You probably got into entertaining or performing because you love music, being in front of a crowd, or making people happy. Now you want to make some money as well. Making that money, however, means making smart business decisions and handling financial and legal details correctly. You’ll need to figure out whether or not you’re ready to take the next step as an entertainer and a business person and establish your service as a business. We’ve outlined a few of the benefits of incorporating and setting up a business license.
1. Better chance at a small-business loan
There may be moments in your career when you’re ready to take your act or service to the next level. It may be investing in new gear or equipment, getting a studio or rehearsal space, or bringing on other employees. All these take money. Being established as a business and maintaining a business license puts you in a stronger position to apply for small business loans and funding. It provides security for the bank and credibility in your application.
2. Better for taxes
When incorporated as a business, and funneling your income and expenses through that business, taxes are now an extension of that business. It’s much easier to maintain and leverage tax breaks and incentives when you’re incorporated. Things like equipment deductions and mileage are manageable to track, and you have higher accounting safeguards in place. Although tax code varies from state to state, it’s almost always better for self-employed talent to receive their income from a business, no matter how small. (Learn more about tax deductions for freelance artists.)
3. Better legal protection
Every band, act, or service provider will hit some bumps along the way. It could be a disgruntled client, an unintentional injury, or even a copyright dispute. An incorporated and licensed business could help shield you from liability and focus any lawsuits on the company. The type of corporation you form comes into play here, so always consult a small business lawyer to get things set up.
4. Clear ownership of assets
It’s a day every struggling band faces. You’re forced to break up because your bass player called it quits with her boyfriend, and he owned the theremin you used for your psychedelic rockabilly cover of “Landslide.” You can’t go on! With an established business, the company owns the equipment. If someone quits or even if you need to dissolve entirely, you’ve developed a clear plan for what goes where. Using the company to purchase supplies and materials means there is no doubt as to who uses it.
5. Easier applications for site and vendor licensing
At GigSalad, we encourage every member to look for unique ways to keep the income going and find new avenues to work and express your talent. From time to time, some of these opportunities, such as festivals or trade shows, may require a license to do business. Having a business license allows you to apply for site or vendor permits to work.
There you have it! The decision to incorporate as a business might feel stuffy or cold, but the benefits far outweigh the hindrances. Accountability, clarity, security, and credibility are all advantages of incorporating and maintaining a business license.