FROM THE DESK OF

UNRAVELING THE RED TAPE

HEAD

by: Shelly Harris / Entertainment Attorney

In past columns, I have often discussed several issues pertaining to the definitions and advantages/disadvantages of setting up your band or your particular entertainment-related business as a formal and separate “legal entity” for liability, tax-related, or other financial reasons. To recap, most states (and the IRS) will either define your business legally and for tax purposes, as one of the following: sole proprietor, partnership, Limited Liability Company, Limited Liability Partnership, S Corporation, or Corporation.

Except for the first two (which also do not provide any legal protection from personal liability), these entities (which are considered separate from you as an individual) require specific filings with the Secretary of State and the IRS. Although I will revisit the pros and cons of designating your band or business as any of the above in the next column, for now I would like to direct you to some very helpful – and Free! – resources for educating yourself on these small business types, their tax advantages and disadvantages, and even resources for helping you better manage your business once it is formed.

First of all, nearly every state now has an online link to its Secretary of State’s office and supplementary information, including special information for small businesses. Just do an online search with the words “Secretary of State” and the name of the state where your business will be located, and “small business”, and you will find an immediate link. For example, the Indiana Secretary of State has a business index at its site full of user-friendly information at: www.in.gov/sos/business/index.html.

You can find more details there on the requirements of filing Corps, LLCs, or LLPs in Indiana, distinctions, or even research your business name to make sure it is not already in use. In addition, another link from that site will take you to “An Entrepreneur’s Guide to Starting A Business in Indiana” or just go to: www.in.gov/sos/business/corps/guide.html.

There you will find forms and detailed definitions and requirements, etc., too numerous to mention here.

Finally, the IRS itself has a great link for small business owners, or those thinking forming a legal business entity, and provides information not only on tax consequences, forms, and the “how to” aspects of your prospective business entity, but also provides free interactive CD ROMs that you can order or view online.

First go to: www.irs.gov/businesses/index.html and browse the topics, but I would also strongly suggest you look at the “related topics” menu on the side bar and the “starting a business” and “operating a business” tabs.

Or if you would like to cut to the chase, go to: www.irs.gov/businesses/small/article/0,,id=101169,00.html for online viewing or for ordering the CD ROMs mentioned at the beginning of this column.

TOPICS INCLUDE:

1) Small Business Tax Calendar.

2) Small Business/Self-Employed Electronic Marketing Card.

3) Virtual Small Business Workshop CD.

4) Small Business Resource Guide CD.

5) Introduction to Federal Taxes CD.

6) Home-Based Business Tax Avoidance Schemes Brochure, etc.

Help yourself, and help your attorney or tax professional help you, by looking over some of this very insightful and easy to understand information for those items which best apply to your band or entertainment-related business!

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