Partnerships can be general or limited and many bands opt for this structure. In manyways, a partnership is exactly like a marriage. I don’t mean that in a metaphoric way. I
mean it literally. Yet, it’s probably the most common legal structure for bands in which
each member is active. A partnership doesn’t need too much in the way of legal stuff, ei-
ther. A handshake can do the trick. If there’s no formal paperwork and two or more peo-
ple are doing business together, the business is automatically classified as a partnership.
And therein lies a large part of, what I believe, is the problem with partnerships. They can
be rather fuzzy when it comes to the details unless there is a rock-solid and clearly
drafted formal partnership agreement.
In a general partnership, typically one or more general partners are responsible for the
total liabilities and actions of the partnership as well as management authority. So, each
general partner is responsible for the actions of the other general partners. This includes
not just the business’ assets, but the partners’ personal assets, as well, should legal action
be taken against the partnership. This is the main drawback to this type of structure.
In a limited partnership, the limited partners are only liable to the extent of their in-
vestment into the company, or band in this case. The downside is that a limited partner
has no managerial authority. Managerial authority is generally granted to one general
partner.
A partnership, mostly because of the name, sounds like a peachy structure for a band,
Maybe so. Maybe no. Get your attorney involved to make recommendations and to draft
an agreement. If a band member leaves, for example, the partnership might evaporate.
Usually it does. A well-thought-out and clearly defined agreement can cover contingen-
cies and matters that you may think will never happen. Those kinds of things do, in fact,