How can a band collectively manage their money?

May 2, 2005 6:22 AM

What's a good way for a band to collectively manage their money? Say you've got a newish band who is just now at the point where shows are actually starting to pay off, and want to make sure the money is kept safe so it can be used for necessary band expenses.

No one wants to be completely responsible for everything (at least half a dozen local horror stories about bands who left money in the care of one person), and for various reasons two of the three members can't get any bank accounts with their names on it. They want to make sure the money is kept safe, so it can be used for things like getting shirts and pins made, and studio time. Is it possible to get a bank account in a band's name, or does it have to be individual's names?

posted by Kellydamnit to Work & Money (7 answers total)

You can get a 'dual signature' account. Simply put, money cannot be removed from the account unless two people sign for it.

Banks may overlook the less than perfect history of your band mates for an account like this.
posted by unixrat at 6:27 AM on May 2, 2005

The band could form an LLC (limited liability corporation) and then start an account in the LLC's name (they could likely start an account in the band's name without forming an LLC), but one or more of the band members will still have to have signatory authority for the account and be responsible for keeping the LLC's/band's records. If they don't want to or can't hire a manager, then there's always going to be the possibility that someone can run off with the money. And of course, hiring a manager is expensive and has its own risks.
posted by anapestic at 6:39 AM on May 2, 2005

Much, much easier than incorporating the band is filling out a D.B.A. Form. DBA stands for "doing business as" and allows a person or persons to, as you said, open a bank account under a fictitious name. It seems like an easy first step for y'all at this point.
posted by stet at 9:21 AM on May 2, 2005

You should be able to get a dual signature business account without setting up a corporation. Depending on which state you're in, you might have to register the fictitious name of the business (i.e. the band) with the state. This will be a general partnership, so you will all be liable for anything the band does or debts it incurs. Beware.
posted by grouse at 9:23 AM on May 2, 2005

fyi: setting up an LLC costs upwards of $1000 (at least in CA -- afaik: I haven't actually set up an LLC, but I looked into it earlier this year, and when the price looked to be around a grand, with additional renewing fees each year, i said "fuck it, let them sue me").
posted by fishfucker at 9:55 AM on May 2, 2005

You should also set up a simple list ("ledger") to track expenditures and deposits: six columns

(1) Date

(2) Check # or Deposit #

(3) Purpose of check or source of deposit

(4) Amount of check

(5) Amount of deposit

(6) Balance in the account


And copies of the monthly bank statement should go to everyone, so that they can see (hopefully) that the amount in the bank is roughly what the list/ledger shows it should be [there are typically timing differences - a check written at the end of the month, or deposit made at the end of the month, will be on the list but not on the bank statement, for example].

The person whose name is NOT on the checking account should probably keep this list/ledger.

Once a month, make a copy for each member of the band.
posted by WestCoaster at 2:58 PM on May 2, 2005

Here's something that was helpful to me: we set up a formula. No matter what a gig paid, we first covered all expenditures (such as reimbursing someone for gas, or a hotel room). We then set aside 20% of the remaining take in a "slush fund". This was the band's growth fund, out of which we would buy needed equipment. The rest was divided as our wages.

We also had a verbal agreement that when we split up, anything bought with the slush fund could be sold, and the proceeds divided evenly, or any single member who wanted it could buy it out at purchase price minus their original share. If you have a low level of trust in bandmates, you might want to do a written version of that. It covers everyone, so at the band's demise it's not like the guitar players run off with the amps gratis while the drummer gets nothing.
posted by Miko at 3:21 PM on May 2, 2005