As much as many of us take part in the music industry because we love it, the bottom line is that it is an industry, and many of us are hopeful to turn our passions into cash. That said, not all of us are Business graduates and, if you’re anything like me, the idea of doing something as banal as your taxes each year is enough to make you sweat. But if you’re a musician and you’re committed to making music your life’s work, then there’s just no escaping the business side of things. The idea of setting up your band as a business can be extremely daunting, and it’s easy to make mistakes, so let this article act as your reference point and guide you through the process. Grab a snack, crack your knuckles, and let’s get into it.
1. Applying for an ABN/TFN
As soon as you decide you’re going to “really DO this music thing”, and your intention is to make a profit from it, get yourself an ABN. Visit the ABR website to start your application. If you’re a solo artist, you can select Individual (Sole trader) as your type of entity for taxation purposes. If there’s more than one of you, select Company, Partnership, Trust or other organisation. According to music lawyer and artist Jackson Walkden-Brown [Legals Course], for most bands at the start of their careers, a Partnership is sufficient – although later in the game it may be worth changing to a Company or Trust, with consultation from an accountant and lawyer. For now though, for most bands your organisation type, unless you’re related to all your fellow band members, will be Other partnership.
If you’re an Australian band (which, assuming you’re reading this and are applying for an ABN, you are) then you’ll be carrying out your activities in Australia unless you’re planning to move elsewhere.
When you come to the “nature of your activity” question, select In the form of a business. Take careful note of the questions about whether you’re carrying on a business or intending to. Hover over the “?” icons to help you answer the questions honestly. An ABN isn’t much use to you if you’ve obtained it under false circumstances. (Plus it’s illegal!)
If, according to the information you provided, you’re eligible for an ABN, you’ll be taken to a screen that gives you the option to print your answers. Do this, and keep it in your business records. Do this every time you’re given this sort of option on any application process you go through.
At the next step, you’ll be asked if “the applicant” has an ABN already or previously had an ABN. If you’re not a solo artist, unless you’ve held an ABN for this particular band before, select no. In your case, “the applicant” refers to your band – your business. If you ARE solo, and are operating as a sole trader, then if you have ever held an ABN before, select yes. In your case, “the applicant” refers to you, because you are your own business.
Same deal with your TFN. If you’re solo and sole trading, this TFN is the same one you give to your employer when you get a new job. If you’re not sole trading, you need a new TFN, and luckily for you, you can apply for one at the same time as your ABN.
Unfortunately, being a musician doesn’t qualify you for being exempt from income tax! And being in a band isn’t generally a non-profit operation. Make sure you don’t register for any of the taxes that come up as options. If you use a tax agent, or have found one that you’d like to use, enter their registration number in the field provided. Honestly, this is a worthwhile practice. Tax agents aren’t too costly, their fees are tax refundable, and they take away a lot of unnecessary stress.
On the “Business activity details” page, you’ll be asked what date you need your ABN from. If you want your ABN as soon as possible, leave this as today’s date. I’m assuming you’re going to want to answer ‘no’ to the question about whether you’re controlled by any level of Australian Government – unless you’re wrapped up in something that goes all the way to the top!
There are a few options that will work when you come to this step. If you’re solo, “Musician – own account” is the go, and “Musicians or musical group operation” is your best bet if you’re in a band.
Next, you’re prompted to give your business address. As the website states when you get to this part, this can be a home address but can’t be a PO Box or anything of that sort. You can make this your tax agent, yourself if you’re a solo artist, or if you’re in a band, you can decide who will be responsible for the filing of important paperwork, bills, receipts, invoices, and make the business address their home address. You also need to give either an email – now’s a good time to set up a joint Gmail account for the band if you need to – or a phone number, if you are so inclined to delegate one to the business.
On the Associates page, make sure to enter the details of every member of the band as “partners” if this is what you want (or just yourself if you’re solo). The whole ABN application process will go a lot faster if you provide each associate’s TFNs, but you are given the option to provide residential addresses if this isn’t viable. Remember though, not every member of the band needs to be a partner – it’s up to you. Music lawyer Darren Sanicki says [in our Legals Course]: “You’d be amazed – often you go to a gig and you might see six or eight people on the stage playing, but does that mean all of those six or eight people are the band? More often than not, the case is no. (There) might be only three or four people (as) the core members of the band, and two or three others are just session musicians that are being paid on a gig by gig basis.”
Finally, you’ll be asked to select the reason for your ABN application. To receive payment for services might be all you’re really after here, but if you’re going to making your music career into a real business then pick New Business in Australia.
When your ABN is approved, you can always access it on the ABN Lookup.
2. Auskey, Business Names, and Trademarks
Once your ABN is set up, you can start registering for your other obligations. You won’t need to register for GST unless your turnover is greater than $75 000, but you will need an Auskey that will identify you when you’re using government online services. All partners (or just you as a sole trader) are able to register for an Administrator Auskey. (*An important tip here is that the Auskey site doesn’t work across all browsers so if you’re having troubles, use a different browser.)
Another thing you’ll need to do, unless you’re a solo artist who operates under your normal, everyday first and last name and nothing else, is register your business name. The cost of doing this is $34 for a year, or $78 for three years. So if your name is Kate Smith and you make music under the name Kate Smith Sounds, you need to register the business name Kate Smith Sounds – but if you just go by Kate Smith then you’re good to go. However, be aware that registering a business name isn’t the same thing as owning that name – if you want your band to be the only one called Pet Rock and the Anti-Socials (I haven’t trademarked that one so go right ahead if you want) you need to register it as a trademark with IP Australia.
Be sure to check with ASIC and IP Australia that the name you want isn’t already taken, too. IP Australia have two ways to check this: TM Check and ATMOSS. They recommend you use both to be sure. On TM Check, it’s as simple as typing in your desired business name and choosing the ‘Education, sport, recreation and entertainment’ option under the ‘Services’ list. ATMOSS is a more comprehensive search tool, and you can nominate to search for the exact word/s you’re using in your business name, phonetic word matches, part word matches, and even part or exact image matches.
3. Other obligations and processes
In today’s climate, it’s pretty much essential that you have a solid web presence. If you’re creating your own site, be sure to register with AUDA for a .au domain name. In any case, make sure you set up a Facebook page, Twitter and Instagram (at the very least) for your business.
Every different kind of enterprise has different legal obligations that they need to fulfill. ABLIS has a fantastic search tool that will provide you with all the information you need to go about doing this. Using “musicians” or “band” as your search term and entering your postcode will allow you to request information about what you’re required to do as a business. Select whatever options and information sections that are relevant to you. Remember that if you intend to employ the services a manager at some stage, this counts as an ‘employee or contractor’.
If you’re unsure about whether something is relevant to you or not, select yes and read the provided information to find out. It’s always better to be safe than sorry in these cases. It’s also important that you get equipment, public liability and indemnity insurance for your business. Read about the basics of these obligations here.
Once you’ve got your ABN, TFN and registered business name, it’s time to set up a bank account for your business. This is relatively simple, but is slightly different depending on which bank you decide to do business with. If, for example, you go with the Commonwealth Bank, you can set up a Business Transaction Account and have each member of the band be a signatory to it, so you can all make withdrawals. This is a matter of personal choice, though – some bands prefer to have one member be a signatory. If everyone wants to be a signatory, it’s best that you’re all present at the time of opening the account, but if that’s not possible, then the other members can be added later. If there are less than two directors of your business (as confirmed by ASIC), the whole process can be done online.
5. Partnership agreements and state organisations
If you’re a band, it’s best that you lay out your obligations to the business and each other in a contract. AMIN has some fantastic resources for this purpose. Find their Legal Pack here, including a Band Partnership Fact Sheet and Checklist.
Finally, be sure that you register with your state’s music organisation, as well as others such as AMIN, AMRAP, who distribute and promote Australian music to various radio stations, and of course the all-important APRA AMCOS in order to make sure you get paid any royalties that are owed to you.
Setting up your music as a business is a lot of work – there’s no disputing that. And of course, this article is by no means exhaustive – there are a plethora of other services and organisations you can and should engage in. All the applications and website hopping and beaurocracy dealings might leave you exhausted, but at the end of the day, if you get to do what you love, the hoops you’re required to jump through to get there aren’t so scary after all.