How Do I Create a Music Business LLC?By Belle Wong
How Do I Create a Music Business LLC?By Belle Wong
Forming an LLC for a music business can be an important step toward growth and success for artists and everyone working in the music industry. Creating a music business LLC is not a difficult process and offers the entrepreneurial music artist, band, or music professional a number of benefits.
Learn what some of the benefits of forming a music LLC are and the process you need to follow.
Benefits of an LLC for Music Businesses
Limited liability companies, or LLCs, are often a good option for musicians registering as a business. An LLC offers those looking to create a music company a number of benefits, including:
- Limited liability. As its name indicates, limited liability is one of the primary benefits of running your music business through an LLC. Because an LLC is viewed as a separate legal entity, an LLC's owners aren't personally liable for any of the LLC's debts or for any legal liability the business might attract. This generally means your personal assets will not be at risk when it comes to your LLC's legal and financial obligations.
- Professionalism. When you run your music business as an LLC, your company will look more professional. This professionalism gives you more credibility and can be particularly important when negotiating with venues and promoters, obtaining loans, and speaking with potential investors.
- Multiple owners. If there's more than one of you in your music business (for example, a band) it's easy to divide profits and expenses among all the members of your LLC. And an LLC's operating agreement can set out important provisions such as what each member's duties are, how income is to be divided, and how big decisions are to be made.
Steps to Create an LLC for Your Music Business
The process of registering your music business as an LLC is the same as starting an LLC for any other type of business. It's important to know that each state has its own set of LLC requirements and regulations, so the registration process will depend on the state you choose to register your business in.
In general, you'll need to go through the following steps to register your LLC:
- Choose the state in which you'll form your LLC. Registering in your home state usually makes the most sense if your music company's main business activities will be focused in your state. But if you're planning to be touring in multiple states—or nationwide—you may want to choose another state in which to register. Things to consider when choosing a state include reporting requirements and taxes.
- Decide on a name for your LLC. Most states require that you use a name that isn't used by another LLC already registered in that state. There are also certain restrictions on what you can use in an LLC name; for example, most states won't allow you to use profanity, obscenities, or anything misleading in your name. Your name will generally also be required to include something that indicates it's an LLC, such as the designations "LLC" or "Limited Liability Company."
- Choose a registered agent. You will need to designate a registered agent whose role is to receive official communications and litigation documents on behalf of your LLC. Each state will have specific criteria as to who can and cannot be a registered agent. Many LLCs choose an LLC member or employee as the LLC's registered agent or go with a third-party registered agent company.
- Draft your LLC's operating agreement. Your LLC's operating agreement provides for how your LLC will be managed. For example, an operating agreement can set out how profits or losses will be distributed among the members, members' specific duties and obligations, how major decisions will be made, and what to do when you want to add a new member, or when a current member leaves. A detailed operating agreement will help you to avoid conflicts among LLC members in the future.
- Prepare your LLC's articles of organization. You can find a copy of the articles of organization you will need to complete on your state's business registration website. Each state will have its own form, but generally, you'll be required to provide information such as your LLC's name, the purpose of forming your LLC, who will be managing your LLC, and your registered agent's name and contact information.
- File your LLC's articles of organization. In order to register your LLC, you will need to submit your LLC's articles of organization, along with a filing fee. In most states, you will have the choice to file online, by mail, or in person. Once your filing has been processed, your state will send out a certificate of organization.
- Publication of notice. Some states also require you to publish a notice about the formation of your LLC. You will need to check with your state's requirements to see where the notice must be published, as well as the frequency of publication and the timing of the notice.
Once you've officially formed your LLC, you can take the next steps in setting up your business, such as applying for a federal tax identification number and opening up bank accounts in your LLC's name.
Creating an LLC for your music business will take a bit of your time, but it's not a complicated process. And once you've formed your LLC, you'll be able to take advantage of the benefits of running your music business as an LLC.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.