May 6, 2025 • 42 mins
🎙️ Podcast Summary: S5 E6 – How to Structure Your Music Business
Welcome to Musicians Tip Jar, where we talk about musicians and money. In this episode, Chris Webb and Dave Tamkin dive into one of the most important (but often overlooked) elements of running a sustainable music career—structuring your music business. Whether you're a solo artist, band leader, or music entrepreneur, selecting the appropriate business structure can help you save costs, safeguard your assets, and create opportunities for funding, branding, and growth.
From sole proprietorships to LLCs to S-Corps, we break down the pros, cons, and key considerations to help you pick the right path based on your income, team size, and future goals.
 ✅ Learn how proper structure helps with taxes, legal protection, and grant eligibility
âś… Hear real-world examples of how musicians benefit from forming LLCs or S-Corps
âś… Discover tools, questions, and action steps to confidently decide what structure fits your music career
Plus, Dave gives a shoutout to musicians running nonprofits and explains how structuring with purpose can amplify your impact. Stick around for laughs, insights, and a few clever zingers disguised as “unknown” quotes from Chris.Â
Listen at www.musicianstipjar.com
🎧 Tune in now and take control of your music business the smart way.Intro & Outro Music Donated by: The Magi https://www.themagimusic.comÂ
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrockÂ
Pictures by: Kit Chalberg https://kitchalberg.com/
Become a supporter of this podcast: https://www.spreaker.com/podcast/musicians-tip-jar--4698023/support.
Visit MusiciansTipJar.com for more resources and tools to empower your financial journey.
Intro & Outro Music Donated by: The Magi https://www.themagimusic.comÂ
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrockÂ
Pictures by: Kit Chalberg https://kitchalberg.com/
Welcome to Musicians Tip Jar, where we talk about musicians and money. In this episode, Chris Webb and Dave Tamkin dive into one of the most important (but often overlooked) elements of running a sustainable music career—structuring your music business. Whether you're a solo artist, band leader, or music entrepreneur, selecting the appropriate business structure can help you save costs, safeguard your assets, and create opportunities for funding, branding, and growth.
From sole proprietorships to LLCs to S-Corps, we break down the pros, cons, and key considerations to help you pick the right path based on your income, team size, and future goals.
 ✅ Learn how proper structure helps with taxes, legal protection, and grant eligibility
âś… Hear real-world examples of how musicians benefit from forming LLCs or S-Corps
âś… Discover tools, questions, and action steps to confidently decide what structure fits your music career
Plus, Dave gives a shoutout to musicians running nonprofits and explains how structuring with purpose can amplify your impact. Stick around for laughs, insights, and a few clever zingers disguised as “unknown” quotes from Chris.Â
Listen at www.musicianstipjar.com
🎧 Tune in now and take control of your music business the smart way.Intro & Outro Music Donated by: The Magi https://www.themagimusic.comÂ
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrockÂ
Pictures by: Kit Chalberg https://kitchalberg.com/
Become a supporter of this podcast: https://www.spreaker.com/podcast/musicians-tip-jar--4698023/support.
Visit MusiciansTipJar.com for more resources and tools to empower your financial journey.
Intro & Outro Music Donated by: The Magi https://www.themagimusic.comÂ
Intro Read by: David “DJ” Lee of The Magi
https://soundcloud.com/rockababyrockÂ
Pictures by: Kit Chalberg https://kitchalberg.com/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome to the show that explores the methods and strategies
on rocking the financial side of your music business. With
over forty years combined experience, here are your hosts, Chris
Webb and Dave Damkid.
Speaker 2 (00:15):
Welcome to Musicians Tip Jab, where we talk about musicians
and money.
Speaker 3 (00:19):
And to all the.
Speaker 2 (00:20):
People who said we musicians wouldn't amount to anything because
of procrastination, you just wait.
Speaker 4 (00:27):
I'm Chris.
Speaker 2 (00:27):
We have joined by'm my co host and the guy
whose response I can't wait to hear, Dave Damkin.
Speaker 3 (00:34):
Man, I.
Speaker 4 (00:37):
Had my notes here somewhere, but I waited till last
night to get everything organized, and I was trying to
have you know, it's a very important conversation today, Chris,
So we have to know what we're talking about, especially
when it comes to LLC and corporations. But I didn't
get might have procrastinated. Can we change the intro?
Speaker 3 (01:01):
Well, we can't keep them waiting forever, Jamitt.
Speaker 2 (01:04):
Today we tackle the common question what is the best
way to structure my business in the music industry.
Speaker 3 (01:10):
This is a big.
Speaker 2 (01:11):
Question, but we will give you all the information you
need to understand and decide what makes the most sense
for you. Today's quote comes from an unknown source. We
can just skip the part where I don't want to
take credit where because I don't want to take someone
else's words, But the quote is the most successful entrepreneurs
(01:36):
are those who not only master the craft, but also
understand the business behind it.
Speaker 4 (01:42):
Ladies and gentlemen, welcome to the podcast where Chris Webb
disguises another of his famous quotes with the word unknown.
Does the refuse us to take credit for his genius
even though he tries to let everyone know that he's
not doing that. I want to give a quote shout
out to musicians running nonprofits. This structure can be a
(02:03):
beautiful way to combine passion with purpose, especially if your
goal is a serve a community through music. We are
not going over nonprofits today as organizing your business, but
something we will do in the near future. But I
just want to give a shout out to everyone that
aligns their goals with giving back in the music community.
This week's nonprofit is Musicbiz dot org. The Music Business
(02:25):
Association exists to connect, educated, and empower the global music
business community. Music biz That's with a Z as a
commitment to reflect the global music industry by ensuring diversity,
equity and inclusion in all their events and initiatives, as
well as in their board of directors and staff. Diversity
and compasses not only race and gender, but also company type, size, ownership,
(02:46):
industry sector, and level of professional experience. Music Biz creates
the rooms in which the important conversations that shape the
future of our industry takes place. Representing more than ninety
percent of the industry at large, the association serves as
the connect the tissue the global music business and provides
a trusted forum where ideas and collaboration can flourish. I
(03:07):
highly suggest you go to musicbiz dot org for more information.
It's a beautiful website with tons of information to help
you enter your music career. If you find this information useful,
please rate and subscribe to the podcast and also slam
that like button if you're on YouTube so we can
help keep you up on the finance side of your
music business.
Speaker 2 (03:27):
Who do you think started the whole slam thing.
Speaker 4 (03:30):
I'm not sure. I never felt like slamming anything when
it came to a computer, dental hands, things things cost money.
Who are these kids saying slam it?
Speaker 2 (03:40):
If you see somebody playing a guitar and slamming their
fingers on the guitar. You'd be like, hey, hey, that's
not how you do it. I'm glad that you're doing it,
but you don't need to slam it. It's just not
good form, you know.
Speaker 4 (03:51):
Do you ever hear that song by John Hyatt? I
think it's like called wrecking a perfectly good Guitar. Yeah,
John Hyatt perfectly good guitar just talks about why would
anyone want to destroy a perfectly good guitar?
Speaker 3 (04:04):
Now I've not no, I'll have to look it up.
Speaker 2 (04:10):
There is always going to be this feeling that you
could be doing what you do better. Sometimes that feeling
is just imposter syndrome rearing its ugly head, but sometimes
it has real.
Speaker 3 (04:21):
Validity to it.
Speaker 2 (04:22):
Today's topic is important to take to heart and be
willing to do what you need to do to help
yourself and your business to be in position for success.
Let's break down everything you need to know to figure
out how to best structure your business.
Speaker 3 (04:37):
Well, let's go.
Speaker 2 (04:47):
So I wanted to preface this conversation with what we
are talking about is particularly about how your business functions
on the legal side, on the representation of being a
legal business.
Speaker 3 (05:00):
And that being said.
Speaker 2 (05:02):
We are only two people who have done what we've
done and talk to who we've talked to to know
what this is best for everyone. So would take this
all with a grain of salt and make sure that
you are talking to the right people before you make
any big moves for your own business.
Speaker 4 (05:15):
It's could you bring that up because if we get sued,
we have to say this is disclaimer. Yeah, the disclaimer
because you have to have your business lined up to
protect yourself from saying a bunch of crap on a
podcast that you may or may not know what you're
talking about.
Speaker 2 (05:33):
Well, we do have a good disclaimer at the end
of all of our podcasts, but we are confident in
what we're saying as well.
Speaker 3 (05:39):
At least I am.
Speaker 4 (05:41):
The United States.
Speaker 2 (05:42):
Yeah, so yeah, this also should only be information targeted
to people doing business in the United States.
Speaker 3 (05:48):
It can be very different depending on your location.
Speaker 4 (05:51):
Did you at least I am you were just setting
yourself up for it. Get my notes? No procrastination, everybody,
We're going to really have to do this intro over.
Go ahead, I'm sorry.
Speaker 2 (06:08):
Should we just talk for a little while before we
get to this more you want to you want to
just keep diverting and installing here.
Speaker 4 (06:15):
Well, obviously, because I don't know what I'm talking about,
you said.
Speaker 3 (06:20):
That, not me.
Speaker 4 (06:22):
I don't know it was. Was that my personal disclaimer?
I'm interrupting, Go ahead, I'm sorry.
Speaker 2 (06:29):
So to simplify, we divided this information up into three sections. First,
why it matters, Second, the main three options that we
think are the right ones for most musicians, and then
how to choose the right one for you. So starting
with why this structuring matters, the music industry is experiencing
exciting growth despite what craziness is going on with tariffs.
(06:52):
They're projecting to climb at a healthy ten nine percent
annually through twenty twenty seven, and hopefully that stays on target.
That translates into billions of dollars flowing through the sector
each year, with artists and businesses investing heavily into diverse
music services.
Speaker 3 (07:11):
This is from wix dot com.
Speaker 2 (07:14):
This is something that we can all look at and say, look,
the money is there, the money is flowing into the
music industry.
Speaker 3 (07:20):
How are you going to get yours right?
Speaker 2 (07:22):
So why this matters the most to us is because
financial management is how you protect your business, but also
how you get your business to be able to grow
to the largest size and structure the business so that
tax benefits and other things like that are going to
all benefit you to their maximum potential.
Speaker 4 (07:40):
This advice also comes from what we know within the
United States, so if you're listening outside of the United States,
definitely check what how your country considers what an LLC
is an escort.
Speaker 2 (07:52):
So let's start with financial management and tax benefits. The
first benefit that we think it really matters. The reasons
this matters is because breading your personal and business finances
make tracking income and expenses much easier. It also is
all about tax deductions for equipment, travel, and marketing expenses
that are also going to be easier for you to
(08:13):
keep track of. But also they aren't eligible necessarily if
they're not in the right type of structure.
Speaker 4 (08:18):
This also helps with legal protection. A legal business structure
like an LLC limits personal liability in cases of lawsuits
or debts. Having contracts in place, ensures proper payment, and
protects intellectual property rights as well.
Speaker 3 (08:31):
Have you been sued before?
Speaker 4 (08:34):
I have been threatened, but not under music so a
different company, But I have sued because they were covered
under their company. They filed for bankruptcy, so it was
like getting money out of a rock, water out of
(08:55):
a rock. But that's what they did to protect themselves,
you know. So they claim that and that personally have
to pay totally.
Speaker 2 (09:03):
And that's exactly what we're saying here, not that we're
all gonna get sued, but it is just something you
do to protect yourself, and it's exactly how they had
structured their business to protect themselves, right yep. Another area
is funding and grant eligibility. Many grants and sponsorships and
investors require a registered business entity. A lot of the grants, especially,
(09:23):
you can't even apply to them if your structure isn't
set first. Also, business credit cards and loans are easier
to obtain for structured entities.
Speaker 4 (09:34):
Last week I brought up something that meant a lot
to me about figuring out your brand growth. So professionalism
and brand growth is important to establish yourself with an
LLC or as a business structure for venues, labels, sponsors.
Any structured business that has these things are going to
be taking more seriously. Registering a business allowing for branding, trademarks,
(09:58):
and ownership protection is of the highest supportance.
Speaker 2 (10:02):
And finally with the ownership and royalties and things. There's
also setting up publishing and record label entities to maximize
income streams for certain types of music businesses. So what
are these main types of business structures? Like? What do
we keep talking about and dancing around? So there are
several business structures, each with its own legal, tax and
financial implications. First, we will go through some of the
(10:25):
most basic of these types and their differences, with some
pros and cons that we put together.
Speaker 4 (10:31):
What's the most basic, Chris.
Speaker 2 (10:33):
The one everyone starts with is the sole proprietorship. This
is the most simple, as all you have to do
is find a business name and register it with the
state that you live in the United States.
Speaker 4 (10:45):
The one thing with that though, there's also no separation
legal structure, and I think that's the point that we're
going to get to with all of this. But you
have full control over your business decisions right out of
the gates.
Speaker 2 (10:56):
Starting with the pros on such a business as a
sole proprietorship.
Speaker 3 (11:01):
Starting with the pros, they're the.
Speaker 2 (11:03):
Easiest and cheapest type of business structure to set up.
You can start working under your legal name right away
or file a doing business ads, which they abbreviate as
a DBA, and then name that make sure that name
is available in your state not taken by someone else,
and then you can register it with usually a small fee,
and every state has a different fee for this. I
(11:26):
think in Colorado it's somewhere around fifty or sixty dollars.
Speaker 4 (11:30):
Another pro is right out of the gates. When you register,
you have full control over all your business decisions underneath
that name. And it's a simple tax filing, so you
have all your expenses are reported in your personal tax
return form for your ten to forty schedule. See this
saves you the complexity and cost of filing separate business
tax returns.
Speaker 3 (11:50):
And that is a very exciting thing.
Speaker 2 (11:51):
Right, We're all going to feel really good just about
starting and just getting going on our business. So for
most people, this is gonna feel like a huge step forward,
and it is. You're legitimizing your idea, your dream, your brand.
But there are some cons to this basic setup of
a sole proprietorship.
Speaker 4 (12:12):
First one would be no legal separation between personal and
business assets, personal liability or debts or lawsuits. So if
someone sues your music business, your personal savings home and
car could be on the line for that. This can
be risky if you're touring, hiring other musicians, signing contracts,
anything like that. And it's also harder to secure funding
(12:35):
or business credit, so banks brand providers before working with
registered businesses as a sole proprietor. As a sole proprietor,
you might rely more on personal credit and crowdfunding.
Speaker 2 (12:48):
There's nothing wrong with that part if that's where you're at.
But the second option is the second I should say
the second most common option is an LLC, which stands
for a limited liveability company. So what is an LLC?
An LLC is a legal business entity that separates personal
(13:08):
assets from business liabilities. They provide flexible management, so you
can run it alone or you can have partners. They
can both can work.
Speaker 3 (13:17):
And it also.
Speaker 2 (13:17):
Allows you to have passed through taxation. So this means
that profits are taxed on your personal return and that
avoids that corporate tax that comes from the next level up.
There's other benefits that I'd like to include as well.
They do protect your house and your car and your
savings if they're set up correctly. They also have flexibility
(13:38):
when it comes to how you structure an LLCs, So
there are a lot of different variations single member, multi member,
as we said, but also in just the way that
you have it set up.
Speaker 3 (13:49):
For your own finances.
Speaker 2 (13:51):
But the good news about the LLC is that it's quite.
Speaker 3 (13:53):
Easy to maintain.
Speaker 2 (13:54):
It's actually what I've had for a long time, and
there's fewer formalities than a corporation, so there's no things
like board meetings and heavy paperwork that you have to
include when you're doing things like your taxes.
Speaker 3 (14:07):
The other thing.
Speaker 2 (14:07):
About it that sets it apart from a sole proprietor
for me is that it's more it has more of
a professionalism to it, and as we said, that biggest
benefit often comes in the sense.
Speaker 3 (14:18):
Of when you need grants, or you need loans.
Speaker 2 (14:20):
Or you're searching for partnerships for certain projects.
Speaker 4 (14:24):
One thing to mention for LLC's if you're registering a
band name or a stage name via the LLC, A
quick note is that the name protection isn't there, so
how forming an LLC doesn't automatically protect you and your brand,
So I would say look into a trademark rights right away.
(14:48):
If this is what you're going to have your LLC
and your brand name be the same, So consider consider
filing a trademark if you want nationwide brand protection on
this one.
Speaker 2 (14:59):
So I thought it'd be useful if we just talked
about quickly for those who've never done this, how to
set up an LLC. So the first thing you're going
to have to do is choose your business name.
Speaker 3 (15:07):
Right, it has to be unique that it.
Speaker 2 (15:09):
Isn't already registered in the state in which you're registering.
It could have someone else somewhere else in the country
that has the same name. As long as it's out
of the state, you legally could register it within your state.
But that being said, as musicians, we know we are
more globally focused. At least we're certainly looking past our
own state borders in the United States.
Speaker 3 (15:29):
To spread our music.
Speaker 2 (15:30):
It would be advantageous for you to plan ahead and
try to get a business name that is not already taken.
That being said, it also doesn't have to be your name,
so obviously some name like mine, which is Chris Webb.
There's a lot In fact, there's a lot of Chris
Webb's and we all fight over the Spotify space. There's
a Christian rapper Chris Webb. There's a country singer in
(15:53):
Texas named Chris web So we all get along, but
the truth is that we're all fighting over that same
real estate. The other thing about that that I would
like to add is that you should check to see
if you could get the domain that you want too,
because before you register this, it makes a lot of
sense if you're going to be identified as the LLC
name to be able to get that actual domain too.
Speaker 4 (16:15):
I would go a step further to you and check
all socials as well.
Speaker 2 (16:20):
As we're saying that, it's only if you're going to
use your LLCD as your actual name during your performances
and your website and all that branding. After you've done
that and you found a good LLC name that is
available for you, then you file those articles of organization.
This is the official form to legally register your LLC
(16:40):
with the state government. And as we said, those fees
can vary, just like with so proprietor registrations. They vary
somewhere around fifty to five hundred dollars depending on the state.
After you've gotten thus far, congratulations, Now you get an
ei N, which stands for Employer Identification number. This EIN
(17:01):
looks a lot like a business social Security number, and
then when you are opening a business bank.
Speaker 3 (17:06):
Account, you'll use the ein.
Speaker 2 (17:09):
If you were hiring employees, which is another topic for us,
but not when we're going to tackle right now, you
would use your ein. And then, of course filing taxes
or sending W nine's, you can use the ein for
your invoicing as well. To receive this ein, you can
actually just go to the IRS website. Step four on
(17:30):
this process is to create an operating agreement. This is
recommended but not required, but you want to outline how
your LLC will be managed, even if you are the
only owner. This can define roles, responsibilities, and profit sharing
if there are multiple owners.
Speaker 4 (17:49):
This is also good practice because this is the smallest
your company will ever be, so if you can start
to define roles and tasks and how things are to
get used to that now and have a vision of
that as your company grows, you'll be able to do
it for one more person, two more people. But it's
(18:10):
a lot harder when all of a sudden you find
yourself with five people trying to manage an LLC and
you haven't started an idea of how you want your
future to look.
Speaker 2 (18:22):
The next step would be to open a business bank account.
This can keep your business and personal finances separate for
legal and tax purposes.
Speaker 3 (18:30):
And your sanity.
Speaker 2 (18:32):
Truthfully, this is one of the most important and valuable
parts as the finance set of things to achieve when
you're setting up the structure of your business. I have
seen so many people that set up in a whole
LLC and then don't keep their finances that are the
income they're generating from the LLC separate from their personal
(18:54):
checking accounts, And as I think we talked about later
on here, it pretty much nulls the protect that you
are trying to achieve by starting this structure.
Speaker 4 (19:04):
Yeah, if you don't start that, now a court could
look into your finances and say that it's really not
a separate identity and hold you personally liable for anything
that might happen if you weren't organizing your business in
this way.
Speaker 2 (19:18):
And then the last step we got on this was
just to comply with the state and local regulations. Some
states require annual reports and they charge fees for those.
Here it's a periodic report with the State of Colorado,
So I have to do that every time for my
personal business. As well as musicians tipjar LLC and that's
(19:39):
something you just get used to. You'll get For us,
we get an email that's reminding us that it's due,
and then you go online.
Speaker 3 (19:45):
You do the whole process online. It's not bad.
Speaker 2 (19:47):
It takes a very short amount of time once you're
used to the process. But you also have to look
into the chance that you might need licenses or permits
depending on what your business is in the industry.
Speaker 4 (20:00):
So going over pros for this, Number one, it protects
personal assets and business liabilities. Your bank gets sued for
breach of contract, a fan is injured at a show,
your personal assets are protected and only the business assets
are at risk. So great for touring, session work or
beat licensing disputes, disclaimers for online music sales, or courses
(20:22):
which hopefully Chris, you and I never have to worry
about with courses, signing contracts for venues, festivals, zync deals.
And say you're playing a gig and someone trips over
something as simple as your cable ensues you're a sole
proprietor your personal savings could be on the line, but
with an LLC it's not.
Speaker 2 (20:43):
Another benefit is the tax benefits and these get to
become pretty sophisticated and very significant for businesses. Flexible tax
options only come with these higher levels of an LLC structure,
not as sole proprietorship. So as much as they get complicated,
(21:03):
you have to pay taxes separately for your business versus
whatever you made outside of the business. It's also easier
to secure funding than it is for a sole proprietorship.
Speaker 3 (21:14):
And we've said this a couple times, but you have to.
Speaker 2 (21:16):
Keep in mind that if you plan on using grant
opportunities or getting loans from certain particular types of sources,
they will not even allow you to apply if you
don't have an LLC. Now there are some cons here
as well for having an LLC. They require formal registrations
(21:37):
and fees. This is something that maybe some people are
not prepared to do yet.
Speaker 4 (21:40):
And you mentioned earlier anywhere from fifty to five hundred.
Where Colorado is I believe was fifty Madison. Here in Wisconsin,
it's one hundred. No, Colorado is one hundred here in
Madison is fifty in California for the minimum is eight hundred.
(22:01):
Is it really and if it's not, please look it
up and tell us because when I did the research.
I didn't know Chris was going to start the episode
by saying he knows what he's talking about, and then
I have no idea what I'm talking about. Some states
imposed additional taxes or reporting requirements. States like New York
and California may require additional publishing for reporting steps. So
(22:23):
it's important to understand your local regulations.
Speaker 3 (22:27):
You know.
Speaker 2 (22:28):
I have a funny story that why this has proven
itself very valuable. The other night, I was playing this
corporate event, and it was for this massive corporate conference,
and all these different companies represented manufacturing companies that made
like the materials that they used to pave roads, and
you know, nothing exciting but a lot of twenty something
(22:52):
men in the group, and they were getting pretty tipsy,
you know. Towards the end of the night, I'm playing
some songs and this guy comes over to me and
you can just you know, when you look at somebody
and you can tell they're already pretty gone, and and
he just kind of a little bit of slurring his words,
but mostly just his eyes were just kind of like
not really looking at me. And he goes, hey, can
(23:14):
you play a food fighter song? Do you know how
to sing a food Fighters song, you.
Speaker 3 (23:18):
Know, and I was like, oh yeah, and he's like, well,
I played the guitar part perfectly, so he.
Speaker 2 (23:23):
Started trying to sit down and take my guitar, and
I was like, oh, I'm so sorry. You know that
I'm not allowed to let anybody else play the guitar,
and he goes, oh, well, do you know any Pearl Jams.
Speaker 3 (23:36):
I can play these Pearl Jam songs perfectly.
Speaker 2 (23:38):
And once again tried to take my guitar out of
my hands and I said, no, I'm sorry, it's not
my rule. You know, it's even though it is my
rule as well, but it helps me defer the responsibility.
But he goes, oh, it's okay. You don't know who
I am, okay, and I understand it. That's okay, Like, okay, now,
I'm sorry.
Speaker 3 (23:57):
Don't you just pay roads.
Speaker 2 (23:59):
I didn't realize that you were also in Pearl Jam,
you know, like it was so embarrassing, and he starts
to walk away and he literally trips over my cables
and falls to the ground and I was like, man,
this is just getting worse, you know, because you know,
I usually kind of keep my space protected, like people
aren't supposed to go past a certain spot, and it
seems pretty obvious to sober people. Drunk people get in
(24:22):
their space, you know. And I thought, oh my god,
this guy's gonna wake up tomorrow with the black eye
and sue me.
Speaker 3 (24:28):
You know, that's the kind of crap where it's like
I had nothing.
Speaker 2 (24:31):
To do with that whole situation, but that would have
fallen on to me if he decided to submit a lawsuit.
Speaker 4 (24:37):
Yeah, which another thing is something you and I do
is have insurance too for those type of things, and
some establishments even make you have insurance or if anything
goes wrong like that.
Speaker 3 (24:48):
Yeah.
Speaker 2 (24:49):
Well, and hopefully I never find out that he actually
did play for Pearl Jam or something like that.
Speaker 4 (24:55):
If he did, I mean, it'd be pretty embarrassing that
any professional musician that does no better to come up
and take another from musicians guitar doesn't need to be
there in the first place.
Speaker 3 (25:06):
That's exactly what I thought too.
Speaker 2 (25:07):
I was like, man, if you were somebody, you would
have a lot more respect for the music community around you. Anyhow,
I just thought that was pertinent to that conversation, because
you never know where something is going to just take
a complete right turn and you need your protections in place.
Speaker 4 (25:21):
The third thing we're going to talk about is escorp
so S corporation, and we first started to address lists
with IO and if your music business is making consistent
profits above thirty K a year, this might be a
benefit for you electing es corp status to reduce self
employment taxes. This doesn't change your LLC, it just changes
(25:42):
how it's taxed. So can we go into that for
number three?
Speaker 3 (25:45):
Yeah, this can be a little more confusing.
Speaker 2 (25:47):
This is the one that a lot of people feel like,
should I switch to this yet or not? And we
went went even the next step over and try to
simplify which one of these fits you in general ways
here at the end. But for now, let's just kind
of talk about who can own an escorp. So obviously,
an s corp is designed to be.
Speaker 3 (26:06):
For the higher level of a.
Speaker 2 (26:09):
Structured business, so you are limited up to one hundred shareholders.
They must all be US citizens and residents. But so
that can allow you to have a lot of growth
depending on how and where your.
Speaker 3 (26:22):
Business is headed.
Speaker 2 (26:23):
Shareholders must be individuals, though they cannot be other businesses,
so the businesses cannot be a shareholder in your ES corp.
And then the other question we get a lot about
what an es corp is is what makes it different,
how does it get managed? And so the main thing
that people don't realize is that by having an es
(26:44):
corp you are required to have board of directors and officers.
Even if you're the only owner, you have to act
as both.
Speaker 3 (26:55):
And so.
Speaker 4 (26:57):
Paid twice.
Speaker 2 (26:58):
It's right on a salary twice for that one right.
Board makes high level decisions, right, they're the officer kind
of handles the daily operations. So the two are separate
in their roles and ideally are two separate people once
you get to this higher level, but they often in
the beginning of switching up to an escort can be
the same person.
Speaker 3 (27:20):
But they do.
Speaker 2 (27:20):
Require you to hold annual meetings that have to have pages,
They have to have notes that you can back up
the fact that you had this annual meeting and maintain
corporate minutes that prove that you had those conversations.
Speaker 4 (27:35):
So you're saying, anytime you start talking to yourself about
the business, just start keeping minute times.
Speaker 3 (27:43):
Minutes.
Speaker 2 (27:43):
Yeah, I mean corporate minutes are a reference to us
making notes. I don't know if you can do it
audio wise, but maybe you could just record yourself talking
to yourself and I'm having a meeting. Just justify your
insanity that way.
Speaker 4 (28:00):
At least help and understand me more when I'm in
the room talking to myself. Need a charge.
Speaker 2 (28:08):
Okay, So moving forward, the next thing to talk about
with an escorp is the taxes and the payroll, because
the biggest thing about an escorp from the others is
that it avoids that self employment tax. So instead of
taking all your business income as a self employment income,
and ESCORP splits the earnings into a salary and then distributions.
(28:32):
A salary, of course, is when you're paid by the
owner of the company or the company itself as an employee, right,
so those are subjects to payroll taxes, whereas a distribution,
which is profit paid to the owners of the company,
is not subject to that self employment tax. This can
help reduce taxes for a lot of businesses that are
(28:53):
at this level, since only the salary is taxed for
Social Security and Medicare, which is often around fifteen percent.
Speaker 3 (29:01):
I thought i'd throw a quick example.
Speaker 2 (29:03):
If that's okay, let's get a quick example of how
tax savings can show up. Let's just say you're an
LLC owner and you're earning one hundred thousand dollars, that
means you're paying about fifteen thousand dollars, let's say, because
the actual tax rate is fifteen point three percent for
Social Security and Medicare on self employment tax. So if
(29:24):
you're making one hundred thousand dollars, that book puts your
self employment tax responsibility at fifteen thousand, three hundred dollars.
If you have an es CORP and you're the owner
of the es corp earning one hundred thousand dollars, you're
taking a salary of that of fifty thousand dollars and
fifty thousand dollars as a distribution, only the self employment
(29:46):
tax is paid of the fifty thousand dollars, which cuts
that self employment tax responsibility in half, saving you seven thousand,
six hundred and fifty dollars just by restructuring.
Speaker 4 (29:59):
So compliance requirements with this setting up an escorp, first
thing you're gonna do is register your business as an LLC,
which hopefully you're already doing out of the gates or
see corp first. But when you file form, it's a
two FI five three form with dirs you're going to
select the s CORP status, set up payroll, which we're
(30:19):
going to say later might be one of the cons
for this, but when you have to do this for
salary for a reasonable compensation, keep corporate bylaws, hold annual meetings,
which is more than talking to yourself in the other room,
and keep being minutes, and file state and federal reports
ongoing compliance. Much like LLC. You're going to file the
(30:41):
ESCORP tax return form one one two zero s, do
that early, always early, issue W two's for salary and
K ones for distributions, and maintain financial records in corporate
meeting minutes.
Speaker 3 (30:56):
A lot of.
Speaker 2 (30:56):
People will will go from one to the next to
the next, which has actually been my journey, and actually
I'm now looking at converting to the s CORP, which
I've been teasing myself on whether this would be a
good move or not. And the more that I've looked
into it, especially doing all this research we've done for
this episode, I've seen that it would be actually a
pretty easy transition for me, and in some ways partly
(31:21):
what I'm already doing just not structured correctly. So this
is directly going to benefit me from learning all this information.
Speaker 4 (31:29):
Especially all the work you've done in the last two
years to establish your income flow. It would honestly be
a no brainer. Yeah, even though like season seasonality affects
your business, especially with when it was just you and
now having all those other musicians you're booking as well,
and you're going through say winter months, you have all
(31:51):
this stuff that's constantly going where Having that even salary
monthly or however you want to pay yourself, it's just
going to make you feel even more steady throughout the year.
Speaker 2 (32:02):
Well, like I said, I actually already do that. I
already take a salary from my business. I'm just not
structured correctly, so I don't feel the seasons anymore income
wise because it's coming from that fund. But I'm not
in escort, so I'm not getting the benefit of reducing
my self employment tax.
Speaker 4 (32:23):
So does that give you a headache reading what you
just did about.
Speaker 2 (32:27):
Yeah, well I look at it and I'm like, why
have I been overpaying?
Speaker 3 (32:31):
What am I doing with this? Yeah?
Speaker 2 (32:33):
So let's talk about the pros and cons just to
kind of simplify this for everyone.
Speaker 4 (32:37):
Okay, So, first pro, avoid double taxation profits passed through
to owner's personal tax returns like an LLC, profits are
passed through to your personal tax return, but you're avoiding
corporate income tax, so you only pay taxes once on
your personal return. Another pro is personal asset protection like
we talked about inn LLC. And then also you can
(32:57):
save on self employment taxes in if it's structured correctly,
so you split your income into reasonable salary, which Chris
Web already does, and then you're subject to just like
a payroll tax and distributions which are not subject to
that tax, so you can say thousands annually if you
do it differently than Chris Web does.
Speaker 3 (33:19):
What about the What about the cons?
Speaker 4 (33:20):
Then you could read the cons because we want to
drive this home for you, Chris, We want e by
halfway through this year your ESCORP set up, so read
the cons, know what you're about to do.
Speaker 2 (33:33):
Yeah, okay, that's fair because truthfully, there are reasons that
I've held back on doing this yet, and some of
them will address here in a second. When we start
listing out what we think everyone should kind of filter
through the discide which was right for them. But let
me just say that there's a lot more regulations, there's
a lot more paperwork involved than there is just with
(33:53):
an LLC, so it gets so much more complicated, and
not to say that that's something you can't handle or
get help with. So it really is about timing on
when this is appropriate, and that's I don't think I'm
that far past when this became appropriate.
Speaker 3 (34:08):
I just think this just is.
Speaker 2 (34:09):
Very fortuitous for me to be talking about this right
now and realizing that this is probably what I.
Speaker 3 (34:15):
Should be doing next for myself.
Speaker 2 (34:17):
So you are required to run a payroll, you are
required to issue W two's to yourself.
Speaker 3 (34:24):
You also have to file.
Speaker 2 (34:25):
Your escort tax return forms, which we said with those
eleven twenty s's, and you have to maintain minutes, which
you know, as we get better at these things, I
don't think that's a big deal, but it actually probably
will help you focus on what your business goals are
and maybe you can use it as your benefit to
make sure you're giving time to this stuff. But you
may need to use a payroll service and a tax
(34:48):
pro to handle this stuff. As you get to the
larger levels of income and expansion, you have to expect
that this is going to at least cost you a
few hundred dollars a year just to stay compliant with
the forms that you have to file, and if your
music income fluctuates a lot or you're just not clearly
consistent yet with your profits, then it's probably something that
(35:09):
you should not be looking into anytime soon.
Speaker 4 (35:12):
Chris, you and I talk about manifesting quite a bit,
and I think, what are the listeners just witness right now?
You and I? Is you manifesting the next step? And
I can't wait to learn more about it. We're going
to have to have a follow up on it. See
when you get trigger because these things you do already.
You do these things already for a podcast, like what
(35:35):
you don't have time to keep minutes you totally do
because we talk for way too long things we may
or may not know what we're talking about. And then
you have an accountant already that can file all this
stuff for you. And then what a few extra you know,
one hundred dollars a year for payroll? I mean your set.
Speaker 2 (35:53):
I should have an episode about manifesting in the music
business and ways to help everyone.
Speaker 3 (35:58):
Do that better.
Speaker 2 (35:59):
I think it's a really worth worthwhile topic to put
some some spotlight on it. And maybe it's not for everyone,
but I do think that for those of us that
make it a part of our process, or at least
allow the idea that these things might sometimes happen for
a reason. I think it might be a useful thing
to have a conversation about.
Speaker 4 (36:20):
I couldn't agree more cool.
Speaker 3 (36:22):
I'm going to put it on a list and.
Speaker 4 (36:23):
I best that episode into reality.
Speaker 3 (36:27):
It already exists, that's the thing.
Speaker 4 (36:29):
I'm physics.
Speaker 2 (36:32):
So wait, no, so people might not might be listening
and being like, wait, did they already record that podcast?
Speaker 3 (36:38):
And now they're just fucking with us.
Speaker 4 (36:41):
Everyone. We talk about this quite a bit, if not.
We send links to articles and podcasts and to tiktoks
and Instagram about it. And in a way, it's just
nice to have Chris there in my life sending things
just to you know, boost your energy up and say, hey,
this is what our future has in store for us,
if we want that, if we're in control of our future,
(37:04):
and to send that right back to Chris. So we digress.
But it's coming, So maybe we should talk about just
to wrap this up, because I know you have the
carpet cleaner's coming over soon and they're not carpet cleans, yes,
but yes you call them carpet baggers.
Speaker 3 (37:20):
No, they're measuring for new carpet.
Speaker 2 (37:24):
Yes, I know the jokes could go on forever on that,
but okay, So yeah, let's talk about which one of
these is best for you, the listener.
Speaker 3 (37:31):
So we had the.
Speaker 2 (37:31):
Three, the SOL proprietorship, we had the LLC and the escort. First,
the SOB proprietor is best for independent musicians that are
just starting out. So if you are just getting started
on this and this is all kind of new to you, that's.
Speaker 3 (37:42):
The place to start.
Speaker 2 (37:43):
And LLC is ideal for musicians who want that liability
protection from drunk people tripping over your stuff. But it
also gives you more flexibility. There's more tax benefits that
are going to start to appear for you as.
Speaker 3 (37:54):
You increase your income. The last one is the ESCORP.
Speaker 2 (37:57):
This is the most complicated to maintain. It's really good
for musicians that are earning significant income and looking for
tax advantages that aren't going to be available with the
other two options.
Speaker 4 (38:07):
So, what are some questions we can ask ourselves as
far as how to choose the right one.
Speaker 2 (38:11):
Yeah, and so my first question is are you working
alone or you with a team? Right, So, if you
are working alone, then all three of these are an option.
But if you're working with a team, you pretty much
want to jump ahead to either an LLC, which can
be a partnership, or an escort.
Speaker 4 (38:28):
I would say. Second question would be do you want
to protect yourself and your personal assets, And the answer
should be yes. You want to protect your house, your car,
your savings from business deats or lawsuits, So yes, go LLC,
es corp. No do anything but that.
Speaker 2 (38:44):
Another question to ask is what you're expected income. Everyone
starts at the bottom, by the way, on this, so
wherever you're at, it's more a subjective.
Speaker 3 (38:52):
It should not be an emotional feeling.
Speaker 2 (38:56):
But if you're under fifty thousand dollars a year a
sole proprietorship or now we'll see if you're within that
fifty This is all again current right, current income in
the United States. If you're between fifty and one hundred
thousand a year, then an LLC or an escorp will
start to make sense. If you're consistently consistently over the
one hundred k a year, then the es CORP will
(39:19):
make the most sense for your structuring.
Speaker 4 (39:22):
Last one, do you plan to apply for grants, loans
or sponsorships if yes again llces corp or C Corp.
If not sick with crowdfunding personal funds and you don't
have to use your LLC, but you can.
Speaker 3 (39:39):
There you go, and so all of this put this
all together.
Speaker 2 (39:42):
Spend a little time making your own pages what are
called minutes, making your own minutes with your own evaluation
of your current situation and make the best choice for you.
And we also recommend talking to business professionals if this
is something that you are still unsure of.
Speaker 3 (39:58):
Our action step.
Speaker 2 (39:59):
Today is use all this guide that we provided. It's
hard to determine that business structure that's right and then
make that time to make the necessary adjustments so that
you are ready to grow and to take advantage of
all these benefits that are available to you for saving
that hard earned money that you are making, and how
to protect what really matters. We know that your time
(40:20):
is valuable. We appreciate you spending this time here with us.
It's our hope that you feel that sense of community
here at Musicians Tip Jar and that you'll help spread
the word to make us all stronger.
Speaker 3 (40:30):
If you'd like to get a hold of us, what's
the best way to.
Speaker 4 (40:32):
Do that you connect with us at musicians tipjar at
gmail dot com or musicians tipjar dot com. You can
also check out all the resources and discounts we have
collected for you on that website. Check out all our
episodes now on YouTube as well. If you find this
information useful, please rate and subscribe to the podcast and
gently move your mouse over that like button. Nice little
(40:54):
soft tap on that and we'd appreciate it very much
and it helps us keep you up on your finance
side of your music business.
Speaker 2 (41:02):
As always, thank you for joining us, and remember there
is already enough for everyone, you just need to know
how to get it. Until next time on behalf of
Dave Hampkin and myself Chris Webb, Stay happy, healthy and wealthy.
A great musician plays the notes, but a savvy musician
plays the industry.
Speaker 3 (41:22):
This is Musicians tip.
Speaker 5 (41:23):
Jarb Somebody somebody.
Speaker 6 (41:36):
Nothing on this show should be considered specific personal or
professional advice. Please consults and appropriate text legal business or
financial professional for individualized advice, individual results and not guarantade
and all discussed at chase the sential for profits loss
your operation on behalf of Musician's Tip Job Else exclus
(41:57):
to say
Speaker 1 (42:00):
Prod use of help, conduse it, that I have it,
Welcome to the show that explores the methods and strategies
on rocking the financial side of your music business. With
over forty years combined experience, here are your hosts, Chris
Webb and Dave Damkid.
Speaker 2 (00:15):
Welcome to Musicians Tip Jab, where we talk about musicians
and money.
Speaker 3 (00:19):
And to all the.
Speaker 2 (00:20):
People who said we musicians wouldn't amount to anything because
of procrastination, you just wait.
Speaker 4 (00:27):
I'm Chris.
Speaker 2 (00:27):
We have joined by'm my co host and the guy
whose response I can't wait to hear, Dave Damkin.
Speaker 3 (00:34):
Man, I.
Speaker 4 (00:37):
Had my notes here somewhere, but I waited till last
night to get everything organized, and I was trying to
have you know, it's a very important conversation today, Chris,
So we have to know what we're talking about, especially
when it comes to LLC and corporations. But I didn't
get might have procrastinated. Can we change the intro?
Speaker 3 (01:01):
Well, we can't keep them waiting forever, Jamitt.
Speaker 2 (01:04):
Today we tackle the common question what is the best
way to structure my business in the music industry.
Speaker 3 (01:10):
This is a big.
Speaker 2 (01:11):
Question, but we will give you all the information you
need to understand and decide what makes the most sense
for you. Today's quote comes from an unknown source. We
can just skip the part where I don't want to
take credit where because I don't want to take someone
else's words, But the quote is the most successful entrepreneurs
(01:36):
are those who not only master the craft, but also
understand the business behind it.
Speaker 4 (01:42):
Ladies and gentlemen, welcome to the podcast where Chris Webb
disguises another of his famous quotes with the word unknown.
Does the refuse us to take credit for his genius
even though he tries to let everyone know that he's
not doing that. I want to give a quote shout
out to musicians running nonprofits. This structure can be a
(02:03):
beautiful way to combine passion with purpose, especially if your
goal is a serve a community through music. We are
not going over nonprofits today as organizing your business, but
something we will do in the near future. But I
just want to give a shout out to everyone that
aligns their goals with giving back in the music community.
This week's nonprofit is Musicbiz dot org. The Music Business
(02:25):
Association exists to connect, educated, and empower the global music
business community. Music biz That's with a Z as a
commitment to reflect the global music industry by ensuring diversity,
equity and inclusion in all their events and initiatives, as
well as in their board of directors and staff. Diversity
and compasses not only race and gender, but also company type, size, ownership,
(02:46):
industry sector, and level of professional experience. Music Biz creates
the rooms in which the important conversations that shape the
future of our industry takes place. Representing more than ninety
percent of the industry at large, the association serves as
the connect the tissue the global music business and provides
a trusted forum where ideas and collaboration can flourish. I
(03:07):
highly suggest you go to musicbiz dot org for more information.
It's a beautiful website with tons of information to help
you enter your music career. If you find this information useful,
please rate and subscribe to the podcast and also slam
that like button if you're on YouTube so we can
help keep you up on the finance side of your
music business.
Speaker 2 (03:27):
Who do you think started the whole slam thing.
Speaker 4 (03:30):
I'm not sure. I never felt like slamming anything when
it came to a computer, dental hands, things things cost money.
Who are these kids saying slam it?
Speaker 2 (03:40):
If you see somebody playing a guitar and slamming their
fingers on the guitar. You'd be like, hey, hey, that's
not how you do it. I'm glad that you're doing it,
but you don't need to slam it. It's just not
good form, you know.
Speaker 4 (03:51):
Do you ever hear that song by John Hyatt? I
think it's like called wrecking a perfectly good Guitar. Yeah,
John Hyatt perfectly good guitar just talks about why would
anyone want to destroy a perfectly good guitar?
Speaker 3 (04:04):
Now I've not no, I'll have to look it up.
Speaker 2 (04:10):
There is always going to be this feeling that you
could be doing what you do better. Sometimes that feeling
is just imposter syndrome rearing its ugly head, but sometimes
it has real.
Speaker 3 (04:21):
Validity to it.
Speaker 2 (04:22):
Today's topic is important to take to heart and be
willing to do what you need to do to help
yourself and your business to be in position for success.
Let's break down everything you need to know to figure
out how to best structure your business.
Speaker 3 (04:37):
Well, let's go.
Speaker 2 (04:47):
So I wanted to preface this conversation with what we
are talking about is particularly about how your business functions
on the legal side, on the representation of being a
legal business.
Speaker 3 (05:00):
And that being said.
Speaker 2 (05:02):
We are only two people who have done what we've
done and talk to who we've talked to to know
what this is best for everyone. So would take this
all with a grain of salt and make sure that
you are talking to the right people before you make
any big moves for your own business.
Speaker 4 (05:15):
It's could you bring that up because if we get sued,
we have to say this is disclaimer. Yeah, the disclaimer
because you have to have your business lined up to
protect yourself from saying a bunch of crap on a
podcast that you may or may not know what you're
talking about.
Speaker 2 (05:33):
Well, we do have a good disclaimer at the end
of all of our podcasts, but we are confident in
what we're saying as well.
Speaker 3 (05:39):
At least I am.
Speaker 4 (05:41):
The United States.
Speaker 2 (05:42):
Yeah, so yeah, this also should only be information targeted
to people doing business in the United States.
Speaker 3 (05:48):
It can be very different depending on your location.
Speaker 4 (05:51):
Did you at least I am you were just setting
yourself up for it. Get my notes? No procrastination, everybody,
We're going to really have to do this intro over.
Go ahead, I'm sorry.
Speaker 2 (06:08):
Should we just talk for a little while before we
get to this more you want to you want to
just keep diverting and installing here.
Speaker 4 (06:15):
Well, obviously, because I don't know what I'm talking about,
you said.
Speaker 3 (06:20):
That, not me.
Speaker 4 (06:22):
I don't know it was. Was that my personal disclaimer?
I'm interrupting, Go ahead, I'm sorry.
Speaker 2 (06:29):
So to simplify, we divided this information up into three sections. First,
why it matters, Second, the main three options that we
think are the right ones for most musicians, and then
how to choose the right one for you. So starting
with why this structuring matters, the music industry is experiencing
exciting growth despite what craziness is going on with tariffs.
(06:52):
They're projecting to climb at a healthy ten nine percent
annually through twenty twenty seven, and hopefully that stays on target.
That translates into billions of dollars flowing through the sector
each year, with artists and businesses investing heavily into diverse
music services.
Speaker 3 (07:11):
This is from wix dot com.
Speaker 2 (07:14):
This is something that we can all look at and say, look,
the money is there, the money is flowing into the
music industry.
Speaker 3 (07:20):
How are you going to get yours right?
Speaker 2 (07:22):
So why this matters the most to us is because
financial management is how you protect your business, but also
how you get your business to be able to grow
to the largest size and structure the business so that
tax benefits and other things like that are going to
all benefit you to their maximum potential.
Speaker 4 (07:40):
This advice also comes from what we know within the
United States, so if you're listening outside of the United States,
definitely check what how your country considers what an LLC
is an escort.
Speaker 2 (07:52):
So let's start with financial management and tax benefits. The
first benefit that we think it really matters. The reasons
this matters is because breading your personal and business finances
make tracking income and expenses much easier. It also is
all about tax deductions for equipment, travel, and marketing expenses
that are also going to be easier for you to
(08:13):
keep track of. But also they aren't eligible necessarily if
they're not in the right type of structure.
Speaker 4 (08:18):
This also helps with legal protection. A legal business structure
like an LLC limits personal liability in cases of lawsuits
or debts. Having contracts in place, ensures proper payment, and
protects intellectual property rights as well.
Speaker 3 (08:31):
Have you been sued before?
Speaker 4 (08:34):
I have been threatened, but not under music so a
different company, But I have sued because they were covered
under their company. They filed for bankruptcy, so it was
like getting money out of a rock, water out of
(08:55):
a rock. But that's what they did to protect themselves,
you know. So they claim that and that personally have
to pay totally.
Speaker 2 (09:03):
And that's exactly what we're saying here, not that we're
all gonna get sued, but it is just something you
do to protect yourself, and it's exactly how they had
structured their business to protect themselves, right yep. Another area
is funding and grant eligibility. Many grants and sponsorships and
investors require a registered business entity. A lot of the grants, especially,
(09:23):
you can't even apply to them if your structure isn't
set first. Also, business credit cards and loans are easier
to obtain for structured entities.
Speaker 4 (09:34):
Last week I brought up something that meant a lot
to me about figuring out your brand growth. So professionalism
and brand growth is important to establish yourself with an
LLC or as a business structure for venues, labels, sponsors.
Any structured business that has these things are going to
be taking more seriously. Registering a business allowing for branding, trademarks,
(09:58):
and ownership protection is of the highest supportance.
Speaker 2 (10:02):
And finally with the ownership and royalties and things. There's
also setting up publishing and record label entities to maximize
income streams for certain types of music businesses. So what
are these main types of business structures? Like? What do
we keep talking about and dancing around? So there are
several business structures, each with its own legal, tax and
financial implications. First, we will go through some of the
(10:25):
most basic of these types and their differences, with some
pros and cons that we put together.
Speaker 4 (10:31):
What's the most basic, Chris.
Speaker 2 (10:33):
The one everyone starts with is the sole proprietorship. This
is the most simple, as all you have to do
is find a business name and register it with the
state that you live in the United States.
Speaker 4 (10:45):
The one thing with that though, there's also no separation
legal structure, and I think that's the point that we're
going to get to with all of this. But you
have full control over your business decisions right out of
the gates.
Speaker 2 (10:56):
Starting with the pros on such a business as a
sole proprietorship.
Speaker 3 (11:01):
Starting with the pros, they're the.
Speaker 2 (11:03):
Easiest and cheapest type of business structure to set up.
You can start working under your legal name right away
or file a doing business ads, which they abbreviate as
a DBA, and then name that make sure that name
is available in your state not taken by someone else,
and then you can register it with usually a small fee,
and every state has a different fee for this. I
(11:26):
think in Colorado it's somewhere around fifty or sixty dollars.
Speaker 4 (11:30):
Another pro is right out of the gates. When you register,
you have full control over all your business decisions underneath
that name. And it's a simple tax filing, so you
have all your expenses are reported in your personal tax
return form for your ten to forty schedule. See this
saves you the complexity and cost of filing separate business
tax returns.
Speaker 3 (11:50):
And that is a very exciting thing.
Speaker 2 (11:51):
Right, We're all going to feel really good just about
starting and just getting going on our business. So for
most people, this is gonna feel like a huge step forward,
and it is. You're legitimizing your idea, your dream, your brand.
But there are some cons to this basic setup of
a sole proprietorship.
Speaker 4 (12:12):
First one would be no legal separation between personal and
business assets, personal liability or debts or lawsuits. So if
someone sues your music business, your personal savings home and
car could be on the line for that. This can
be risky if you're touring, hiring other musicians, signing contracts,
anything like that. And it's also harder to secure funding
(12:35):
or business credit, so banks brand providers before working with
registered businesses as a sole proprietor. As a sole proprietor,
you might rely more on personal credit and crowdfunding.
Speaker 2 (12:48):
There's nothing wrong with that part if that's where you're at.
But the second option is the second I should say
the second most common option is an LLC, which stands
for a limited liveability company. So what is an LLC?
An LLC is a legal business entity that separates personal
(13:08):
assets from business liabilities. They provide flexible management, so you
can run it alone or you can have partners. They
can both can work.
Speaker 3 (13:17):
And it also.
Speaker 2 (13:17):
Allows you to have passed through taxation. So this means
that profits are taxed on your personal return and that
avoids that corporate tax that comes from the next level up.
There's other benefits that I'd like to include as well.
They do protect your house and your car and your
savings if they're set up correctly. They also have flexibility
(13:38):
when it comes to how you structure an LLCs, So
there are a lot of different variations single member, multi member,
as we said, but also in just the way that
you have it set up.
Speaker 3 (13:49):
For your own finances.
Speaker 2 (13:51):
But the good news about the LLC is that it's quite.
Speaker 3 (13:53):
Easy to maintain.
Speaker 2 (13:54):
It's actually what I've had for a long time, and
there's fewer formalities than a corporation, so there's no things
like board meetings and heavy paperwork that you have to
include when you're doing things like your taxes.
Speaker 3 (14:07):
The other thing.
Speaker 2 (14:07):
About it that sets it apart from a sole proprietor
for me is that it's more it has more of
a professionalism to it, and as we said, that biggest
benefit often comes in the sense.
Speaker 3 (14:18):
Of when you need grants, or you need loans.
Speaker 2 (14:20):
Or you're searching for partnerships for certain projects.
Speaker 4 (14:24):
One thing to mention for LLC's if you're registering a
band name or a stage name via the LLC, A
quick note is that the name protection isn't there, so
how forming an LLC doesn't automatically protect you and your brand,
So I would say look into a trademark rights right away.
(14:48):
If this is what you're going to have your LLC
and your brand name be the same, So consider consider
filing a trademark if you want nationwide brand protection on
this one.
Speaker 2 (14:59):
So I thought it'd be useful if we just talked
about quickly for those who've never done this, how to
set up an LLC. So the first thing you're going
to have to do is choose your business name.
Speaker 3 (15:07):
Right, it has to be unique that it.
Speaker 2 (15:09):
Isn't already registered in the state in which you're registering.
It could have someone else somewhere else in the country
that has the same name. As long as it's out
of the state, you legally could register it within your state.
But that being said, as musicians, we know we are
more globally focused. At least we're certainly looking past our
own state borders in the United States.
Speaker 3 (15:29):
To spread our music.
Speaker 2 (15:30):
It would be advantageous for you to plan ahead and
try to get a business name that is not already taken.
That being said, it also doesn't have to be your name,
so obviously some name like mine, which is Chris Webb.
There's a lot In fact, there's a lot of Chris
Webb's and we all fight over the Spotify space. There's
a Christian rapper Chris Webb. There's a country singer in
(15:53):
Texas named Chris web So we all get along, but
the truth is that we're all fighting over that same
real estate. The other thing about that that I would
like to add is that you should check to see
if you could get the domain that you want too,
because before you register this, it makes a lot of
sense if you're going to be identified as the LLC
name to be able to get that actual domain too.
Speaker 4 (16:15):
I would go a step further to you and check
all socials as well.
Speaker 2 (16:20):
As we're saying that, it's only if you're going to
use your LLCD as your actual name during your performances
and your website and all that branding. After you've done
that and you found a good LLC name that is
available for you, then you file those articles of organization.
This is the official form to legally register your LLC
(16:40):
with the state government. And as we said, those fees
can vary, just like with so proprietor registrations. They vary
somewhere around fifty to five hundred dollars depending on the state.
After you've gotten thus far, congratulations, Now you get an
ei N, which stands for Employer Identification number. This EIN
(17:01):
looks a lot like a business social Security number, and
then when you are opening a business bank.
Speaker 3 (17:06):
Account, you'll use the ein.
Speaker 2 (17:09):
If you were hiring employees, which is another topic for us,
but not when we're going to tackle right now, you
would use your ein. And then, of course filing taxes
or sending W nine's, you can use the ein for
your invoicing as well. To receive this ein, you can
actually just go to the IRS website. Step four on
(17:30):
this process is to create an operating agreement. This is
recommended but not required, but you want to outline how
your LLC will be managed, even if you are the
only owner. This can define roles, responsibilities, and profit sharing
if there are multiple owners.
Speaker 4 (17:49):
This is also good practice because this is the smallest
your company will ever be, so if you can start
to define roles and tasks and how things are to
get used to that now and have a vision of
that as your company grows, you'll be able to do
it for one more person, two more people. But it's
(18:10):
a lot harder when all of a sudden you find
yourself with five people trying to manage an LLC and
you haven't started an idea of how you want your
future to look.
Speaker 2 (18:22):
The next step would be to open a business bank account.
This can keep your business and personal finances separate for
legal and tax purposes.
Speaker 3 (18:30):
And your sanity.
Speaker 2 (18:32):
Truthfully, this is one of the most important and valuable
parts as the finance set of things to achieve when
you're setting up the structure of your business. I have
seen so many people that set up in a whole
LLC and then don't keep their finances that are the
income they're generating from the LLC separate from their personal
(18:54):
checking accounts, And as I think we talked about later
on here, it pretty much nulls the protect that you
are trying to achieve by starting this structure.
Speaker 4 (19:04):
Yeah, if you don't start that, now a court could
look into your finances and say that it's really not
a separate identity and hold you personally liable for anything
that might happen if you weren't organizing your business in
this way.
Speaker 2 (19:18):
And then the last step we got on this was
just to comply with the state and local regulations. Some
states require annual reports and they charge fees for those.
Here it's a periodic report with the State of Colorado,
So I have to do that every time for my
personal business. As well as musicians tipjar LLC and that's
(19:39):
something you just get used to. You'll get For us,
we get an email that's reminding us that it's due,
and then you go online.
Speaker 3 (19:45):
You do the whole process online. It's not bad.
Speaker 2 (19:47):
It takes a very short amount of time once you're
used to the process. But you also have to look
into the chance that you might need licenses or permits
depending on what your business is in the industry.
Speaker 4 (20:00):
So going over pros for this, Number one, it protects
personal assets and business liabilities. Your bank gets sued for
breach of contract, a fan is injured at a show,
your personal assets are protected and only the business assets
are at risk. So great for touring, session work or
beat licensing disputes, disclaimers for online music sales, or courses
(20:22):
which hopefully Chris, you and I never have to worry
about with courses, signing contracts for venues, festivals, zync deals.
And say you're playing a gig and someone trips over
something as simple as your cable ensues you're a sole
proprietor your personal savings could be on the line, but
with an LLC it's not.
Speaker 2 (20:43):
Another benefit is the tax benefits and these get to
become pretty sophisticated and very significant for businesses. Flexible tax
options only come with these higher levels of an LLC structure,
not as sole proprietorship. So as much as they get complicated,
(21:03):
you have to pay taxes separately for your business versus
whatever you made outside of the business. It's also easier
to secure funding than it is for a sole proprietorship.
Speaker 3 (21:14):
And we've said this a couple times, but you have to.
Speaker 2 (21:16):
Keep in mind that if you plan on using grant
opportunities or getting loans from certain particular types of sources,
they will not even allow you to apply if you
don't have an LLC. Now there are some cons here
as well for having an LLC. They require formal registrations
(21:37):
and fees. This is something that maybe some people are
not prepared to do yet.
Speaker 4 (21:40):
And you mentioned earlier anywhere from fifty to five hundred.
Where Colorado is I believe was fifty Madison. Here in Wisconsin,
it's one hundred. No, Colorado is one hundred here in
Madison is fifty in California for the minimum is eight hundred.
(22:01):
Is it really and if it's not, please look it
up and tell us because when I did the research.
I didn't know Chris was going to start the episode
by saying he knows what he's talking about, and then
I have no idea what I'm talking about. Some states
imposed additional taxes or reporting requirements. States like New York
and California may require additional publishing for reporting steps. So
(22:23):
it's important to understand your local regulations.
Speaker 3 (22:27):
You know.
Speaker 2 (22:28):
I have a funny story that why this has proven
itself very valuable. The other night, I was playing this
corporate event, and it was for this massive corporate conference,
and all these different companies represented manufacturing companies that made
like the materials that they used to pave roads, and
you know, nothing exciting but a lot of twenty something
(22:52):
men in the group, and they were getting pretty tipsy,
you know. Towards the end of the night, I'm playing
some songs and this guy comes over to me and
you can just you know, when you look at somebody
and you can tell they're already pretty gone, and and
he just kind of a little bit of slurring his words,
but mostly just his eyes were just kind of like
not really looking at me. And he goes, hey, can
(23:14):
you play a food fighter song? Do you know how
to sing a food Fighters song, you.
Speaker 3 (23:18):
Know, and I was like, oh yeah, and he's like, well,
I played the guitar part perfectly, so he.
Speaker 2 (23:23):
Started trying to sit down and take my guitar, and
I was like, oh, I'm so sorry. You know that
I'm not allowed to let anybody else play the guitar,
and he goes, oh, well, do you know any Pearl Jams.
Speaker 3 (23:36):
I can play these Pearl Jam songs perfectly.
Speaker 2 (23:38):
And once again tried to take my guitar out of
my hands and I said, no, I'm sorry, it's not
my rule. You know, it's even though it is my
rule as well, but it helps me defer the responsibility.
But he goes, oh, it's okay. You don't know who
I am, okay, and I understand it. That's okay, Like, okay, now,
I'm sorry.
Speaker 3 (23:57):
Don't you just pay roads.
Speaker 2 (23:59):
I didn't realize that you were also in Pearl Jam,
you know, like it was so embarrassing, and he starts
to walk away and he literally trips over my cables
and falls to the ground and I was like, man,
this is just getting worse, you know, because you know,
I usually kind of keep my space protected, like people
aren't supposed to go past a certain spot, and it
seems pretty obvious to sober people. Drunk people get in
(24:22):
their space, you know. And I thought, oh my god,
this guy's gonna wake up tomorrow with the black eye
and sue me.
Speaker 3 (24:28):
You know, that's the kind of crap where it's like
I had nothing.
Speaker 2 (24:31):
To do with that whole situation, but that would have
fallen on to me if he decided to submit a lawsuit.
Speaker 4 (24:37):
Yeah, which another thing is something you and I do
is have insurance too for those type of things, and
some establishments even make you have insurance or if anything
goes wrong like that.
Speaker 3 (24:48):
Yeah.
Speaker 2 (24:49):
Well, and hopefully I never find out that he actually
did play for Pearl Jam or something like that.
Speaker 4 (24:55):
If he did, I mean, it'd be pretty embarrassing that
any professional musician that does no better to come up
and take another from musicians guitar doesn't need to be
there in the first place.
Speaker 3 (25:06):
That's exactly what I thought too.
Speaker 2 (25:07):
I was like, man, if you were somebody, you would
have a lot more respect for the music community around you. Anyhow,
I just thought that was pertinent to that conversation, because
you never know where something is going to just take
a complete right turn and you need your protections in place.
Speaker 4 (25:21):
The third thing we're going to talk about is escorp
so S corporation, and we first started to address lists
with IO and if your music business is making consistent
profits above thirty K a year, this might be a
benefit for you electing es corp status to reduce self
employment taxes. This doesn't change your LLC, it just changes
(25:42):
how it's taxed. So can we go into that for
number three?
Speaker 3 (25:45):
Yeah, this can be a little more confusing.
Speaker 2 (25:47):
This is the one that a lot of people feel like,
should I switch to this yet or not? And we
went went even the next step over and try to
simplify which one of these fits you in general ways
here at the end. But for now, let's just kind
of talk about who can own an escorp. So obviously,
an s corp is designed to be.
Speaker 3 (26:06):
For the higher level of a.
Speaker 2 (26:09):
Structured business, so you are limited up to one hundred shareholders.
They must all be US citizens and residents. But so
that can allow you to have a lot of growth
depending on how and where your.
Speaker 3 (26:22):
Business is headed.
Speaker 2 (26:23):
Shareholders must be individuals, though they cannot be other businesses,
so the businesses cannot be a shareholder in your ES corp.
And then the other question we get a lot about
what an es corp is is what makes it different,
how does it get managed? And so the main thing
that people don't realize is that by having an es
(26:44):
corp you are required to have board of directors and officers.
Even if you're the only owner, you have to act
as both.
Speaker 3 (26:55):
And so.
Speaker 4 (26:57):
Paid twice.
Speaker 2 (26:58):
It's right on a salary twice for that one right.
Board makes high level decisions, right, they're the officer kind
of handles the daily operations. So the two are separate
in their roles and ideally are two separate people once
you get to this higher level, but they often in
the beginning of switching up to an escort can be
the same person.
Speaker 3 (27:20):
But they do.
Speaker 2 (27:20):
Require you to hold annual meetings that have to have pages,
They have to have notes that you can back up
the fact that you had this annual meeting and maintain
corporate minutes that prove that you had those conversations.
Speaker 4 (27:35):
So you're saying, anytime you start talking to yourself about
the business, just start keeping minute times.
Speaker 3 (27:43):
Minutes.
Speaker 2 (27:43):
Yeah, I mean corporate minutes are a reference to us
making notes. I don't know if you can do it
audio wise, but maybe you could just record yourself talking
to yourself and I'm having a meeting. Just justify your
insanity that way.
Speaker 4 (28:00):
At least help and understand me more when I'm in
the room talking to myself. Need a charge.
Speaker 2 (28:08):
Okay, So moving forward, the next thing to talk about
with an escorp is the taxes and the payroll, because
the biggest thing about an escorp from the others is
that it avoids that self employment tax. So instead of
taking all your business income as a self employment income,
and ESCORP splits the earnings into a salary and then distributions.
(28:32):
A salary, of course, is when you're paid by the
owner of the company or the company itself as an employee, right,
so those are subjects to payroll taxes, whereas a distribution,
which is profit paid to the owners of the company,
is not subject to that self employment tax. This can
help reduce taxes for a lot of businesses that are
(28:53):
at this level, since only the salary is taxed for
Social Security and Medicare, which is often around fifteen percent.
Speaker 3 (29:01):
I thought i'd throw a quick example.
Speaker 2 (29:03):
If that's okay, let's get a quick example of how
tax savings can show up. Let's just say you're an
LLC owner and you're earning one hundred thousand dollars, that
means you're paying about fifteen thousand dollars, let's say, because
the actual tax rate is fifteen point three percent for
Social Security and Medicare on self employment tax. So if
(29:24):
you're making one hundred thousand dollars, that book puts your
self employment tax responsibility at fifteen thousand, three hundred dollars.
If you have an es CORP and you're the owner
of the es corp earning one hundred thousand dollars, you're
taking a salary of that of fifty thousand dollars and
fifty thousand dollars as a distribution, only the self employment
(29:46):
tax is paid of the fifty thousand dollars, which cuts
that self employment tax responsibility in half, saving you seven thousand,
six hundred and fifty dollars just by restructuring.
Speaker 4 (29:59):
So compliance requirements with this setting up an escorp, first
thing you're gonna do is register your business as an LLC,
which hopefully you're already doing out of the gates or
see corp first. But when you file form, it's a
two FI five three form with dirs you're going to
select the s CORP status, set up payroll, which we're
(30:19):
going to say later might be one of the cons
for this, but when you have to do this for
salary for a reasonable compensation, keep corporate bylaws, hold annual meetings,
which is more than talking to yourself in the other room,
and keep being minutes, and file state and federal reports
ongoing compliance. Much like LLC. You're going to file the
(30:41):
ESCORP tax return form one one two zero s, do
that early, always early, issue W two's for salary and
K ones for distributions, and maintain financial records in corporate
meeting minutes.
Speaker 3 (30:56):
A lot of.
Speaker 2 (30:56):
People will will go from one to the next to
the next, which has actually been my journey, and actually
I'm now looking at converting to the s CORP, which
I've been teasing myself on whether this would be a
good move or not. And the more that I've looked
into it, especially doing all this research we've done for
this episode, I've seen that it would be actually a
pretty easy transition for me, and in some ways partly
(31:21):
what I'm already doing just not structured correctly. So this
is directly going to benefit me from learning all this information.
Speaker 4 (31:29):
Especially all the work you've done in the last two
years to establish your income flow. It would honestly be
a no brainer. Yeah, even though like season seasonality affects
your business, especially with when it was just you and
now having all those other musicians you're booking as well,
and you're going through say winter months, you have all
(31:51):
this stuff that's constantly going where Having that even salary
monthly or however you want to pay yourself, it's just
going to make you feel even more steady throughout the year.
Speaker 2 (32:02):
Well, like I said, I actually already do that. I
already take a salary from my business. I'm just not
structured correctly, so I don't feel the seasons anymore income
wise because it's coming from that fund. But I'm not
in escort, so I'm not getting the benefit of reducing
my self employment tax.
Speaker 4 (32:23):
So does that give you a headache reading what you
just did about.
Speaker 2 (32:27):
Yeah, well I look at it and I'm like, why
have I been overpaying?
Speaker 3 (32:31):
What am I doing with this? Yeah?
Speaker 2 (32:33):
So let's talk about the pros and cons just to
kind of simplify this for everyone.
Speaker 4 (32:37):
Okay, So, first pro, avoid double taxation profits passed through
to owner's personal tax returns like an LLC, profits are
passed through to your personal tax return, but you're avoiding
corporate income tax, so you only pay taxes once on
your personal return. Another pro is personal asset protection like
we talked about inn LLC. And then also you can
(32:57):
save on self employment taxes in if it's structured correctly,
so you split your income into reasonable salary, which Chris
Web already does, and then you're subject to just like
a payroll tax and distributions which are not subject to
that tax, so you can say thousands annually if you
do it differently than Chris Web does.
Speaker 3 (33:19):
What about the What about the cons?
Speaker 4 (33:20):
Then you could read the cons because we want to
drive this home for you, Chris, We want e by
halfway through this year your ESCORP set up, so read
the cons, know what you're about to do.
Speaker 2 (33:33):
Yeah, okay, that's fair because truthfully, there are reasons that
I've held back on doing this yet, and some of
them will address here in a second. When we start
listing out what we think everyone should kind of filter
through the discide which was right for them. But let
me just say that there's a lot more regulations, there's
a lot more paperwork involved than there is just with
(33:53):
an LLC, so it gets so much more complicated, and
not to say that that's something you can't handle or
get help with. So it really is about timing on
when this is appropriate, and that's I don't think I'm
that far past when this became appropriate.
Speaker 3 (34:08):
I just think this just is.
Speaker 2 (34:09):
Very fortuitous for me to be talking about this right
now and realizing that this is probably what I.
Speaker 3 (34:15):
Should be doing next for myself.
Speaker 2 (34:17):
So you are required to run a payroll, you are
required to issue W two's to yourself.
Speaker 3 (34:24):
You also have to file.
Speaker 2 (34:25):
Your escort tax return forms, which we said with those
eleven twenty s's, and you have to maintain minutes, which
you know, as we get better at these things, I
don't think that's a big deal, but it actually probably
will help you focus on what your business goals are
and maybe you can use it as your benefit to
make sure you're giving time to this stuff. But you
may need to use a payroll service and a tax
(34:48):
pro to handle this stuff. As you get to the
larger levels of income and expansion, you have to expect
that this is going to at least cost you a
few hundred dollars a year just to stay compliant with
the forms that you have to file, and if your
music income fluctuates a lot or you're just not clearly
consistent yet with your profits, then it's probably something that
(35:09):
you should not be looking into anytime soon.
Speaker 4 (35:12):
Chris, you and I talk about manifesting quite a bit,
and I think, what are the listeners just witness right now?
You and I? Is you manifesting the next step? And
I can't wait to learn more about it. We're going
to have to have a follow up on it. See
when you get trigger because these things you do already.
You do these things already for a podcast, like what
(35:35):
you don't have time to keep minutes you totally do
because we talk for way too long things we may
or may not know what we're talking about. And then
you have an accountant already that can file all this
stuff for you. And then what a few extra you know,
one hundred dollars a year for payroll? I mean your set.
Speaker 2 (35:53):
I should have an episode about manifesting in the music
business and ways to help everyone.
Speaker 3 (35:58):
Do that better.
Speaker 2 (35:59):
I think it's a really worth worthwhile topic to put
some some spotlight on it. And maybe it's not for everyone,
but I do think that for those of us that
make it a part of our process, or at least
allow the idea that these things might sometimes happen for
a reason. I think it might be a useful thing
to have a conversation about.
Speaker 4 (36:20):
I couldn't agree more cool.
Speaker 3 (36:22):
I'm going to put it on a list and.
Speaker 4 (36:23):
I best that episode into reality.
Speaker 3 (36:27):
It already exists, that's the thing.
Speaker 4 (36:29):
I'm physics.
Speaker 2 (36:32):
So wait, no, so people might not might be listening
and being like, wait, did they already record that podcast?
Speaker 3 (36:38):
And now they're just fucking with us.
Speaker 4 (36:41):
Everyone. We talk about this quite a bit, if not.
We send links to articles and podcasts and to tiktoks
and Instagram about it. And in a way, it's just
nice to have Chris there in my life sending things
just to you know, boost your energy up and say, hey,
this is what our future has in store for us,
if we want that, if we're in control of our future,
(37:04):
and to send that right back to Chris. So we digress.
But it's coming, So maybe we should talk about just
to wrap this up, because I know you have the
carpet cleaner's coming over soon and they're not carpet cleans, yes,
but yes you call them carpet baggers.
Speaker 3 (37:20):
No, they're measuring for new carpet.
Speaker 2 (37:24):
Yes, I know the jokes could go on forever on that,
but okay, So yeah, let's talk about which one of
these is best for you, the listener.
Speaker 3 (37:31):
So we had the.
Speaker 2 (37:31):
Three, the SOL proprietorship, we had the LLC and the escort. First,
the SOB proprietor is best for independent musicians that are
just starting out. So if you are just getting started
on this and this is all kind of new to you, that's.
Speaker 3 (37:42):
The place to start.
Speaker 2 (37:43):
And LLC is ideal for musicians who want that liability
protection from drunk people tripping over your stuff. But it
also gives you more flexibility. There's more tax benefits that
are going to start to appear for you as.
Speaker 3 (37:54):
You increase your income. The last one is the ESCORP.
Speaker 2 (37:57):
This is the most complicated to maintain. It's really good
for musicians that are earning significant income and looking for
tax advantages that aren't going to be available with the
other two options.
Speaker 4 (38:07):
So, what are some questions we can ask ourselves as
far as how to choose the right one.
Speaker 2 (38:11):
Yeah, and so my first question is are you working
alone or you with a team? Right, So, if you
are working alone, then all three of these are an option.
But if you're working with a team, you pretty much
want to jump ahead to either an LLC, which can
be a partnership, or an escort.
Speaker 4 (38:28):
I would say. Second question would be do you want
to protect yourself and your personal assets, And the answer
should be yes. You want to protect your house, your car,
your savings from business deats or lawsuits, So yes, go LLC,
es corp. No do anything but that.
Speaker 2 (38:44):
Another question to ask is what you're expected income. Everyone
starts at the bottom, by the way, on this, so
wherever you're at, it's more a subjective.
Speaker 3 (38:52):
It should not be an emotional feeling.
Speaker 2 (38:56):
But if you're under fifty thousand dollars a year a
sole proprietorship or now we'll see if you're within that
fifty This is all again current right, current income in
the United States. If you're between fifty and one hundred
thousand a year, then an LLC or an escorp will
start to make sense. If you're consistently consistently over the
one hundred k a year, then the es CORP will
(39:19):
make the most sense for your structuring.
Speaker 4 (39:22):
Last one, do you plan to apply for grants, loans
or sponsorships if yes again llces corp or C Corp.
If not sick with crowdfunding personal funds and you don't
have to use your LLC, but you can.
Speaker 3 (39:39):
There you go, and so all of this put this
all together.
Speaker 2 (39:42):
Spend a little time making your own pages what are
called minutes, making your own minutes with your own evaluation
of your current situation and make the best choice for you.
And we also recommend talking to business professionals if this
is something that you are still unsure of.
Speaker 3 (39:58):
Our action step.
Speaker 2 (39:59):
Today is use all this guide that we provided. It's
hard to determine that business structure that's right and then
make that time to make the necessary adjustments so that
you are ready to grow and to take advantage of
all these benefits that are available to you for saving
that hard earned money that you are making, and how
to protect what really matters. We know that your time
(40:20):
is valuable. We appreciate you spending this time here with us.
It's our hope that you feel that sense of community
here at Musicians Tip Jar and that you'll help spread
the word to make us all stronger.
Speaker 3 (40:30):
If you'd like to get a hold of us, what's
the best way to.
Speaker 4 (40:32):
Do that you connect with us at musicians tipjar at
gmail dot com or musicians tipjar dot com. You can
also check out all the resources and discounts we have
collected for you on that website. Check out all our
episodes now on YouTube as well. If you find this
information useful, please rate and subscribe to the podcast and
gently move your mouse over that like button. Nice little
(40:54):
soft tap on that and we'd appreciate it very much
and it helps us keep you up on your finance
side of your music business.
Speaker 2 (41:02):
As always, thank you for joining us, and remember there
is already enough for everyone, you just need to know
how to get it. Until next time on behalf of
Dave Hampkin and myself Chris Webb, Stay happy, healthy and wealthy.
A great musician plays the notes, but a savvy musician
plays the industry.
Speaker 3 (41:22):
This is Musicians tip.
Speaker 5 (41:23):
Jarb Somebody somebody.
Speaker 6 (41:36):
Nothing on this show should be considered specific personal or
professional advice. Please consults and appropriate text legal business or
financial professional for individualized advice, individual results and not guarantade
and all discussed at chase the sential for profits loss
your operation on behalf of Musician's Tip Job Else exclus
(41:57):
to say
Speaker 1 (42:00):
Prod use of help, conduse it, that I have it,
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