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80 posts
Sep 03, 2011
11:56 AM
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On the thread regarding how hard it is to be a pro the subject of dealing with the business side of being a professional musician, especially as a band leader, was raised. A couple of items which may be of interest.
The accounts side can be dealt with much easier these days with software such as Quickbooks. Quickbooks can be a little expensive at $185 list but discounted copies can be found and the savings in time and the accuracy makes it well worth it. Once you set up the accounts for income and expenses it's super easy to keep track and because it so easy one tends to actually enter the ins and outs straight away. Be sure to then at least put all receipts into a large envelope should you ever need them rather then scatter them about the place or throw them away.
A really good site for knowledge about what are legitimate expenses and why can be found at http://www.artstaxinfo.com/musicians.shtml. I strongly urge anyone who performs either semi-pro or pro to have a careful read. It amazes me how many do not take advantage of what the taxman will actually give them, mileage is the classic example.
The information on the site is useful even for part timers as you can deduct expenses such as harps, mileage, repairs, customization, etc. as long as you also report income even though you may operate at an overall loss,which is usually the case. This loss can be deducted from your gross taxable income. Do be aware that you can only show a loss for so long before the IRS considers it not a business or profession but a hobby. Also you should have a reasonable income from playing. A couple hundred annual gross isn't going to cut it but a even a few thousand will even if it is not a living wage. DO NOT THINK THE IRS ARE STUPID OR EASILY FOOLED.
If you are a band leader I would also advise that you keep track of who gets paid at the end of the night and how much, especially if your name is on the check or you are the venue's contact. Cash or check, the venue will record you by name as the one having been paid, assuming they've got any sense. If for example you have a long term residency and the venue were to be audited the IRS may look to cross reference and note that there is undeclared income under your name. Not good. And if you had no record of having paid the other guys you would be liable for the tax on the entire amount. Do you really want to pay the tax for the drummer!?
You should record any and all income,including tips, so that the gross is as high as possible. Should the IRS ever audit they will know you're serious.
Every once in a blue moon the taxman will decide to target a particular profession. Several years ago in the UK they went after musicians of all people. My former drummer received a tax demand from the Internal Revenue for 30,000 GB pounds for income from a previous band. He hadn't earned anything like enough to attract 30 grand in tax. Hell, he hadn't even earned remotely near 30 grand total in his whole time with that band. The demand was a scare tactic on the theory that he would immediately settle for less and say "thank you" when they accepted. Fortunately my friend was in the UK musicians union who provided free legal and tax advise. He did settle for a very much smaller amount but it was a lot of stress costing time and money that could have been easily avoided.
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Last Edited by on Sep 03, 2011 12:05 PM
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