Why Lyricists Need a Business Setup in the First Place
Whether you’re
scribblin' hooks in your bedroom or landing sync deals on Netflix, being a songwriter
or lyricist today means you're runnin' a business—even if you didn’t sign
up for one. And just like any biz, how you structure that business can
decide how much tax you pay, how protected your assets are, and how serious
others take your craft.
So the question ain’t
just LLC vs Sole Proprietor…
It's more like: Do you wanna grow this thing or let it slip through the
cracks?
The Two Main Options: Sole Proprietor vs LLC
Let’s break 'em down
real clean.
1. Sole Proprietor (a.k.a. the default)
If you’ve ever gotten
paid for lyrics but didn’t set up anything legally, congrats—you're already a Sole
Proprietor. It’s the easiest, zero-cost way to start. You just… exist. And
pay taxes on your own return.
Pros:
- Easy and cheap (no formal paperwork)
- Use your personal bank account
- Fewer tax filings
Cons:
- No separation between your money
and your biz
- You’re 100% liable if someone sues
- May look less legit to labels, sync
agents, or investors
Think of it as
freestyling—quick, no setup. But risky if you blow up.
2. LLC (Limited Liability Company)
An LLC is more formal.
You register with your state, pay a fee, and boom—you’ve separated yourself
from your business.
Pros:
- Protects your personal assets (someone
sues? They can't take your crib)
- Tax flexibility (can choose how you’re
taxed)
- More professional—easier to land contracts
and brand deals
Cons:
- State fees (usually $50–$300/year)
- Requires bookkeeping, separate bank
account, EIN number
- More paperwork (but once it’s setup, it’s
chill)
Real Talk: Which One’s Best for Lyricists?
If you’re just
starting out, got a few hundred bucks from gigs or streaming, Sole
Proprietor might work. Keep it light, track your earnings, and focus on growth.
But if you’re makin'
over $5K/year from your lyrics—or plan to—and you’re serious about turning this
into your main hustle? Go LLC.
✅ It’ll protect your beats, your words, your
royalties.
✅ You’ll look pro when sending invoices or signing
contracts.
✅ Plus, it helps for tax write-offs: studio time, beat purchases, travel—all
deductible under your LLC.
How Other Songwriters Do It
Plenty of pros make
the switch once their income becomes regular. In fact, in our post “How Lyrics
Writers Earn Money in 2025”, we talked about how many use an LLC to protect
their growing royalty income.
You’ll even see the
same approach in our post on choreographers, where formal structure helped
negotiate better rates and ownership rights.
What About Royalties & Copyrights?
An LLC can own your
lyrics, too. That means you can:
- Sell them under a company name
- License them to labels or films
- Transfer them legally if needed
In our article, “Copyright Insurance for Lyricists”, we mention how using an LLC helps centralize protection and management of lyrics as assets.
You can also insure
those rights, just like how we broke it down in “How Insurance Can Safeguard
Your Royalties”.
Tax Tips for Lyricists Choosing a Business Setup
- Sole Props file with Schedule C on their
personal tax return
- LLCs can choose to be taxed as a sole
prop, S-Corp, or Partnership
Pro tip? Once you're
making $40K+ a year, having an accountant set you up as an S-Corp
(through your LLC) can save thousands on self-employment tax.
Want more? Our
detailed breakdown in “7 Money Lessons From Music That Made Rappers Millions”
touches on tax-smart moves many artists overlook.
External Sources That Help
For a deeper dive,
check these external gems:
Choose Structure, Protect Your Passion
Being a lyricist ain’t
just art—it’s intellectual property ownership. The sooner you treat it
like a business, the more you protect your ideas and bag.
🎤 Want more insights like this? Keep scrollin’
through our homepage
and explore gems like:
- Best Lyrics Suppliers for Musicians
- Can Writing Breakup Songs Make You Rich?
- How Do Song Composers Make Money?
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