Wilco was formed following the breakup of the influential alternative country music group Uncle Tupelo. Singer Jay Farrar quit the band in 1994 supposedly because of a soured relationship with co-singer Jeff Tweedy. Both Tweedy and Farrar sought to form bands immediately after the breakup. Tweedy was able to keep the entire Uncle Tupelo lineup sans Farrar, including bassist John Stirratt, drummer Ken Coomer, and multi-instrumentalist Max Johnston. The band was tempted to keep the Uncle Tupelo name, but ultimately decided to rename the band. The group named itself "Wilco" after the CB radio voice procedure for "I Will Comply".
Wilco made its live debut on November 17, 1994 to a capacity crowd at Cicero's Basement Bar in St. Louis, Missouri (the band was billed for the occasion as "Black Shampoo").
During the two hundred-date tour supporting A.M., Tweedy began to write songs for a second album. The lyrical theme of the songs reflected a relationship between musical artist and a listener; Tweedy chose this topic because he sought to eschew the alternative country fan base. Ken Coomer elaborated:
The whole No Depression thing was funny to us because people seemed to forget that Jeff was a bigger punk-rock fan than a country fan. It led to things like us all switching instruments on "Misunderstood," where I'm playing guitar.
A number of songs were recorded with this theme, including "Sunken Treasure" and "Hotel Arizona", However, Wilco also recorded a number of songs in the style of A.M. Wilco named the album Being There after a Peter Sellers film of the same name. The band went through some personnel changes during the recording sessions. Max Johnston left the band because he felt that his role in the band had diminished in favor of Bennett; he had also been replaced by violinist Jesse Greene on one track because the band felt that Johnston was unable to play the part. Bob Egan of Freakwater briefly joined the band in the studio, playing pedal steel guitar on "Far, Far Away" and "Dreamer in My Dreams", and then became an official member in September 1996.
Unlike the A.M. recording sessions, the band had no vocation for producing a hit song from their second effort. The recording sessions produced nineteen songs, too many for a single album release. Tweedy was concerned about the high retail price that a double album would be sold for (at least $30), so he asked Reprise Records to release it as a double album at a single album price ($17.98 or less). Reprise agreed to this on the terms that they received Wilco's share of the album royalties. It was estimated in 2003 that the band lost almost $600,000 on the deal, but Tweedy was satisfied. Being There was well-received by critics from several major media outlets, including Rolling Stone. The album reached #73 on the Billboard album charts, a significant improvement from A.M., and placed fourteenth on the Pazz & Jop Critics Poll for 1996.