Band Finances and Property
I hope someone here has an opinion or suggestion for me based on some practical experience. I am in a band that is starting to make some money playing gigs. Which is good, but to get the next level, we will have to start investing money in equipment and expenses of the band. As a band, we would like to upgrade our PA system first. My concern is that sooner or later band members will change. So I am wondering how a \"working\" band goes about buying \"band\" equipment fairly and how to keep the peace with ex-bandmates financially if they have to leave the band. At this point, none of us feels that a single person should bear the total cost of a new PA system, but I can foresee problems of everyone in the band kicking in for a PA system and then someone has to leave later.
I figure now is the time to ask some of you with experience, good or bad, about this before we make some bad decisions. We would hate to lose a bandmate and it would be worse to lose a friend over money. Any advice or suggestions? Thanks.
I figure now is the time to ask some of you with experience, good or bad, about this before we make some bad decisions. We would hate to lose a bandmate and it would be worse to lose a friend over money. Any advice or suggestions? Thanks.
Comments
Option 2: use the accounting equation. I'm an accountant by profession, but I don't want to bore you with technical talk. If you ever take an Accounting 101 course, here's the one thing you have to understand to pass with flying colors.
Everything that a business (in this case, band) has comes from either participants (in this case, band members) contributing money to it, or owing money to someone else (usually credit cards). I'm guessing your band doesn't have a credit card or line of credit, so mostly source #1 will be how you get stuff. If a band member uses his own credit card, that's still his contribution - equity, in accounting terms. So, your assets (equipment and band's money) will always equal equity (band member contributions).
Let's take a three-piece: singer/bassist Joey, guitarist Alex, and drummer Neil. Take a sheet of paper (use a spreadsheet if you're a geek like me) and start a column for five items:
* Name of piece of equipment or other asset (such as profits from gigs)
* Amount the equipment costs
* Joey's contribution
* Alex's contribution
* Neil's contribution
If a member changes, just add another column for the new guy/girl.
Each time you have a gig, put the date of the gig and location in column 1, amount the band made in column 2, and split the total of the amount in columns 3, 4, 5 into either three equal parts or whatever you agree on (see option 1).
Each time you buy something, put the date of purchase and name of the equipment in column 1, negative amount paid in column 2, and in columns 3, 4, 5 respectively what each band member contributed (also negative).
If there are major expenses (transportation, repairs, etc), treat them as if they are equipment purchases
If you start a bank account for the band, and a band member deposits an amount into it (whether gig proceeds or own money), do the same thing you do with gig profits. The point is to accurately track who contributed what.
This allows for the following:
* Adding up all amounts in column 2 will give you the total amount of money the band made (or, at first, lost)
* Adding up all amounts in columns 3, 4, 5 will give you the total amount of money each of the band members made, or lost
* Column 1 will help you explain to the begrudged band member, down the line, exactly where the money went and how much, at most, the band owes him for equipment. It will also help you divide the stuff up if you ever split
Save receipts from all purchases, repairs, gas money, band dinners, bank deposits, etc - it's up to you how far you want to take this. Sometimes it's easier to take turns buying gas and food than recording every single dollar-menu adventure.
I realize this isn't exactly a fail-proof double-entry system, but to me this is something most non-accountants can make sense of.
Most importantly, associate yourself with good people - it makes all things easier in the long run, music and business.
Trust me, they definitely will. It happens every single time. Follow iliace's advise, he's right on the money.
Bands I have been associated with have had a terms of agreement on equipment, vehicles, leases, Studio time. New equipment purchased are solely based on a few things:
Since Each member can lay claim if they want; a drummer for sticks, heads and expendables (as we call it) ; guitarist for strings, maintenance etc etc . To avoid the usual arguments Only NEW property acquired by the group fell into the agreement of participating member shares/financial obligations.
If a new monitor system was gained, we all participated. Basically anything the group benefits from as a new purchase was divided. IF a member was constrained and a purchase still made, that person did not become part of the division if the band went separate ways.
If any member left for their own reasons or fired, they forfeited any returns on purchases.
You have to have agreements set to keep the peace. Sometimes its just easier for one guy to use his/her CC and get what they need. It's theirs and they keep it. Repairs on the other hand, can be a member participation and it makes sense. Things like a blown speaker or damages to mic's/cables are usually shared expenses.
I've not had this in simple cover bands but when going the pro route it was like a taxation of sorts. They pull it out and you never see it missing from your paycheck. In my case, touring expenses, roadies, vehicle maintenance health care and life Ins for roadies, techs crew was absorbed by the group..not the production company! So if you ever thought about why some of these bigger bands went broke..... (one of many undefined reasons bands had an issue with Napster and piracy for years).
OT- the Judas Priest wrongful death suit (suicider)cost the group 1.2 mil in legal services! For an acquittal !! That was a member expense according to GT.