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How to split/save money

Discussion in 'Band Management [BG]' started by Flatbass, Jul 18, 2012.


  1. Flatbass

    Flatbass

    Mar 13, 2004
    Yurop
    Hi all,

    My band is heavily divided on how we should deal with the money coming in. I'd like to present our case as objectively as possible, so that we can discuss the options and not who's wrong or right.

    The band consists of five musicians who are all well above the average level on their instrument. All of them want to make a living playing music. All five do all kinds of gigs to make ends meet: playing background music, subbing, teaching, small projects, etc. They are in this one band together, which plays original music and has been together for about a year. The goal of the band is to 'make it', basically. Within a couple of years, we want to be able to have the band as a more or less steady source of income.

    When starting out, the band has played some gigs for free. Some of these gigs led to paying gigs. The band decided that they want to record professionally in about a year to produce a better demo or possibly an album, which will lead to more gigs.

    Because all of the band members regularly have other gigs, sometimes not all band members can make every gig. Apart from that, band members can get sick for extended periods of time, get called to tour abroad, etc. Sometimes, subs are called in, but mostly the band will play with band members that are available and change the arrangements to make the songs work. This usually leads to a better performance, than if a sub would be called in and had to learn all the material or read his/her way through the gig.

    What would be the best way to save up money for studio time?


    1. All the money the band makes goes into the band's bank account.
    Downside: if a band member can't make it to a lot of gigs, he or she is still going to benefit from the money in the bank, which mostly the others worked for.

    2. The money made on a gig only goes into the band's bank account if all members played that particular gig. If not everyone was present, the money is split equally among those who played.
    Downside: the band won't save money very fast.

    3. A hybrid of the two options above. Each time money is made, a percentage goes into the bank account, and another percentage gets distributed among those who've played.

    What do you all think?
    Thanks very much!



    By the way, I'm really surprised as to how few threads there are concerning band management and money. It has always been a heavily discussed subject in most of my bands.

    By the way, part 2. Here's a little extra question... If one of the band members decides to quit the band after a one year. Does he: 1) get his equal share out of the band's bank account. He has worked for it, right? On the other hand, taking one fifth out of the bank account will slow the band down considerably. They would have less money to spend on a studio. Also, when a replacement is found, this person has to 'buy himself' into the band, for all members to have invested the same amount of money.
    This leads to a simpler option, which is.
    2) the person leaving, or being forced to leave, gets nothing.
     
  2. Divide the money among whoever plays the gig.

    Core members pay for the recording sessions equally when the time comes. If they have no money when the time comes, they can make arrangements, it is their problem. If they opt out, look for a replacement. Better to get this straight early instead of later when the band is a known entity and one member is flaking out.
     
  3. DiabolusInMusic

    DiabolusInMusic Functionless Art is Merely Tolerated Vandalism Supporting Member

    Do you have day jobs or are these gigs paying your rent?

    You do not have core members with full dedication, do not start a band fund it will only end badly. I also almost guarantee that when you decide to record at least one of your band mates will not have the money for it, in fact they probably won't have any money and you will be facing another challenge.

    Carl is right though, paying out after gigs is the easiest way to ensure fairness.
     
  4. Flatbass

    Flatbass

    Mar 13, 2004
    Yurop
    We are all music college students/graduates. Some are still in school, some mostly teach for a living, others live with their parents while trying to get a career as a performing musician off the ground.

    None of us is able to play for a living, right now. Let alone with an originals band we've started only one year ago. Because of this, no anyone of us can put all of their time in this one band.

    All band members are loyal and are doing whatever is possible to make this band happen, time permitting. However, I'd like to set up a financial system that will be fair in all cases and without confusion.
     
  5. If you start acting like mommy now, just imagine how much worse it will be when they have money and fame added into the equation.

    If you aim to make music your business, either be the boss or have equal partners in this enterprise. If they can't handle the business side of it now, they most likely never will.

    The reality is that most people are lousy at business.

    Boss or partners. Have the talk now.
     
  6. ChrisB2

    ChrisB2 Bass... in your fass

    Feb 27, 2008
    TalkBass > Off Topic
    Option 2 seems the only fair and reasonably easy-to-manage option. i.e., #1 is too unfair and #3 would be a nightmare to administer.

    As to a member leaving... that will depend on the band and the purpose of the fund. If the fund is strictly saving for recording, IMO he gets it back, and the new guy has to pay in. However if it's a general expense fund, or if it's both, he forfeits.
     
  7. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    Whatever you decide amongst yourselves will be the agreement. You are free to come to whatever agreement works for all of you. However, setting the agreement in writing will make it easier to resolve things in case of a dispute.

    When it comes to money, unless you explicitly do something to change it, your band is legally a business partnership.

    If you read the first 6-10 chapters in any typical accounting text, you could learn how to easily keep a set of books so you would be able to instantly know how much equity each member had in the band. This would allow for equitable and legal settlement of any disputes.

    But honestly, until you are at the point where you need to file taxes, I'd recommend you just pool your money for recording and not worry about it. Band unity and a spirit of being in it together are more important than petty disputes of a few dollars.
     
  8. jmattbassplaya

    jmattbassplaya Looking for a gig around East Islip, NY!

    Jan 13, 2008
    I vote for super secret option #4 - everyone pockets their share of the money they make and when it's time to record everyone who wants an equal share buys in.
     
  9. Flatbass

    Flatbass

    Mar 13, 2004
    Yurop
    Thanks for the replies so far!

    By 'acting like mommy' you mean that I'm trying to decide or manage too many things for them? That's not what I'm trying to do, although I have a tendency to do more than my fair share of work and I can never stop thinking about how things could be improved.

    We are all equals in this band and we need to find a system that we can all agree on.

    To be honest, I like option 2 the best, but most other band members don't seem to think so :/
    The only reason to have a band fund, would be to make sure that everyone has that certain amount of money when we need to pay for the recording. Also, it will sound more like 'we have €1000 to spend on a recording'. Otherwise, they might say 'I have to shell out €200 for our recording? Forget it, I'd rather spend it on something else...'
     
  10. Put it all into the band fund unless you get a really good paying gig where it's not going to hurt to give each member a personal pay cheque. You'll never get each member to save their own money to contribute to recording.

    If a member leaves the band...too bad. They don't get anything from the band fund.
     
  11. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    Band consists of Al, Bob, Chuck, Dan, and Ed

    Event #1 - Entire band plays a gig, get's paid $300.
    Assets
    -- Cash $300
    Equity
    -- Al $60
    -- Bob $60
    -- Chuck $60
    -- Dan $60
    -- Ed $60

    Event #2 - Entire band except Ed play and make $400.
    Assets
    -- Cash $700
    Equity
    -- Al $160
    -- Bob $160
    -- Chuck $160
    -- Dan $160
    -- Ed $60

    Event #3 - Entire band except Dan play and make $200
    Assets
    -- Cash $900
    Equity
    -- Al $210
    -- Bob $210
    -- Chuck $210
    -- Dan $160
    -- Ed $110

    Event #4 - Band Spends $500 on studio time
    Assets
    -- Cash $400
    Equity
    -- Al $110
    -- Bob $110
    -- Chuck $110
    -- Dan $60
    -- Ed $10

    Event #5 - Bob quits, is paid out his equity of $110. Barry joins band
    Assets
    -- Cash $290
    Equity
    -- Al $110
    -- Barry $0
    -- Chuck $110
    -- Dan $60
    -- Ed $10

    Event #6 - Entire band plays gig, makes $500
    Assets
    -- Cash $790
    Equity
    -- Al $210
    -- Barry $100
    -- Chuck $210
    -- Dan $160
    -- Ed $110

    etc.

    Notice that Assets always equal Equity

    This is VERY simplified accounting, but it would work.
     
  12. Flatbass

    Flatbass

    Mar 13, 2004
    Yurop
    Nice, I'm learning something about accounting. Thanks! :)
    It must have taken some time to type all that...


    In your example Chuck and Al have more money in the band than anyone else, and let's say they can't be substituted on a gig, because they are both singers/front men. Then the others could never catch up to them... How would you solve this? Just pay them $50 each so that they'll be at the same level as Dan?
    And every time a band member can't be at a gig, both Chuck and Al will get some cash to even out the amounts invested?

    And what would you do if the band wanted to record after Bob left? Barry has to pay out of his own pocket? Or hope that Barry will catch up as the other members keep missing gigs? :) That would be unlikely to happen, they might as well pay out everyone's equity.
     
  13. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    It's not hard, just copy/paste :)

    There is no reason to solve this. There is no reason to equal out equity. Their extra equity makes it fair because they have contributed more. If the band were to break up, they would get a bigger share of the band fund, which again is fair.

    Note that this doesn't give them more say in the band decisions. You can still give each band member an equal vote in band decisions.

    Ok lets add some more events

    Event #7 - Band pays $750 for recording session
    Assets
    -- Cash $40
    Equity
    -- Al $60
    -- Barry -$50
    -- Chuck $60
    -- Dan $10
    -- Ed -$40

    No reason equity can't be negative!!

    Event #8 - Entire band except Dan play gig, make $400
    Assets
    -- Cash $440
    Equity
    -- Al $160
    -- Barry $50
    -- Chuck $160
    -- Dan $10
    -- Ed $60

    Event #9 - Al needs money for rent, takes $100 from band fund with band's permission
    Assets
    -- Cash $340
    Equity
    -- Al $60
    -- Barry $50
    -- Chuck $160
    -- Dan $10
    -- Ed $60

    Event #10 - To speed up recording, Barry contributes $100, Dan contributes $200
    Assets
    -- Cash $640
    Equity
    -- Al $60
    -- Barry $150
    -- Chuck $160
    -- Dan $210
    -- Ed $60

    Event #11 - Band spends $500 on recording session
    Assets
    -- Cash $140
    Equity
    -- Al -$40
    -- Barry $50
    -- Chuck $60
    -- Dan $110
    -- Ed -$40

    Event #12 - Entire Band does corporate gig, makes $1000
    Assets
    -- Cash $1140
    Equity
    -- Al $160
    -- Barry $250
    -- Chuck $260
    -- Dan $310
    -- Ed $160

    and so on....
     
  14. Personally, I wouldn't play in a group where my money goes to the band.
     
  15. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    That's the beauty of accounting, your money isn't really going to the band. Each member's actual contributions are accounted for exactly. That's what equity IS, and what it's FOR.

    In other words, if at any time you dissolve the band fund according to equity, you would have the exact same amount that you would have had if you had been paid cash at each gig and contributed cash to each recording project. There's no difference.

    And you can do cash dispersions if you choose:

    Event #13 - Band pays each member $150 cash after big corp gig
    Assets
    -- Cash $390
    Equity
    -- Al $10
    -- Barry $100
    -- Chuck $110
    -- Dan $160
    -- Ed $10

    So you can ride the line between paying cash for gigs and saving for band expenses to whatever extent the band agrees to.

    And band members can contribute different amounts, knowing they will get out what they put in. So if one member can afford to pay extra for recording, his extra contribution is reflected in the band equity.
     
  16. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    And if you've got one band member that wants his full pay for each gig, you give it to him, and subtract the money from equity. He chooses to have $0 equity in the band.

    Then when you incur expenses, like recording, if he won't contribute cash, you take it out of his equity, taking it into the negative.

    Then at the next gig, you take that negative equity out of his pay. It's like the rest of the band loaned him the money for the expense, and he is paying it back to the band out of his pay.

    It all comes out the same, fair and square.
     
  17. I studied accounting in college, and have had to manage my own payroll in the past and have a fair understanding of how it all works.

    I stand by my previous statement. My cut goes to me, not a band bank account. If I need to cover my share of a band expense, I pay for it myself, I do not need someone telling me I can't be trusted to handle my own finances.

    It is insulting.

    Boss or partnership. If you are the boss you manage who gets what - and you pay them. You are not entitled to hold back funds for the good of the band.

    If it is a partnership, you negotiate and have written contracts stating how things are to be done.

    It sounds like you are appointing yourself as a boss who will decide who gets what and when.
     
  18. ChrisB2

    ChrisB2 Bass... in your fass

    Feb 27, 2008
    TalkBass > Off Topic
    Event #13 - Band discovers that Barry, who has been entrusted with overseeing the Band Fund, has taken some liberties with his Equity and disappeared!

    Assets
    -- Cash $0
    Equity
    -- Al -$285
    -- Barry $1140
    -- Chuck -$285
    -- Dan -$285
    -- Ed -$285

    :D

    Personally, I'm with carl h. No band fund for me thanks...
     
  19. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    No, I am merely suggesting a system to the OP that his band can use to save up for recording sessions and keep fair track of each members money. The system even works with a stubborn person like Carl.

    Event #14 - Chuck Quits Band, gets his equity as payout, Carl joins band
    Assets
    -- Cash $280
    Equity
    -- Al $10
    -- Barry $100
    -- Carl $0
    -- Dan $160
    -- Ed $10

    Event #15 - Entire Band plays gig, get's paid $500, Carl stubbornly takes his $100 in cash
    Assets
    -- Cash $680
    Equity
    -- Al $110
    -- Barry $200
    -- Carl $0
    -- Dan $260
    -- Ed $110

    Event #16 - Band plays $300 for recording session, Carl stubbornly pays his $60 in cash
    Assets
    -- Cash $440
    Equity
    -- Al $50
    -- Barry $140
    -- Carl $0
    -- Dan $200
    -- Ed $50

    If the band breaks up, Carl gets nothing because he stubbornly wouldn't put anything in. The rest of the band would get exactly what they put in. Nobody is getting cheated. It all comes out the same.
     
  20. DBCrocky

    DBCrocky

    Oct 18, 2011
    Cary, NC
    Ok. The OP wanted to know how to do this. If you don't want to, I'm certainly not going to make you.
     

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