From the course: Taxes and Accounting for Music
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LLCs and corporations
From the course: Taxes and Accounting for Music
LLCs and corporations
- Tax rules are different for music businesses that operate as corporations. The corporate music business is taxed once when the corporation files its corporate tax return and the income is taxed again when the owners of the business, the shareholders, report their corporate income on their individual tax returns. In other words, the IRS considers a corporate music business as a separate tax-paying creature. This may seem unappealing. Why participate in a music business where income is taxed twice? But in practice, a corporate structure can save a musician money. Particularly if the musician earns profits and leaves a chunk of that money in the business each year. Aside from these potential tax benefits, many musicians form corporations because they limit personal liability from lawsuits or other financial claims. For that reason, a musician or a band that does a lot of touring may form a corporate touring company to shield against lawsuits. An exception to corporation rules occurs if…
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