Taking a Listen to the Business Side of Being a Musician in California
It’s no secret that California attracts aspiring musicians from around the world who dream of building successful music careers. While talent and passion are essential, long-term success also depends on understanding the business side of music. Many artists are surprised to learn that being a musician is not just an art—it’s a business.
If you’re serious about building a sustainable music career, it’s important to approach it with the same professionalism as any full-time occupation. Doing so can protect your finances, improve organization, and open doors to funding opportunities.
Treat Your Music Career Like a Business
As artists begin their journey in the music industry, they must understand the legal and financial responsibilities that come with running a legitimate business. Successful musicians treat their careers as professional enterprises, complete with contracts, financial records, and long-term planning.
To protect personal assets, many artists form a legal business entity such as a Limited Liability Company (LLC) or Corporation. These entities separate personal finances from business obligations and reduce personal liability.
What Is a Loan-Out Company?
In the entertainment industry, many artists operate through what’s known as a loan-out company. This business entity enters into contracts on behalf of the artist. As a result, the company—not the individual—is responsible for contractual obligations and debts. This structure protects personal assets if issues arise. For example, if a band performs at a venue and equipment is damaged, liability rests with the loan-out company rather than the individual band members, assuming the contract was properly structured.
Financial & Tax Benefits for Musicians
Operating through a business entity allows musicians to:
1. Open a business bank account under the company name
2. Track income and expenses more efficiently
3. Deduct legitimate business expenses such as studio time, equipment, travel, and marketing
To avoid the IRS classifying your music career as a hobby (which limits deductions), the business must demonstrate an intent to generate profit. Even if losses occur early on, documented expenses and proper records may still qualify for deductions.
Keeping organized financial records, saving receipts, and using a dedicated business debit or credit card can help ensure compliance and simplify tax reporting.
Business Structure & Intellectual Property Management
A formal business entity operates under written agreements—such as operating agreements or shareholder agreements—that define:
1. Profit and loss distribution
2. Decision-making authority
3. Ownership changes
4. Intellectual property rights
This structure is especially important for bands and partnerships, where multiple individuals share creative and financial responsibilities. It also helps manage intellectual property like recordings, videos, logos, and merchandise.
Maintaining Corporate Compliance
While business entities provide legal protection, it’s essential to follow state-specific corporate formalities. Failing to do so may allow creditors to “pierce the corporate veil” and access personal assets.
Best practices include:
1. Maintaining separate business and personal accounts
2. Documenting annual meetings and decisions
3. Using the entity solely for legitimate business purposes
Some record labels and partners may also require artists to operate through a registered business entity for payment and accounting purposes.
Applying for a Business Loan Using an EIN
An Employer Identification Number (EIN) allows a business to apply for loans and credit independently of the owner’s personal Social Security number. EIN funding is only legal when used by a legitimate business entity.
When applying for a business loan, you’ll typically need to provide:
1. Your EIN
2. Business formation documents
3. Business license (if applicable)
4. Company start date and industry type
In some cases, lenders may still request a personal guarantee or Social Security number, especially for newer businesses.
Building Business Credit with an EIN
Many businesses begin building credit by applying for EIN-based credit cards. Common starting points include office supply stores, fuel cards, and retail credit accounts before moving on to major credit cards and larger financing options.
Funding Options for Creative Entrepreneurs
If financial limitations are holding you back, there are alternatives. With decent credit and a registered business, you may qualify for:
1. Small Business Loans
2. No Documentation (No-Doc) Loans
3. EIN Number Funding
4. Unsecured Business Lines of Credit
Our goal is to provide the education, tools, and funding options needed to turn your creative vision into a sustainable business.
About Unsecured Finances
Unsecured Finances brings over 10 years of experience helping entrepreneurs secure funding solutions. We specialize in:
1. Unsecured Business Loans
2. Start-Up Business Loans
3. No-Doc Stated Income Loans
4. Lines of Credit from $10,000 to $500,000
5. No assets or collateral required
Apply on our website to find out if you qualify, or call today for a free consultation: 1-888-294-2584
