Someone called my office this week and
he had a great question. He asked why does a band need an LLC? Which stands for a limited liability company. It’s a great question. It’s something that there’s a lot of misunderstanding about. So, in this video we’re gonna cover why you need an LLC. Hi guys, I’m miss Krystle. I’m an entertainment attorney and public
speaker. I’m the owner of Dukes Up records and most importantly, I’m an independent musician. We release videos just like this once a week to help you with your music careers and getting you to the next level. We cover topics like music marketing, trademarks, copyright and everything in between. So, let’s get into the video. Now, the first thing that I want to do is just set your guy’s minds as far as what is an LLC when we say that. When I say LLC, think of a real company that is registered with the state where you live. It’s the first step that you’re gonna do. And, we’ll get into the whys. We’re talking about a real company. Whether it’s just you or whether it’s your full band We’re talking about actually registering a real life company. The first reason why you, your band, your
company, whatever it is that you’re trying to protect needs an LLC is because it creates a liability shield. When I say liability shield, I’m talking
about this proverbial idea of something that is now surrounding your bands, your brand, your company. And, it essentially now acts as a barrier. And so, if, for example, something happens and now we’re talking about someone has a claim against you. They were damaged in some kind of way, maybe they got hurt. Whatever the potential claim or issue is now instead of having that claim directly against you as an individual you have a limited liability company, or
an LLC, to protect you and what you’re doing. So, for purposes of this video,
let’s do a little case study and we’ll say you are a rock band. And, as a rock band, you have all kinds of fun. You get real crazy on stage and things get a little rowdy at your shows whether it’s you on stage, whether it’s your fans. And so, there’s a couple of things they’re probably gonna happen during those types of shows. One of which is maybe some of those rowdy fans decide they want to get on the stage with you. Or, they’re trying to pick a fight. So, you and your band are performing, you’re having a great time. There’s some, let’s say, not so good interactions that happen with some of the people in the audience. Someone comes up to the stage. You see your bassist, your bassist says I’m not gonna deal with this. So, he goes and he kicks the fan in the face, or we’ll just say someone who is there at the show that night. Now that person has a claim against your bass player and potentially against the band as well. So, that person files a lawsuit. You guys know lawsuits are not fun. They’re very long, they’re very expensive. And, you want to avoid them at all cost. But hey, anyone who wants to file a
lawsuit can, so they do. Now, you are wrapped up in this litigation. Who do they sue? So, as an initial matter they’re probably gonna bring claims and try to do it individually. If you don’t have the LLC around your band now you are potentially on the hook for whatever damages ends up being awarded to this particular person because that person now is saying the responsibility of my injury and my harm was you, the band. So, if you didn’t have that LLC,
guess what happens now. Unfortunately, you might end up getting a judgment against you and then that judgment follows you around. We’re gonna talk about the practical effect of that. But, going back to this idea of having a liability shield. If the band is now protected because each one of the members is within this LLC or this company the company now gets sued and so it protects all the individual members that are inside that LLC. Now, the second reason why you need an LLC is because it’s just a good business practice. You’ll find as you go throughout your career that you’re probably gonna end up setting up a couple of different LLC’s. And maybe, there will be one that you do that acts as the company or, kind of that bubble that I had described that you put all of your efforts in for the merchandise. And so, every time you do a contract for your merchandise kind of endeavors you do it on behalf of that LLC. Maybe you do another LLC and that’s just for your music releases. Now, of course not to overcomplicate it, you can just do one. One LLC that operates as the main
functioning company for the majority of your music career. Now, the third reason why you want to start an LLC is because it makes you risk adverse And, so what happens essentially is that because now you have a company protecting you. Let’s say the company gets sued and you lose. And, when you lose you get what’s called
a judgment. And so, if someone has a judgment against you and maybe it’s for more than your company can actually pay sometimes LLC’s go bankrupt. So, the difference ends up being instead of now you, personally, getting sued, losing and now you personally have to go through bankruptcy, it’s only the LLC And, so we go back to the original tip which was, creating this liability shield
around you. It really has to do so very much with if the absolute worst case scenario happens. You get sued, you lose, now there’s a judgement. The LLC is the one that ultimately will go down and it’s not gonna be you. Now most of the people that contact my office are usually pretty earlier in their careers. But, sometimes their people have been doing their music and releasing certain content for a long time and they just haven’t thought to set up an LLC or even needed to. And, that’s a good thing because obviously there hasn’t been any kind of crazy event that’s happened. But, the sooner that you can set one up the better. And remember, actually use it. When you sign your contracts. You sign your contracts on behalf of the company rather than your name individually. So, these are just really prudent, good steps to take to keep yourself protected to keep your fans protected, whatever it is that you’re doing and the purpose of your company. And, of course, now that you know the three important reasons why you even set up an LLC You can keep that in the back of your mind and just rest assured that you’ve now taken a step to really keep yourself protected. Now, if you guys have been following along you saw last week’s video which is why your music career can’t wait. And, if this is a good first step for you to take or to incorporate into your list of things that are very, very high priority, add it to the list. Create your LLC and get going today. Thank you guys for watching this video. I’m gonna get out of here. Don’t forget to subscribe and hit that
Bell notification so you don’t miss any more weekly videos from your favorite redhead. I appreciate your time. I’m Miss Krystle and I’ll see you on the next one. Bye guys.