If you're going to hire a band, learn the nuts and bolts of how to pay them, house them, feed them and keep all the terms of your arrangement clear and binding. Find out what the IRS rules are for contract employees.
As featured in: Performing Songwriter Issue #75, January/February 2003. Visit performingsongwriter.com to order back issues or subscribe.
“Hey, Friend, can you play guitar during my set Saturday night at the HotSpot? I just need you for 45 minutes. Oh--but be there at least 30 minutes before for setup. Oh, and can you rehearse on Tuesday for an hour or so?”
Does that conversation sound familiar-- either on the giving or receiving end? If it does, you have just hired or been hired as a band member. And that might be the last official conversation about the gig--everything after that could be music and gear. Now what?
Hiring a band has a huge impact on your career. The timing of adding more players can be dictated by record labels, managers or personal goals. The actual cost of those players, as well as all the additional expenses associated with extra bodies on the road, all need to be calculated when determining how many and when to add band members to your team.
This article is available with enhanced graphics in pdf format.
Independent Contractor or Employee
How the person is going to be classified--as an employee or independent contractor-- has an impact on the expenses and the amount and type of paperwork you need to handle. You don’t get to decide--the IRS does. There is a handy IRS publication (#1779) which focuses on this question. The answer boils down to control--as in who has control over the worker. There are three main categories: behavioral control, financial control, and relationship of the parties. The following lists the basic differences between the two options:
Independent Contractor (Self-employed)
Musician dictates how the work is to be performed.
All musical gear, racks, amps and consumables (strings, drum heads, etc.) are supplied by the musician.
The musician can accept or decline individual performances at will, since he has a variety of revenue sources.
The training and practice required to be a top-level musician, as well as the cost of the training, are the responsibility of the musician, not anyone else.
All expenses incurred for association fees, travel and other business are the responsibility of the musician.
The ability to realize a profit or incur loss is an indicator that the musician is an independent contractor.
The musician is responsible for any insurance that covers health, business or property.
A contract of work for hire may exist to determine the relationship between the parties.
A 1099-M is issued for income paid to the musician.
No federal taxes are withheld from payments made to the musician. The musician is responsible for making estimated tax payments.
Self-employment taxes are the musician’s responsibility (Social Security and Medicare).
A Schedule C is the IRS tax return that must be prepared for income received as an independent contractor. This is also where the musician can deduct expenses for business.
Employee
Instructions are given as to how, where and when the work is performed.
Musical gear is provided for the use of the musician--e.g., a grand piano provided for a keyboard player on a tour.
Rehearsals are required and extensive for learning the songs in the performance or choreography for a show.
Expenses for transportation, lodging and other travel costs are paid directly by the tour or are reimbursed to the musician.
The musician is paid the same amount per show, or a set amount for the duration of a tour, regardless of what the end profitability of the tour may be.
Insurance, pension or paid leave may be provided for the musician (don’t hold your breath, though--I haven’t found this to be very common).
The employer matches the FICA taxes withheld from the musician’s payroll check, meaning the musician’s share is 7.65 percent (up to annual limits for social security; Medicare has no limits) and the employer pays an additional 7.65 percent that does not come out of the musician’s check.
A W-2 form is given to the musician showing the amount of taxes withheld from the musician’s pay.
Hiring a player for one show every now and then probably falls under the independent contractor rules, while hiring a player for a full tour is an employee/employer arrangement.
Show-days and Off-days
As the tour is planned, the routing will include show-days and off-days. Does a band member get paid for off-days? This depends on several variables, and you as the artist/business owner have complete discretion to decide the answer. Each individual player has a per show payment figure in his head as to what his time and talent are worth, especially if he is traveling. This could be based on what he could make as a session player, or his value as established on other tours. However, a tour has a budget as to how much it can pay each player, and fairness, talent and time away from home are all factors that go into determining show pay for each player. If the tour is routed for two days off every seven days, and the band will be home each of those off-days, then no compensation would be necessary for off-days. However, if the off-days are all out of the hometown, then compensation may be required. This point is completely negotiable between you as artist/business owner and the band. Before you quickly agree to 50 to 100 percent of show pay for off-days, remember that you will not be earning any income during those off days. Work your budget to know what you can afford, and pay your band members fairly, being sure to adequately explain what is and is not being paid for during the tour.
Another off-day scenario: What if you are taking a three-month break from touring, but when you start again, you really want to have your old band back? Band members make their livings one day at a time. Expecting them not to take another gig that may last longer than three months is not reasonable unless you compensate them for being available to you when you start touring again. This is another completely negotiable point, but 25 to 50 percent of show pay during this break is not uncommon, depending on the artists’ financial success thus far. Make sure to budget this cost before you promise to pay during the break.
Rescheduled shows should have an established policy. If a show must be rescheduled due to weather, illness, venue breakdown, travel delays or any other reason, make sure the band members know if they are getting paid for that show. A standard policy in my experience is that “every effort will be made to reschedule postponed or cancelled shows, however, only shows played will be paid.”
Rehearsal pay for time spent prior to the start of a tour is another rate of pay that needs an established policy. This can be anywhere from 25 to 50 percent of show pay depending on the duration of a rehearsal. The number of rehearsal days should be specified as well.
