Band Finance Advice

[craigie]

If each member can’t handle their own expenses well enough to do without a band bank account then they can’t be trusted with access to a band bank account.

Likewise in that situation one member will always be the boat anchor that prevents the necessary purchases and expenses and needs their “cut” for personal use right away.

Each cut is after expenses and there needs to be an agreement and manager of it.

 

[delta7fred]

Never had a joint bank account and no way would I agree to one (I've only been gigging 50 years).

We are a 3 piece and often gig money doesn't split 3 ways easily so we split it best we can and throw the rest in a pot along with what little merch money we make (the occasional CD). We use that to pay for promo material, posters, cards, blank CDs, ink for whoever prints the covers, etc. If there gets too much money in the pot we do another split.

 

[QweziRider]

A couple of the guys seem to want a joint bank account for the band

Nope. nope nope nope nope NOPE!!!!!

 

[MobileHolmes]

Yeah, I'm in agreement with all of you, thanks for the reinforcement. Ultimately, about an hour after I posted, we decided over text just to split the money each gig. My main thing is that I don't want money to be an issue, and holding it in a band fund is recipe for disaster. A little more background probably would have helped in the first place.

We are a piano/bass/drums/vox group doing all covers (Jazz and R&B) and not at all musically ambitious. Mostly we are playing for fun. Not serious enough to consider hiring subs and such. The amounts of money you can make gigging around here is pretty small, and really not a significant stream of income for any of us (all middle aged stably employed people). Realistically, probably about 3 grand a year is the upper bound for what the band could make. Free practice at the key players house. Everybody owns their own decent gear and the singer owns the PA. Division of labor has been pretty equal. Keys player gets music when needed, I do most of the "booking," which is negligible, and social media, singer has been responsible for setting up set lists and such, drummer has landed a couple gigs, and, well, he's got the most stuff to move

What we've done so far, and has worked is that we split the gig money equally and have used the tips to stock the mini fridge that I donated to the practice space. We are having a band meeting next week just to hammer out a few hypotheticals for the future (what's the minimum we'd play for, are we willing to play free for friends, etc).

Anyway, thanks for the advice. I've been playing a long time (but off a while) and typically either in more hired gun situations, or in DIY bands that saved gig money for studio time, so this is sort of a new arrangement for me.

 

[Bunk McNulty]

Our BL has a checking account in the band's name, only because there are places that pay us by check and 1099 us. Every now and again, she asks us for money to cover promotion expenses (mainly poster printing, once in a while merch like t-shirts, sweatshirts, hats). We give her whatever she needs (it's never much) and don't think twice about it.

 

[fhm555]

I’m with Ronnie and Nancy on this one.
Just say no.

 

[jchrisk1]

We don't pool money from gigs, but we do put all record sales into a band fund for future recording. If a band member quits, they get their share. When we upgrade equipment we buy separately. For instance, we got a new PA last year. I bought the speakers, guitarist bought the board. If either of us quit, we take what we bought plus our share of sales. It keeps it pretty simple for us .

 

[DavC]

in this day and age of chronic ID theft ... access to anything related to my finances is nobody else's freakin business ..!

just pay me in cash ... all is well

 

[40Hz]

At the end of the year 1099 those who earned more than the contractor's threshold of $600 in 2018.

If you're going to be the paymaster, you'd better be sure you're keeping records and filing any necessary tax forms.

What you need (as in really need) to worry about if you do however, is risk inadvertently getting yourself classified an employer, and the people you're paying as "statutory employees" by the IRS. And that determination has nothing to do with you saying they're not or having them sign some written agreement with you saying they're not. The rules can get a little complicated depending on what you're doing. And if the IRS disagrees with what you're doing, they have the home court advantage.

Should the IRS determine that you are an employer and your bandmates are employees, and you haven't been filing witholding taxes and forms and other paperwork, you can get hit with a hefty fine - even if each of those band members paid all the taxes owed on what they received on their personal tax returns.

Then there's your state revenue services, who have their own rules about a lot of things as well - such as whether you're supposed to be remitting sales or entertainment taxes that you're supposed to be collecting on your band bookings. Or whether you require licenses or permits for the services you're providing. These rules vary by state, so there's no general rule to say what you may be required to do. A lot depends on where you live.

So get some professional tax advice if you do anything other than divvy up cash at the end of the night.

 

[Nephilymbass]

New band is sort of taking off (at least by standards of things I've done in the past). Good reception, coupla three paid gigs a month (in a smallish market). We've never really had any formal discussion of band finances. So far, we've just settled up at the end of the night. A couple of the guys seem to want a joint bank account for the band, but I don't think this is a great idea. We basically don't have any collective expenses at the moment (all promo is free social media, Singer owns a PA, don't do originals so probably won't be recording), so I'm not seeing a reason not to just keep paying everybody in real time. Am I missing something here? Seems like keeping the band money together is just asking for trouble down the road at this point.

My band used to have a checking account years back yeah it can cause drama especially if people can’t see on a day by day basis the money that’s coming and going. These days we use PayPal. There are several benefits to paypal imo.

1 It’s a relatively painless way to take credit cards for Merch sales. You might be surprised how much more merch you can sell when you can take credit cards. Lot of the places we play have ATM machines with rediculous fees(I’ve seen some that were as high as a $16 fee) It also severely cut down on the amount of cash we keep in the money box to make change when selling Merch.

2 We don’t all have to wait around until three in the morning or until the next rehearsal or show to get paid. Singer is usually the one that waits to get paid. Then he deposits the cash and sends everyone our cut with PayPal. I also use PayPal for a lot of my music gear purchases so this simplifies things for me.

3 When we do anything that cost us money for example paying for new Merch to be made or studio time (every respectable studio in my area takes PayPal payments) There’s no waiting to see everyone at rehearsal to collect everyone’s cut and there is a digital record of it which helps avoid drama like a band member thinking they paid when they actually didn’t also helps hold everyone accountable.

I also recommend a Facebook group chat for the entire band. Not only does it avoid confusion because there’s no so and so called and said or texted me this or that. With both fb messenger group chats and PayPal you have a digital record you can always look back through the conversation. This is awesome for me as I work night shift and the rest of the band works days and I can scroll back through anything that’s said while I was sleeping so im not suprised for example if the guys start promoting a show I didn’t know about.

 

[40Hz]

New band is sort of taking off (at least by standards of things I've done in the past). Good reception, coupla three paid gigs a month (in a smallish market). We've never really had any formal discussion of band finances. So far, we've just settled up at the end of the night. A couple of the guys seem to want a joint bank account for the band, but I don't think this is a great idea. We basically don't have any collective expenses at the moment (all promo is free social media, Singer owns a PA, don't do originals so probably won't be recording), so I'm not seeing a reason not to just keep paying everybody in real time. Am I missing something here? Seems like keeping the band money together is just asking for trouble down the road at this point.

If you're not set up as a formal business entity (partnership, LLC, etc.) there's little point in having a joint checking account for the band. Doing so would potentially put you on the radar for operating as a business entity, which usually requires some form of registration somewhere. And that's just for openers. So tread carefully - and get some professional advice.

There are advantages to operating as a business. But there are responsibilities and costs associated with it too. So it's a good idea to sit down with the band members and decide where you want to go with what you're doing. And then make some decisions.

 

[smogg]

New band is sort of taking off (at least by standards of things I've done in the past). Good reception, coupla three paid gigs a month (in a smallish market). We've never really had any formal discussion of band finances. So far, we've just settled up at the end of the night. A couple of the guys seem to want a joint bank account for the band, but I don't think this is a great idea. We basically don't have any collective expenses at the moment (all promo is free social media, Singer owns a PA, don't do originals so probably won't be recording), so I'm not seeing a reason not to just keep paying everybody in real time. Am I missing something here? Seems like keeping the band money together is just asking for trouble down the road at this point.

Just say NO!

 

[Josh Kneisel]

New band is sort of taking off (at least by standards of things I've done in the past). Good reception, coupla three paid gigs a month (in a smallish market). We've never really had any formal discussion of band finances. So far, we've just settled up at the end of the night. A couple of the guys seem to want a joint bank account for the band, but I don't think this is a great idea. We basically don't have any collective expenses at the moment (all promo is free social media, Singer owns a PA, don't do originals so probably won't be recording), so I'm not seeing a reason not to just keep paying everybody in real time. Am I missing something here? Seems like keeping the band money together is just asking for trouble down the road at this point.

We used to just split it at the end of the night, but eventually you get paid in checks or with a card and sent tax forms by venues at the end of the year... We have a joint account for the LLC we started and we just deposit any gig money that isn't cash (usually just gets split if it's cash) and once a week we each pay ourselves a 3rd of the money we made. If we have to order merch/cds/etc we pay for it out of the band account and still divide the cost/pay equally. This has worked well with very few issues for 5 yrs...

 

[Deleted member 165050]

My opinion, unless you are making so much that you need to form a company to manage the income from the band, don't do joint anything, divide the fees after each gig as per usual or whenever the money comes in if it's paid by check. Never have group gear ownership, trust me.

 

[Josh Kneisel]

FWIW It doesn't matter much for a hobby band, but if you are being paid and checks are going to one band member who then splits it up then that band member is liable for all the tax on the whole amount according to the IRS.

 

[JRA]

i don't think there is a must-do or must-not-do...every group of people/musicians should decide what's best for that group. regarding the OP's specific situation: if you don't want to do it (band account/fund) then say so. you may become the 'sideman' to the rest of the group, but who cares? i've dealt with $$$ in all the ways mentioned or implied and IME: it (the plan) has to fit the 'culture' and the goals of the group in order to work for everyone involved.

good luck with your 'finances'!

 

[Chrisk-K]

Anything jointly owned will not have a happy ending.

 

[SLO Surfer]

We formed a business partnership and opened a joint band bank account in my band a couple years ago. It's working great so far. Because we have a partnership we have everything written down and signed in contract, so there's no confusion. I would say a written and signed contract is paramount in these types of agreements, no matter how good a group of friends it's among.

My band is all great friends, an originals band (well, 75% originals, the rest random covers). Having a band checkbook makes it super easy for paying everyone out at every gig. For instance, when the venue/promoter pays us with a check, we don't have to wait for someone to go deposit or cash it and then pay us out. We use our band account to finance recordings (we make one CD every three-five years), purchase and maintain PA gear (selling and splitting PA cost evenly if/when band breaks up is written into business agreement), and to buy band merch to sell. Then all recording sales (CDs, itunes, Amazon, Spotify payouts, etc) and merch sales (in person and online sales) go straight back in to the band account and we make new recordings and buy new merch with those specific profits. Every gig we pay out every band member evenly from the gig income. It's great because our merch and recordings all pay for themselves, and we get paid fully at every gig instead of having to wait a day or week for one band member to cash a check and get our money to us individually. We always have plenty in the band account to buy meals and drinks when we feel the "need."

That said, I think this doesn't work well in most band's instances. Who wants to go through the trouble of starting a business, opening a bank account, and signing a legally binding contract with friends and band mates?

Works for us, but I think we are a unique group.

 

[SLO Surfer]

FWIW It doesn't matter much for a hobby band, but if you are being paid and checks are going to one band member who then splits it up then that band member is liable for all the tax on the whole amount according to the IRS.

That band member needs to 1099 the other band members, which is no fun but well worth the tax savings.

 

[fdeck]

In my view, a band fund is likely to encourage the band to spend more than anybody really wants to. If it's a hobby band, I'd rather tell them that I'm responsible with my finances, and if the band really needs something, just ask.

With that said, my main band has a band fund. Everything we take in donations goes to buying new big-band charts. Everybody is happy with that arrangement.