Business structure for a band?

Business structure for a band?

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My friends' band have recently been signed and are wanting me to do their accounts. I assume it should be a partnership? Is the only other choice a Ltd Co?

Having never formed a partnership before, are 5 partners ok? (I know there is a limit).

The chances are that the result of a reported business will result in nice tax rebates but does anyone have any experience of this or advice? I've never read about what bands are like as accoutanncy clients!

Ta muchly

Jen

Jenni Frost

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By User deleted
26th Jul 2006 23:07

No tax rebates if Ltd Co
You mention tax rebates - which infers the business will run at a loss. The losses will be ring-fenced and limited to relief against future trading profits if a Ltd Co is the format of trading.

If a partnership, loss relief against personal income will be an option - SUBJECT TO THE TRADE BEING CARRIED OUT WITH A VIEW TO PROFIT. Hobby trading that creates losses runs the risk of not getting tax relief for losses against other income.

There might be a third format of trading - a loose association of a few sole traders that I have seen with entertainers in the past : there's no mixing of money as in such an alternative arrangement all band members pay their own expenses and prepare their own sole trader accounts, their income being their share of the gross appearance fees. This rather informal arrangement I mention not because I recommend it, but rather because I seen examples of it in the past. This informal arrangement could have VAT implications if the total "individual" yearly fees collectively exceeded the VAT threshold unless the paperwork was robust enough to demonstrate several sole traders signing up for appearance fees rather than the band as an entity.

There are other entities available - Unlimited Company, or Limited Partnership but I don't know why anyone would wish to use these alternatives although I do know of a lock manufacturer in the former category (formed in 1780 I understand!) and a sporting partnership ion the latter category.

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By AnonymousUser
31st Jul 2006 21:15

Band
Thanks for the comments. Frauke in particular, interesting to hear you say all sole traders, but that does make sense.

I don't think they are at a "royalty" level yet but will bear such things in mind.

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By frauke
28th Jul 2006 17:02

Bands
I have been dealing with clients in the music industry for more than 20yrs. Bands are never partnerships - too many problems if things go wrong. Each band member is self-employed in their own right, and submits their own accounts. The income and expenses, will different for each band member.

Sometimes a Ltd company is formed to handle the "admin & accounts" management of a band, but that's its only purpose.

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By listerramjet
28th Jul 2006 13:09

there are wider issues
do they collectively share in royalties, or do only some of them write the songs (or do they only do covers). what will happen if they split - who will own the rights to any band names or other intangibles. Are they employed by a record company and receive salaries or are they on a commission based on record sales, or are they simply playing live in clubs for fees. Do any of the band members have any other interests which might need to be ringfenced?

You should beware of offering any advice unless you are familiar with all the circumstances, and you have the requisite knowledge to be able to offer competent advice. You would not want to carry the financial can if this all goes horribly wrong!

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