“When signing to a label, the danger is not knowing the legal intricacies and ramifications of what you’re getting yourself into. Don’t use a lawyer who doesn’t encourage you to ask questions. Make sure you understand every single clause of your contract, understand what it is you’re being bound to and be sure to ask around the industry to check that your contact is acceptable. A big problem is young bands and musicians feel so indebted to record companies and publishers they feel honoured to be receiving funds for anything at all – remember, these industries wouldn’t exist if it weren’t for musicians like yourself. Don’t take the first thing offered to you if it’s average. If you value your songs and your talent, holdout for something better.”
Stephanie Ashworth, Something For Kate
Once you have a registered business name and an ABN you need to set up a bank account in that name to be used exclusively for earnings and expenses made under that name. A cheque account is best and the account should have more than one person as signatory if it’s for a band. A cheque account is preferable because you can easily keep track of expenses written in the cheque book and match them to the monthly bank statements. It’s not a good idea to have an ATM card on the account as it’s more difficult to keep track of cash withdrawals and expenditure. For cash expenses or earnings, such as gig payments, merchandise sales, etc, you should keep an invoice/receipt book. This is also good for keeping track of incoming cheque payments. With your monthly account statements, your invoice book and any receipts collected from money spent, you’ll have everything you need to keep accurate accounts which can then be used to do your tax return at the end of the financial year.
You may find it useful to have an initial meeting with an accountant to help you set up your business. They can also advise you of your responsibilities regarding the collection and payment of GST. You should then only need to see them once a year at tax time.
There aren’t many occasions when an artist needs a lawyer but whenever you’re presented with a contract that affects your career or earnings over a long period of time you must seek legal advice. This includes contracts with recording and publishing companies and also contracts between an artist and management.
Most contracts contain terms that may not be fully understood by the average person. This is why you must have any contract explained to you by someone who not only understands the law but also the music industry.
All contracts can and should be negotiated. If someones gives you a contract it will always be written with their best interests in mind. For example, they may want 25 per cent of your gross earnings when really you should only be paying between 15 and 20 per cent. It’s up to you to negotiate a better deal for yourself and this is when someone with knowledge of the law and the music industry is needed to help you obtain the fairest deal. The important thing to remember is: never sign a contract before you have shown it to someone who can explain it to you in detail and you fully understand exactly what you are signing and the effect it will have on your future career.
KEEPING DETAILED AND ACCURATE ACCOUNTS
This is possibly the least interesting job for any artist but it is one area that can cause you many problems if not done properly from the start.
When setting yourself up as a professional act, you need to register the name you will perform under as a business. Under the Victorian Business Names Act 1962, you must register a business name with Consumer Affairs Victoria, except if you conduct a business under either your personal name (but if you add something to a personal name, such as ‘Group’, ‘Quartet’, then it must be registered) or a company name registered under the national Corporations Act 2001, administered by the Australian Securities and Investments Commission. A business name can apply only in the State where it is registered.
To carry on business in another State, the Business Name must also be registered there. For a young band, setting up a company (pty ltd) is complicated and pricey. A business name registration is generally enough, and is relatively cheap.
Having a business name means all money earned or spent can be kept separate from your personal accounts. This is particularly important if one member of the band is handling the money or if a manager or other third party is looking after the accounts. You’ll also need to register for an ABN (Australian Business Number) in the name of your business. This can be done through the Australian Taxation Office at www.ato.gov.au or by calling 132 866 for advice. You don’t have to register to be able to collect GST but you should talk to the ATO about the possible advantages of collecting GST so you can claim back any business related GST that you’ve been paying.
Contact Consumer Affairs Victoria on 1300 361 673 or at www.consumer.vic.gov.au. They can also advise you if the name you’ve selected is already registered by someone else. You can contact the ASIC Infoline on 1300 300 630 or at www.asic.gov.au.
ACCOUNTS & LEGAL – A Summary
- Registering a name with Consumer & Business Affairs, Victoria
- Getting an ABN
- Setting up a bank account
- Having contracts examined by a lawyer