Members ned911 Posted July 31, 2006 Members Share Posted July 31, 2006 We've got our first big gig coming up where we will have to fill out a 1099 or W-4. We have 3 dates at this place already and hopefully more to come. Question: Is it better for 1 person to give there SSN then handle 1099's to the rest of the band at the end of the year or form a legal entity and use that tax ID? Link to comment Share on other sites More sharing options...
Members THX1138 Posted July 31, 2006 Members Share Posted July 31, 2006 Kinda depends on if that one person is comfortable being personally and financially responsible for all the legal aspects of the band. We formed an LLC awhile back once we realized that this truck was going to keep moving forward. Decided it was in our best interest to go completely legit with the business. Link to comment Share on other sites More sharing options...
Members Beachbum Posted July 31, 2006 Members Share Posted July 31, 2006 From my perspective you would be better off forming a legal entity (S Corp, LLC...) OR have each individual band member receive their portion in a check from the club (some bands do this, not real professional...). If you receive the total pay amount it can have an effect on your personal taxes later on. Tough call but I like the legal entity route, especially for future use (keep that truck moving forward). Link to comment Share on other sites More sharing options...
Members BlueStrat Posted July 31, 2006 Members Share Posted July 31, 2006 If you're making tens of thousands of dollars a year and are buying a lot of stuff as a group, a corp. might be worth it. If you're talking a couple grand a person a year, one person doing the 1099 is better for everyone, IMO. Link to comment Share on other sites More sharing options...
Members wikwox Posted July 31, 2006 Members Share Posted July 31, 2006 After 30 years of gigging current band is the first to go Scorp. There's no choice, our best gigs come thru an agent who demands it. Pain in the ass? Ask me come tax time..... Link to comment Share on other sites More sharing options...
Members Dave Martin Posted July 31, 2006 Members Share Posted July 31, 2006 it shouldn't matter - S corp, LLC or 1099 to the leader; the person taking the money should write checks to the rest of the band and give them 1099's at the end of the year, and everything will be hunky-dory. Link to comment Share on other sites More sharing options...
Members Henway_piano Posted August 6, 2006 Members Share Posted August 6, 2006 Incorporate or LLC. Anything but sole proprietorship....Remember the "Great White" fire? Link to comment Share on other sites More sharing options...
Members Beachbum Posted August 6, 2006 Members Share Posted August 6, 2006 Everyone I know that has done both the non S Corp route and then the S Corp route agrees that the S Corp (or LLC) makes things easier. Without trying out S Corp benefits it I'm not sure how it could be evaluated properly(?). Link to comment Share on other sites More sharing options...
Members BlueStrat Posted August 6, 2006 Members Share Posted August 6, 2006 Originally posted by Henway_piano Incorporate or LLC. Anything but sole proprietorship....Remember the "Great White" fire? Um...the guy who got sentenced in the Great White fire was the manager, who is a contract employee of the band, not the sole proprietor. At the club level of playing, 99.9% of bands just need one guy to keep track of the dough (usually whoever does the contracts) and issue everyone 1099s and that's it. Unless you're doing shows where you are liable for the safety of the audience, or your actions can be demonstrated to grossly affect ticket sales or profit to the promoter/venue owner, your chances of being sued for any amount of money are almost nil, and if you did get sued, you'd likely go to small claims court anyway. The guy at Joe's Bar and Grill is going to have a hard time showing that you cost him several thouand dollars by anything you do. BTW, in my contracts I always state that the condition of the stage, the condition of the wiring, and power supply is soley up to the clubowner, so if running my band causes an electrical fire, it's their fault for not providing enough power or outlets to the stage. And, if any of my equipment is damaged because of said conditions, I can get reimbursed for repairs or replacement. This is, to me, an essential contract clause, since I've played places where they had one 14 ga extension cord and a power strip with a broken reset button to run the entire stage, or one outlet to run the band, the pinball machines, and the big screen TV. Link to comment Share on other sites More sharing options...
Members MartinC Posted August 7, 2006 Members Share Posted August 7, 2006 1099 to the leader-he 1099's everyone else, unless you are all making a real good living and own lots of assets together. Keep it simple. Link to comment Share on other sites More sharing options...
Members geoffo Posted August 7, 2006 Members Share Posted August 7, 2006 Can't comment on how things work in the USA, but over here in Australia, there are so many benefits for doing everything legit. Come tax time, the taxman becomes my best friend especially with all the costs incurred, depreciation etc. jus doing mine now as we speak Link to comment Share on other sites More sharing options...
Members ned911 Posted August 8, 2006 Author Members Share Posted August 8, 2006 Talked to my accountant and she thinks just using my SSN and cutting 1099's is the easiest thing to do. Link to comment Share on other sites More sharing options...
Members BlueStrat Posted August 8, 2006 Members Share Posted August 8, 2006 Originally posted by ned911 Talked to my accountant and she thinks just using my SSN and cutting 1099's is the easiest thing to do. Huh. I wonder where I heard that before... Link to comment Share on other sites More sharing options...
Members tunz4all Posted August 8, 2006 Members Share Posted August 8, 2006 Been said before-----if you are doing more than a few gigs a year, it starts to make sense to do it legit. Get a tax-ID, open a 'lil checking account (preferably a free one), issue 1099's at end of year. Get legitimate tax deductions for qualifying gear, gas, vehicle, band clothing, lunches and dinners, travel & entertainment, -------gee, I sound like a commercial for the IRS!----------read up on legitimate tax deductions for businesses. Go with an S-Corp or LLC. Link to comment Share on other sites More sharing options...
Members jerrye Posted August 8, 2006 Members Share Posted August 8, 2006 Choice of business entity impacts taxes and liability for bad stuff that happens. Incorporate or LLC. Anything but sole proprietorship....Remember the "Great White" fire? I think this is a reference to the fact that, if the Great Fire happens, the first rule of plaintiff lawyers is: Sue every sonofabitch that moves. This means that the lawyer for an alleged victim will sue everyone -- the club owner, the band, band members, managers, the manufacturer of the pyro, the manufacturer of the insulation for the building, and more. Liability is determined in court or by settlement. But this is after every sonofabitch gets sued and hires lawyers to get released from suit or otherwise defend. When a court finds a party blameless, this does not negate the fact that the party had to deal with being sued. Defendants usually need to hire lawyers and will lose much time, money, sleep, and energy, in making a case for no liability. Other Great Fires: auto accidents involving the band trailer, speakers falling on audience members, alleged damaged to hearing of a bar patron. Here's how the liabilty issue relates to the choice of business entity: Partners are liable for the acts and omission of the partnership. Courts will determine that a joint venture, e.g. a band, is a partnership, even when the members signed no partnership contract. This true when the joint ventures share in the profits and risk. We share in the risk of financial loss, when we play in bands. That is, unless the band formed a corp or LLC. The liability of corp shareholders and LLC members is limited to the assets of the corp or LLC, generally. This means that, if the Geat Fire happens, and the band LLC is found to share in the liability, and the band can't fork up its share of the money, the personal assets of the shareholders or members are not subject to seizure or lien. So, no band member's house is up for grabs, in other words.So, some folks avoid partnerhsips to insulate from liability. Also, although a contract may state that the club is responsible for providing ample power, if the Great Fire happens, a court might find that, although the club is 75% liable, the band is 25% liable. A court might reason that, if the power supply was so poor, the band was unreasonable in using it. In other words, the band should have refused to play, unless or until the club provided ample means. Also, courts refuse to enforce clauses in contracts, at times, so some smart contract clauses do not always save the day for the beneficiary of the clause. Sole proprietorship applies where one person owns the business. For example, a bandleader might run a band. That person may hire employees. A band member could be an employee, if the bandleader controls the way the members play their parts, what instrument is used (e.g. 6 string versus 12). Employers are liable for the acts or omissions of their employees. Or the sole proprietor might hire independent contractors. Link to comment Share on other sites More sharing options...
Members BlueStrat Posted August 8, 2006 Members Share Posted August 8, 2006 All of this may be true. But in 35 years of playing out, I have enever had any of it happen, never seen it happen, never heard it of it happening to anyone I know, or evn don't know. What happened to Great White as a fluke. Same with the Allmans, when a light truss fell and killed a crew member. Yes, it's possible. It's possible that my band truck could pop out of gear and roll into a restaurant window while we'e eating and kill someone. It's possible that I could bump somone in the club, they could trip, fall onto a beer pitcher and cut their throat. Any number of calamitous things could happen, but the issue is, are they likely? If it makes anyone feel better to incorporate to protect themselves while they're out doing their 30 or 40 weekend gigs a year, that's great. To me, it's a bit like buying meteor insurance for my house because a rock could fall from the sky and could go through my roof. Link to comment Share on other sites More sharing options...
Members jerrye Posted August 8, 2006 Members Share Posted August 8, 2006 I have enever had any of it happen, never seen it happen, never heard it of it happening to anyone I know, or evn don't know. My experience, also, at the small-pond level. Rick James was in BR at the State Fairgrounds in 1981/1982, and he had a speaker fall on some folks. To me, it's a bit like buying meteor insurance for my house because a rock could fall from the sky and could go through my roof. Well, that analogy is a bit extreme. A car accident involving the band trailer is no less likely than any other car accident. A car accident is more likely than a meteor strike. In some states, one can go to the Secretary of State website and incorporate for $75. So, the "insurance" in this case is cheap. And, if someone's on the fence, regarding the issue, in light of taxes, the additional knowledge of liability may sway the decision. That being said, my band is not incorporated. While we have no plans to incorporate, we are consulting with a tax pro. Sometimes, it's helpful for folks to know the worse-case scenario. One can then look at the cost of protection versus the liklihood of stuff happening, factoring in the severity of the impact, if the bad stuff does happen. Sometimes, this weighs in favor of getting no extra protection. But if I were a married to a brain surgeon, I'd probably go LLC. I wouldn't the rewards of her labor to be at risk, albeit a small risk. Peace Link to comment Share on other sites More sharing options...
Members BlueStrat Posted August 8, 2006 Members Share Posted August 8, 2006 Originally posted by jerrye My experience, also, at the small-pond level. Rick James was in BR at the State Fairgrounds in 1981/1982, and he had a speaker fall on some folks. Well, that analogy is a bit extreme. A car accident involving the band trailer is no less likely than any other car accident. A car accident is more likely than a meteor strike. In some states, one can go to the Secretary of State website and incorporate for $75. So, the "insurance" in this case is cheap. And, if someone's on the fence, regarding the issue, in light of taxes, the additional knowledge of liability may sway the decision. That being said, my band is not incorporated. While we have no plans to incorporate, we are consulting with a tax pro. Sometimes, it's helpful for folks to know the worse-case scenario. One can then look at the cost of protection versus the liklihood of stuff happening, factoring in the severity of the impact, if the bad stuff does happen. Sometimes, this weighs in favor of getting no extra protection. But if I were a married to a brain surgeon, I'd probably go LLC. I wouldn't the rewards of her labor to be at risk, albeit a small risk. Peace Well, I can't argue with any of that. and yes, my analogy was extreme, but I'm talking about probability. And you're right about consulting a tax pro. Thta's what I did; I file a separate Schedule C for my band business, keep a separate checking account, and treat all the guys as employees with 1099s. Now if you'll excuse me, I'll be on the roof mounting my Meteor Deflectors I just scored for 7 k on e-bay! Link to comment Share on other sites More sharing options...
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