⚖️Legal & Compliance
LLC, S-Corp, or Sole Proprietor?
The business structure decision every musician eventually faces — what it means and what to choose.
7 minMarch 2026Intermediate
Why Business Structure Matters
Once you're earning money from music, you're running a business — whether you've formalized it or not. The right structure protects your personal assets, can save you money on taxes, and makes you look professional.
The Options
Sole Proprietorship (Default)
If you earn music income without forming an entity, you're a sole proprietor by default.
- Pros: No paperwork, no fees, simple taxes
- Cons: No liability protection — if someone sues your music business, they can go after your personal assets
- Best for: Very early stage, minimal income
LLC (Limited Liability Company)
The most common choice for musicians.
- Pros: Liability protection, flexible taxation, professional credibility
- Cons: Filing fees ($50-500 depending on state), annual paperwork
- Best for: Any musician earning consistent income from music
- Cost: $50-500 to form (varies by state), $0-800/year to maintain
S-Corp (S Corporation)
An LLC that elects to be taxed as an S-Corp.
- Pros: Can save on self-employment taxes above ~$40K net income
- Cons: More complex accounting, requires payroll, more expensive to maintain
- Best for: Musicians earning $50K+ annually from music
- Cost: $500-2,000/year in additional accounting costs
When to Form an LLC
Form an LLC when:
- You're earning $10,000+ per year from music
- You're signing contracts
- You're hiring people (session musicians, designers)
- You have gear worth protecting
- You're touring (liability exposure)
Practical Steps
- Choose your state (where you live is usually best)
- Pick a name (your artist name works)
- File articles of organization with your state
- Get an EIN (free from the IRS website)
- Open a business bank account
- Keep business and personal finances separate