians make enough money to pay for their equipment.

Guess I'm in the top 2% then...I also paid half the cost of my current (used) Honda Element, and financed my dental implants, out of music revenues. All those nursing homes and historical societies add up; 131 gigs booked for 2019, so far.

However, I've never tried to live on what I make gigging. "Music is a wonderful mistress, but a lousy wife" -- I said that. Civil service retirement is a helluva lot more reliable.

[DHopkins]

We're a community band and a 501(c)(3) non-profit......

We're non-profit, too. We certainly didn't plan it that way, however. :) ♫