Tax and Legal Issues for Musicians

Here are a few sample tax and legal issues that indie bands in the US will have to worry about, and where you can find more information:

Taxes – If you make any money at all from your music (payments for gigs, CD sales, merch sales, etc.), you’re required to report the income to the IRS, no matter how small it is. Remember, you can deduct some of your expenses to lower the amount of tax you’ll be required to pay (such as for your equipment, CD manufacturing, travel, and more). Read our past articles on Self-Employment Tax for Musicians and Tax Deductions for Musicians for more information about taxes.

Copyrights – When you write or record a song, it’s automatically copyrighted (as long as it’s written down or recorded – just playing it in a practice session doesn’t afford you any protection). While your common law copyright may be enough, you may want to consider registering your copyrights with the US Copyright Office, as added protection if someone accuses you of stealing their work, or if you find someone has stolen yours.

Trademarking Your Band Name – Do you have to trademark your band name? No. Should you? Maybe. Just like with a copyright, there is also a common law trademark. The difference is that you have the common law trademark once you use the name for the purposes of business, or you announce publicly (and can prove it) that you intend to use the name for business. So, once you accept money under your band name, you’re granted a common law trademark.

Here’s the catch: If someone else already was doing business under that name, and operating in your area in some way (and selling online can make this a gray area, especially if there’s any room for confusion between the two bands), you don’t have any trademark rights. You could even pay the fees to register the trademark, but if it’s proven that someone else was using it first, your registered trademark will be worthless. And since you didn’t do the research ahead of time, don’t think you’ll get your registration fees back (and registrations, plus legal advice and research will often go for as much as $1000).

So, what’s your best bet? Make sure you have a completely unique name. Search sites like Purevolume and MySpace, and see if other artists are using your name. Find out who was using the name first. If it was you, you have the right to trademark it and protect it (to maintain your trademark you’re required to actively defend it … meaning you’ll need to send cease and desist notices to other bands using the name … or you can lose your trademark rights – in other words, you can’t wait around for a competitor you know about to make it big, hoping to sue them for a lot of money. You have to defend it when you discover the infringement.) If you weren’t the first band using the name, you’ll need to change your band name, including on any CDs, merch, and promotional materials. If you don’t, you run the risk of being sued by the rightful trademark holder. For more information about registering a trademark, visit the site of the US Patent and Trademark Office.

For more tax and legal issues that affect indie bands and musicians, read Music Law: How To Run Your Band’s Business by Richard Stim.