The music industry is tough, but as long as people have parties, weddings and celebrations, they’ll probably need a DJ. A DJ business is easy to start because all you need is a computer, and it can be wildly lucrative, especially if you manage to nab a club night residency or have a proven knack for getting people amped up at weddings. You’d be surprised how much word of mouth can grow a DJ business, and you probably won’t even need a DJ business loan to get started.

According to Forbes, the 10 highest-paid DJs of 2018 made a collective $260 million. That doesn’t even count the little guys who make a living at children’s birthday parties rather than Coachella. Basically, you don’t need a Vegas residency to make big bucks.

As fun as being a DJ sounds, it’s still a business. You still need a DJ license and insurance in order to legally operate.

As a DJ, you can choose from a number of ways to register your business. You’ll want to do this before you try to get any sort of DJ business loan (which is honestly a hard sell for many lenders considering the volatile nature of the music industry).

Many performers opt for an LLC, which combines different characteristics of a partnership and corporation. As an LLC, you’re not personally liable for company debt, which could be a good thing because DJing might not be instantly lucrative. You’ll only have to pay taxes on your profits.

A DBA or sole proprietorship is also commonplace in the world of DJs. It’s similar to an LLC, but you’re the sole member of the business, and the money you make is passed through to your personal tax return rather than paying yourself a salary. The type of business structure you choose depends on whether you operate as a duo, a group or all by yourself.

Register Your Business Name With the IRS

Once you choose your company’s legal structure, you’ll want to register with the IRS. Depending on the state, you’ll also need to register a DBA (or “doing business as”) with the appropriate state agency. This is a trade name or fictitious business name that you’ll use on your tax forms.

If you’re an LLC, you don’t need a tax ID number. You already get an EIN (or employer identification number) from the IRS. If you’re a sole proprietor, you won’t necessarily need an EIN, but you will want one anyway_._

It’s free to obtain from the IRS website and takes about five minutes to register. Plus, it prevents you from having to give out your Social Security number to get paid at every single gig. Any opportunity to protect yourself from identity theft is probably one you should take.

Apply for a State Business License

DJ business licenses vary from state to state. The requirements are always different, but once you register with the IRS, you’ll probably need to apply for a state business license through your Secretary of State’s office. Check out your Secretary of State’s website for more information on filling out your business license application.

As a DJ, you’ll also be performing out of state, so you’ll be on the hook for various state taxes. You do not have to have a state business license for every state in which you perform a gig, but you will need to register one state as your home base. Be forewarned: Taxes are going to be a headache if you tour. DJs who tour will have to fill out dozens of state tax returns. Getting the business license is the easy part.

Obtain a Local DJ Business License

After applying for a state business license, you might need a local business license. Contact your local government about the specific licensing requirements. They may not require a local DJ business license at all, especially if you’re mostly traveling to gigs.

You Might Need General Liability Insurance to Register

A DJ license and insurance go hand in hand. In order to register for a DJ business license, you may need general liability insurance. This protects you from a potential lawsuit if someone gets injured at one of your gigs (which could be a very real possibility because you never know who’s going to slip on the dance floor).

You may also want to pick up special event insurance. This may be required if you’re playing an outdoor festival or larger event, and you might not get the gig without it. Traveling DJs also have a notorious problem of getting their gear stolen on the road, so property insurance can help protect all your gear and prevent the need for a DJ business loan in the event of theft.

Are You Selling Any Merch?

This is where being a DJ gets kind of complicated. You already have a normal DJ license and insurance, but you’ll need an additional license to sell things that are subject to sales tax (such as T-shirts with your DJ name on them). If you’re selling merchandise, you should contact your state’s taxation department to obtain a seller’s permit.

Since you’re required to pay sales tax in each state in which you sell, you’ll have to keep track of it gig to gig.