 The Clarinet BBoard
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Author: Hank Lehrer
Date: 2021-11-18 18:41
Hi All,
To make a long story short, I've been a member of a clarinet quartet that we formed just a year ago. All of us are seasoned clarinetists with music degrees, lots of playing experience, and have held principal chairs of one kind or another.
But things have gotten a little out of hand. We played a few public gigs but surprisingly, we began getting calls for all kinds of things. We have had some honorariums and some local sponsors already. But the idea of more substantial ongoing funding has suddenly seemed like a possibility. Our targets audiences for funding and performances are local charities, schools, and public organizations.
While we will never get rich here, the quartet members enjoy doing community service and are just interested in clearing expenses.
Should we get a 501c3 and/or form an LLC? Your thoughts, please.
Hank
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Author: Paul Aviles
Date: 2021-11-18 19:26
On a basic business level you want an LLC to protect yourselves from personal liability (don't want to be on the hook for monies if the business goes south). But in your case since you are looking more to be a non-profit, you'd probably want the 501c status. It also tells everyone else where you guys are coming from.
................Paul Aviles
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Author: Steven Ocone
Date: 2021-11-18 21:54
An LLC would be simpler. Or perhaps a "partnership"(which can include everyone). Or one person could own the business (sole proprietorship would be fine) and subcontract the others. The sole proprietorship would be the simplest - no legal fees needed to set up a business and no separate tax numbers. The owner of the business would need to include a schedule C with their 1040 (a fairly simple form).
Steve Ocone
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Author: rmk54
Date: 2021-11-19 04:07
Keep in mind that if you set up a 501(c)3 you will need to establish a board of directors, which means you could lose some control of the group.
I know of at least one instance where the board ultimately fired the group's founders.
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Author: jeig
Date: 2021-11-19 08:36
You can get a fiscal sponsor. It is sort of baby steps toward 501c3. Look up the organization Fractured Atlas. They provide a lot of services for a pretty low fee that might work for your group. Especially if you don’t want to deal with taxes, bank accounts… It might not work for what your ensemble needs, but it is an option worth considering.
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Author: Hank Lehrer
Date: 2021-11-19 16:21
Thanks for the great ideas shared above. Lots of little tidbits to consider.
Your advice is greatly appreciated.
Hank
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Author: davyd
Date: 2021-11-19 20:48
The concert band I play in is (as I write this) considering LLC. How much is that likely to cost, up front and recurring? Or is it not that simple?
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Author: bradfordlloyd
Date: 2021-11-20 01:51
I run two nonprofits as my day job, and both are 501(c) organizations (one is a 501c3).
It is not simple getting 501c3 status. It requires a bunch of paperwork for the IRS, and they have to make a determination,. As stated above, you DO need a Board of Directors, as it's a part of the way these organizations are formed and to ensure that they deliver against their charitable missions.
Especially if you are looking to take in donations to fund some or all of your activities, a 501c3 can be helpful. It also simplifies taxes for the organization (to a degree). You can also apply for tax-free status in many states after your 501c3 status is granted that can save the group a significant amount of money.
TL:DR -- It's a lot of work to get a 501c3 status, but it can be well worth it.
Good luck. Let me know if I can assist.
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Author: Hank Lehrer
Date: 2021-11-20 02:27
Bradfordlloyd,
Your words are extremely helpful and insightful. We have reviewed the 501c3 paperwork and our state's requirements. There are some daunting tasks ahead and we are considering the benefits and tradeoffs.
One of our quartet members is a lawyer and the other three have written proposals and/or managed many sizeable government (local, state, and federal) grants. We are approaching things very cautiously.
Thanks for the excellent advice.
HRL
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Author: Chris_C ★2017
Date: 2021-11-20 03:46
It all sounds very complicated! In the UK things are much simpler... for a quartet earning significant money the simplest thing is for each member to put it on the annual tax return (income and expenses). Setting up a Limited Company in the UK is very easy - 20 minutes and £15 if you want to be very formal and are a truly commercial organisation.
A non-profit is a bit more complicated - you have to register with the Charity Commission (for England, Wales, Scotland or Nothern Ireland, which all have different legal systems) - but then qualify for some tax advantages, so most amateur orchestras and bands go that route.
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Author: Bennett ★2017
Date: 2021-11-20 21:12
I wonder whether you could just list your earnings as charitable donations, just as you can deduct mileage traveling to a charitable event?
Just a thought and perhaps totally wrong.
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Author: elmo lewis
Date: 2021-11-20 21:30
¿How about an S corporation? www.investopedia.com/terms/s/subchapters.asp
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Author: Hank Lehrer
Date: 2021-11-20 22:59
All good ideas and lots of options to consider. I suspect eventually we will end up using the Law of Parsimony.
Hank
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Author: SunnyDaze
Date: 2021-11-21 00:25
I wonder if it would also be worth considering whether you really want to get into money at all (just a thought)? I think it changes the vibe considerably when a totally volunteer group starts to get into the complexities of having proper money. I think it's probably worth thinking really hard about what you really want from the group before you go that way, so that you are all absolutely sure about what you want.
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