Limiting the band's liability
When you operate your band business as a partnership, a creditor can collect a partnership debt against any band partner. The same is true for any lawsuit judgement against the band. Keep in mind, we're talking about band debts and obligations. Not non-band personal debts. Here are a few things band members can do to minimize your band's risk. Form an LLC or corporation. Unlike partnerships, limited liability companies, LLCs and corporations, shield individual band members from business debts and lawsuits.
Forming one of these liability limiting businesses usually requires the assistance of a lawyer or a business formation service. You can find one online. Expect to pay several hundred dollars to form one of these entities. Maybe more, depending on your state law. There are also fees and legal work involved in dismantling these entities should the band break up. Maintaining a LLC or corporation may also be expensive. For example, in California there is an annual LLC fee of $800.
Source: https://www.linkedin.com/learning/music-law-managing-a-band-s-business/limiting-the-band-s-liability