What tax liabilities are incurred regarding a musical group? 4 Answers as of February 13, 2011

What is the minimum amount of revenue a musical band must earn before it is liable for state and federal taxes? I'm am trying to determine at what point it makes sense to form the band into an LLC.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Law Office of Harry Gordon Oliver II
Law Office of Harry Gordon Oliver II | Harry Gordon Oliver II
Roughly $12,000. Call for more info.
Answer Applies to: California
Replied: 2/13/2011
Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
These is really a wide open question with a lot of tax considerations. First, the IRS states that income is from any source derived. If your band has income, then it needs to be reported on tax returns. Second, the band would seem to be a partnership and as such would need to file a Form 1065 at the federal level and a corresponding state partnership return. Third, the band would file a state return based upon its state of residence. Fourth, it may also have to file in other states if it receives income from gigs in those states.

As far as choice of entity for operations, a lot of considerations need to be taken into account as to whether an LLC or some other entity is best for your business.

In any event, you should meet with a tax attorney to get this done right the first time.
Answer Applies to: Pennsylvania
Replied: 2/2/2011
LT Pepper Law
LT Pepper Law | Luke T. Pepper
Anything over 600 must be reported as income and will be by venues that pay you. It would make sense to form an LLC to protect your personal assets in case there is a problem with the band.
Answer Applies to: Pennsylvania
Replied: 2/1/2011
Givner & Kaye
Givner & Kaye | Bruce Givner
Establishing an LLC has more to do with (i) asset protection and (ii) operational issues (how do you split income? Who owns the name?) than it does with taxes.

As for state and Federal taxes, I would have to know what state you are in to give you an intelligent response.
Answer Applies to: California
Replied: 1/31/2011
Click to View More Answers: