A band agreement is a written deal between band members setting out how gig fees, merch money, royalties and shared costs get split, who owns the gear and the name, and what happens when someone leaves. It works best when it's signed before any money comes in, and a lawyer should draft it or check it so it holds up later.
That's the whole idea. The rest of this article covers the part most explainers skip: how the money actually moves. Clause checklists are easy to find. What bands tend to lack is a clear picture of the path a gig fee takes from the venue's bank account to each member's pocket, and where arguments start along the way. As accountants who work with musicians (an accounting firm for creatives led by a Chartered Accountant and registered tax agent), we see the same mistakes again and again. Nearly all of them could have been settled in a ten-minute conversation before the first show.
Four people who rehearse together, split door money and buy a PA between them may already be running a partnership in the eyes of the law. Each state and territory has its own Partnership Act. Under these Acts, people who carry on a business in common with a view to profit can be treated as partners whether they meant to be or not, and the default rules about who owns band property may not match what the members want (Arts Law Centre of Australia, 2024).
Two consequences matter most for money.
The first is debt. Partners are generally personally liable for debts any other partner runs up in the business's name. If one member puts an expensive amp on a band account and then vanishes overseas, the people left behind can end up paying for it. An agreement can't remove that exposure to outside creditors, but it can set spending limits and approval rules that make it much less likely.
The second is how long the partnership lasts. An agreement that says nothing about duration may leave the band as a "partnership at will", which one member can end simply by resigning. That can force a wind-up and a sale of shared assets at the worst possible moment, such as halfway through recording an album.
Partnership law is state-based, so the details shift depending on where the band operates. A lawyer can explain how the Act in your state or territory applies.
Bands usually split profit equally, music royalties aside. The key word is profit. Profit is what's left after expenses, any loans being repaid, tax obligations and a reserve for future costs. Splitting the gross fee at the end of the night and paying costs out of your own pocket later is how resentment builds. The member who always fuels up the van eventually notices.
A cleaner flow looks like this:
A simplified illustration using round hypothetical numbers: a four-piece plays a show for a $1,200 fee. Rehearsal room hire was $120, fuel was $80 and PA hire was $150, so costs total $350 and $850 remains. The band agreed to hold $150 in reserve, leaving $700, which splits to $175 per member. This ignores tax and GST entirely, and real outcomes depend on each band's and member's circumstances.
Bands with steady turnover sometimes pay members a regular fixed amount instead, compare it with the books every so often, then distribute whatever profit is left over. It smooths out lumpy income, but it only works if someone keeps the books current. Xero or similar software makes the reconciliation far less painful, and a bookkeeper or accountant can keep it honest.
A separate account solves half the problem. The other half is control. The agreement can say who may sign or withdraw, whether one, two or all members must approve a payment, and which expenses band money can cover. Unexpected costs, or anything above an agreed amount, usually need every member's sign-off. Arts Law puts the risk bluntly: "Many band disputes begin with errors in accounting, unintentional or otherwise" (Arts Law Centre of Australia, 2024).
A band that can't agree on who pays for fuel will never agree on who owns the songs. Sort out the small money first.
Merchandise is where informal bands lose the most money without noticing. Someone fronts the cash for shirts, the shirts sell at shows, the cash goes into a tip jar, and nobody can say later whether the stock ever paid for itself.
A band agreement can settle three questions before the first box arrives. Who pays for the stock upfront? Is that payment a loan the band repays before profit is shared, or a capital contribution? And who owns the unsold stock if the band splits up?
Another simplified hypothetical: one member pays $800 for 100 shirts at $8 each. The band sells 60 at $30, bringing in $1,800. Repaying the member's $800 first leaves $1,000 of profit, or $250 each across four members. The 40 unsold shirts cost $320 and are still band stock under the agreement, not the property of whoever has them in their garage. Tax and GST are left out here, and real outcomes depend on each band's and member's circumstances.
Merch also hangs on the band name. The name and its reputation can cover artwork and merchandise, and registering it as a trade mark with IP Australia makes it easier to protect. Who keeps the name when the line-up changes is one of the most fought-over questions in any band, so it belongs in writing from day one.
Royalties sit apart from the gig-and-merch pot, and for good reason. Copyright in a song (the music and lyrics) is separate from copyright in a recording of it. The writer is generally the first owner of the song unless they've agreed otherwise.
Co-writers are treated as equal owners regardless of how much each contributed. If a band wants the main songwriter to hold, say, 75% of a song, that should be set out in a written agreement (Arts Law Centre of Australia). APRA AMCOS guidance points the same way: there's no set formula, co-writers do best agreeing their splits before writing starts or as soon as possible afterwards, and getting something in writing, even an email chain, is far better than memory. Royalties follow whatever split is registered, and changing it later requires every co-owner to agree.
The mistake to avoid: using APRA registration to record how the band wants to share income instead of who actually wrote the song. Arts Law notes that this doesn't comply with APRA's rules and can seriously disadvantage the real writers.
Some bands agree that non-writing members receive a modest share of the writers' publishing income while they remain in the band. Recording income from streaming, sales and licensing can also flow into the band account first to cover recording costs. Both arrangements are legitimate. Both are also complex, and they need proper legal and accounting advice before anyone signs, because income and copyright ownership are separate questions.
The money clauses carry the most weight, but they sit inside a wider document. This table maps the main areas to the question each one answers.
| Area | The question it settles |
|---|---|
| Capital contributions | What each member puts in at the start, and whether more can be required later by unanimous or majority vote |
| Equipment | Which gear belongs to the band and which is a member's own on loan, and who pays repairs |
| Band account and spending | Who can withdraw, approval thresholds, and what band money can't be used for |
| Profit split | Gig and merch profit after costs, loans and reserve, and how it's shared |
| Songwriting and recordings | Writer splits, recording income, and whether non-writers share publishing |
| Band name | Who owns it and who keeps it if members leave |
| Decisions | Which calls need everyone and which need a majority |
| Outside projects | Whether members can play in other acts or release solo work, and how that income is treated |
| Leaving or expulsion | Notice period, gear, payments owed, and responsibility for debts and unrecouped advances |
| Disputes and winding up | Mediation before court, and how assets and debts are divided at the end |
Equipment deserves a closer look because it causes so many arguments. A guitarist's own guitar might be lent to the band, with the band paying for repairs, while a second guitar bought with band money stays with the band unless everyone agrees otherwise. Contributions can also be documented as loans repayable later, which keeps things fair when one member has more cash to put in at the start.
On departures, the default position surprises people. Unless the members have agreed otherwise, someone who leaves generally keeps their rights in the songs they wrote and the income from them. Notice periods, gear, any payout and who carries outstanding debts all need settling in writing, along with whether the band can expel a member and on what grounds.
For disputes, mediation is far cheaper than court, which is slow, stressful and expensive. Many agreements name a mediation process as the first step.
A band operating as a partnership generally lodges its own partnership tax return but doesn't pay income tax itself. According to the ATO, each partner declares their share of the partnership's net income or loss in their own return. Where there's no written agreement, income and losses are generally split equally.
That last point is worth sitting with. An undocumented band still has a split, just one the members never chose.
Some bands outgrow the partnership and set up a company to sign contracts, collect income, pay expenses and pay members. Others have members contract individually. Which structure fits depends on income, risk, plans and each member's own tax position, and a registered tax agent who knows the music industry can explain how the options would apply before anything is set up. GST registration, deductions for gear and what counts as assessable income (the income tax is worked out on) are all questions for that conversation too, rather than for a band group chat.
As for the agreement itself, a lawyer should draft or review it. Arts Law recommends signing it as a deed rather than a contract, which brings its own formal requirements, including witnessed signatures. Getting the execution wrong can undermine the whole document, so this is not a DIY job. Arts Law also publishes templates, including a simpler letter agreement and a fuller partnership deed, which can give a band a starting point to discuss with a lawyer.
The best time to agree a split is before there's anything worth fighting over. When fees are small and the van is borrowed, the conversation is easy. After a sync deal or a sold-out tour, it isn't. A one-page summary of what everyone thinks the deal is, taken to a lawyer for proper drafting, can save a band from the expensive kind of argument later. Clean records in a separate account, kept up to date, tend to make tax time calmer too.
This article is general information only, reflects the rules at the time of writing and does not take your personal circumstances into account.
If your band's books are more feedback than harmony, we'd love to help tune them up. Give the Amplify 11 team a call on (02) 4715 1000 or email [email protected], and let's get your numbers playing in time.
Size doesn't change the underlying issues. Two people who share income and costs can still be treated as a partnership under their state or territory's Partnership Act, and the same questions about gear, songs, the name and departures apply. A shorter document may be enough, but a lawyer can confirm what a two-person arrangement needs.
A new member is generally not bound by an agreement they never signed. Bands commonly update or redo the agreement so the newcomer signs on, with clear terms about whether they share in income from earlier releases, existing gear and the band name. A lawyer can advise on whether an amendment or a fresh document is the better route.
Hired players are usually engaged separately on a fee basis rather than as members, so they generally sit outside the band agreement. How they are engaged can affect obligations such as super guarantee and payroll, depending on the arrangement. A registered tax agent can explain the tax side, and a lawyer can help document the engagement.
Cash still belongs in the band's books. Banking cash takings into the band account promptly and noting the gig, date and amount gives a clear trail for both the members and the partnership return. Receipts for cash costs such as fuel or parking should be kept too. Accounting software like Xero can record cash transactions alongside bank feeds.
Yes, because cover bands still share gig fees, gear, transport costs and often a name and reputation that bookers recognise. Songwriting clauses matter less, but the money flow, spending approvals, equipment ownership and departure terms carry the same weight. A lawyer can tailor a simpler document that focuses on those areas.
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