Not
enough bands realize that their band is a business.
Some band members may be familiar with business
practices, but most are not.
The very first thing a band should do is get a
business licence from the county they live in. A
business licence is also called a "fictitious
name certificate". What this certificate does is
tells the world that X,Y & Z are doing business
using the name "The Band" and where their
business address is located. The procedure for
obtaining a licence is through the County Court. They
will require an application and a small fee.
Generally, another legal requirement is that you
publish your application in a newspaper for 3 weeks.
Most newspapers do this in their legal classified
sections. The newspaper will publish your licence and
it will read something like this: "LEGAL NOTICE:
X,Y & Z are doing business as "The
Band" with principle place of business at 123
High St. Anytown." The newspaper will take care
of the rest and you'll soon receive your business
licence. The main reason you need this licence is to
open a cheque account in the band's name.
The next thing you should do is get a tax ID number
for the band although very few bands pay taxes on
what they earn. I am not sanctioning not paying, but
this is the procedure for doing it the legal (and
correct) way. You can obtain the necessary form from
your local tax office. Once you have a tax number,
you should keep track of all the income the band
earns. More importantly, you should keep track of all
the band's expenses. This includes everything from
promotion costs (flyers, 8x10's, etc.) to equipment
(guitars, amps, PA's, etc.) to tour expenses (petrol,
meals, etc.). All of these are tax deductions. Taxes
can be complicated so you may want to see an
accountant. Don't worry, even the accountant's charge
is deductible, as is a lawyer's incidentally. The
Inland Revenue also puts out a great, though lengthy,
tax guide. When requesting your form, also request
"Tax Guide for Small Businesses." Anything
you ever wanted to know, or not know, is contained in
this guide.
It's also recommended that bands consider taking out
insurance. You can buy insurance for anything. For
example, sports teams often take insurance out on
their star's physical ability. Consider insuring your
equipment. If it gets stolen or damaged, the proper
insurance policy may go a long way toward getting the
band playing again. Also make sure whoever drives the
band has car insurance. Once again, insurance is
deductible as a business expense.
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