happen and can easily screw up everything you’ve worked so hard to achieve. On the tax
front, the partners file partnership tax returns and adjust their personal returns (1040s) to
reflect the profit or losses of the partnership.
A band operating under a partnership as their legal structure is different than a band
partnership agreement (BPA) for the members of the group. A BPA addresses various is-
sues within the band including who owns the band’s name, what happens if a member
quits or is fired, how the money is distributed and decisions are made. It can also address
subjects such as how decisions are made regarding which gigs to play, how equipment is
purchased, how internal disputed are handled and how set lists are decided. BPAs can
also address many other operational and structural topics, but they aren’t a formal legal
partnership agreement that forms the band’s legal entity. Essentially, a partnership agree-
ment addresses the band’s formal legal structure. A BPA addresses its internal manage-
ment and administration issues and practices. They can be thought of as a type of opera-
tions manual that can lessen or eliminate conflicts down the road.
A C-corporation is a legal entity that is created to conduct business. In many ways, it’s
like creating another person. It can be taxed, separate from its founders and shareholders.
It can be held legally responsible and liable for its actions. Naturally, it can also make a
profit. The primary benefit to having a corporation structure is the ability to avoid per-
sonal liability. But, corporations also require much more record keeping. S-Corporations
are a variation on the “C” variety and, similar to partnerships, allowing profit or losses to
be passed through, in the form of dividends, on individual tax returns.
A popular new hybrid is the Limited Liability Company (LLC). It can be an excellent
for bands in many ways. An LLC combines the best parts of the corporate and partnership