Band Bank Account

Juniorkimbrough · #1 08-10-2006, 02:05 PM

I think i've seen similiar things discussed on here but not exactly like this.
Basically our band wants to open a bank account to keep a percentage of our gig money as a band fund. We don't really feel safe just keeping it at someone's house so we are thinking about opening a bank account.
We are wondering if we would have any tax problems from this? We don't want to save up a bunch of money in our account then find out we owe a bunch of taxes on it.

Anyone else's band do something like this?

thanks!

markjazzbassist · #2 08-10-2006, 04:20 PM

why don't you just put it in a can and keep it at someone's house. if you guys don't trust each other, than have a book that keeps track of the cash and then rotate the can each week or month or something.

we have it in a piggybank at my house. my bandmates trust me so it just sits here. A LOT EASIER than a bank account. that could get messy if you guys break up.

spudmaster34 · #3 08-10-2006, 05:25 PM

and if you do do the comunal money thing, be sure everyone knows what it can and can't be spent on

Juniorkimbrough · #4 08-10-2006, 06:00 PM

it's not that we don't trust each other, it's mainly because we are afraid of having $1000 saved up then someones house gets broken into and all the money gets stolen.

the main reason is to keep the money "safe".

jive1 · #5 08-10-2006, 06:41 PM

If you're going to go through the hassle of opening up a band bank account, go the extra mile and get a DBA (Doing Business As) for your band name. That way you can get checks made out the band instead of an individual. You can also work it out so that all band members need to sign for a withdrawal, or you each have equal rights to the money. The nice thing about this is that it makes accounting a little easier. Everything goes into the account, and you can pay each player from the account, as well as make purchases for the band. Your bank statements and checks make for decent accounting tools.

Another advantage of a band bank account is for electronic funds transfer. This comes in real handy if you process credit card sales for merchandise on your website, or get paid for banner ads or referrals. Same goes for if you sell band equipment on E-bay or something like that.

As far as taxes, it doesn't offer any type of shelter, but it does make accounting a little easier.

For the sake of liability, make it so that it's easy to put money in, but harder to take out. Don't get debit/ATM cards, just use checks. If you need to withdraw make it so that you have to do it at bank hours, and if possible do it so that 2 or members have to sign for a withdrawal.

Juniorkimbrough · #6 08-10-2006, 07:16 PM

I trust all the guys in the band. Our main worry is taxes.

So pretty much you are all telling me it has a good possibility it WILL be taxed as income?

steveb98 · #7 08-10-2006, 11:58 PM

I would say if you guy trust each other don't do the bank account. The IRS at somepoint could take interest in it and then would be asking if you guys are reporting the bands gig money as income. If you are really worried about the money getting stolen, then one of you open a savings account in their name and put the money there. That way the money doesn't co-mingle with the persons other money and they can show you the monthly statement. Plus you'll make a little interest.

My friends band take this a step further and have everyone who hires them write the checks to the singer. Then at tax time he calculates how much extra tax he's paying due to the band and the band splits the cost of the taxes. IRS is happy because someone is paying taxes.

beyondhairy · #8 08-11-2006, 12:18 AM

why not just put it in a safe deposit box in the banks vault?

they dont tax those

Dkerwood · #9 08-11-2006, 03:25 AM

Yeah. It's really more of an ethical question if you're talking small amounts. Technically, you need to pay taxes on gig money, but not everyone does (personally, if I was to keep track of my income from music, I'd have to keep track of my expenses, which get pretty high... and in the end, I would end up STILL not paying taxes, so I don't bother).

I like the safe deposit box idea. You also might think about purchasing a safe that you could leave in someone's house.

Murf · #10 08-14-2006, 09:14 PM

HELL NO!!

Run away...seriously, every band I know who have opened a joint "band account" have been totally screwed mostly in the sense that one band member cant resist the temptation and ends up drawing out the "band" money to fund holidays/gear/personal stuff etc.

The thing with bands is you tend to trust your bandmates but at the end of the day you dont know somebody elses circumstances, your dealing with a number of people who have their own lives outside of the "band bubble" and as much as you might think you know them and trust them..you dont.

Also, say after a few years to-gether and a lot of money saved/invested etc. the band implodes and you all split acrimoniously..what happens to the band fund?

It can get very very messy...not to mention the tax implications on top of this...especially if you have a day job and gig "part time" and havent declared your extra income.

I'm not sure what the taxation system in the U.S is but in Europe you also have to take into account V.A.T, I know of at least 20 bands who declared their income for tax (as "working" bands) but they forgot/never knew about paying the V.A.T on top of their annual earnings..end result..they all got landed with HUGE tax bills at the end of the year.

be very, very careful

PastorofMuppets · #11 08-16-2006, 03:17 PM

i would advise against this highly
its just a dangerous road and CAN open you up to huge headaches
that will greatly outway the peace of mind that you are looking for