The EIN functions just like a social security number, but for your band as a whole. Fortunately, requesting an EIN is quick and easy.
If you have employees besides the partner band members i. Rather than making you pay for everything in April, the IRS wants you to send them a check every three months to spread out your tax burden, making it easier for you to find the money to pay Uncle Sam.
Make sure you fill out a W-9 and give it to any business that hires you to ensure that you get your Professionals have a thorough understanding of the tax system and might even be able to get you bigger refunds. However, keep in mind that even the best tax preparer needs you to keep your records straight to figure it all out.
Good recordkeeping will save you time, stress, and money! You've got until April 15 to ask the IRS for an extension. In addition to federal income taxes, don't forget that you also owe state income taxes for the states you live and do business in. This article has only focused on federal tax form requirements, so make sure to check with your particular state for information on state tax form requirements.
Jamie Davis-Ponce is a professional musician and graduate of Northeastern University's Master of Music Industry Leadership program with a concentration in entrepreneurship. You can view more of her writing on her blog on Music, Business, and Creativity.
Find me on: LinkedIn Twitter. Running a music business likely requires certain monthly expenses, and you can claim these as deductions to reduce your tax liability. These include:. Launching and maintaining your music business usually involves paying some basic business expenses , and you can deduct these on your tax return.
Note that expenses related to a home studio are deductible, as are:. Note, too, that when you attend functions sponsored by industry associations like the National Association of Music Merchants, or NAMM, and Audio Engineering Society meetings, your travel, lodgings, meals , and attendance fees are deductible business expenses as long as there is a business reason for you to attend.
As a musician, some of your greatest costs—your instruments, cases, bows, music stands, even your music library—are usually considered capital expenses.
While you might not be able to claim the entire upfront cost as a business expense, you may be able to claim some of the cost in small increments over time a process called depreciation. Keep all receipts for travel to lessons, recording sessions, and performances, as you can claim the mileage come tax time.
Instrument upkeep and repairs, and the cost of consumable goods like rosin, are also deductible expenses. Deductions often overlooked by musicians are the costs of such things as tickets, transportation, and parking, incurred when you attend other musicians' performances.
You attend these performances in order to enjoy them, but also to learn about musical trends, which makes them deductible. Keep all of your receipts in a series of folders. For example:. Monthly review and adjustments helps spot any missing documentation. TurboTax Self-Employed will ask you simple questions about your life and help you fill out all the right forms. Perfect for independent contractors and small businesses.
TurboTax Self-Employed searches over tax deductions to get you every dollar you deserve. Some DJs out there are one audit away from complete and total financial ruin. Taxation is no joke in the United States, my friends.
It is a vast and ridiculous topic whose rules are always changing. The best thing you can do here is to hire a good accountant who specializes in self-employed people.
While you may save a little bit on your fees, this is not something you want to skimp on. Just as DJing is a craft that takes many years to cultivate, tax accounting is very similar. Having an expert to consult on these incredibly complicated tasks is invaluable.
Most tax accountants offer year-round consultations, so if you ever have a question about your situation, good advice is just an email away.
The moral of the story is this: find someone who is excellent at their job, and work with them. Tax accountants can be a goldmine for various personal finance tips. For those of you who are interested in what exactly your accountant may be asking you, feel free to read on to the next section where we discuss strategies for reducing your taxes as a self-employed individual.
Think of an expense as any money that you HAVE to spend to do keep your business running and do your job properly. The amount of things that qualify as business expenses is rather large. Some examples include the miles that you put on your car for traveling to gigs, space in your house for a home office, record pool subscriptions, new computers, DJ gear, and even purchased music. In essence: the government cannot tax you on money you did not earn.
To be a DJ, you have to spend a fair amount of money to do your job! You must be a professional DJ who is actively earning yearly profit to write off expenses from it. Talk to your accountant about this! Unfortunately, having some idea of your monthly budget is going to be necessary to save money and set yourself up for success.
For my budgeting, I use Personal Capital. It gives me a detailed overview of every bank account, credit card, and investment account that I have in one view. On top of that, it accurately tracks monthly spending from all sources. If you pull money out of the ATM, purchase something on your credit card, or even pay with PayPal, it all gets tracked in one place.
You connect your accounts to the app, and it does a considerable amount of the work for you. Personally, it took me about an hour and a half to create a monthly budget after Personal Capital highlighted my monthly spending. Not only does the app help with budgeting, but it also allows you to watch your money grow over time. This is where mastering personal finance tips can become fun!
Being able to see all of your money in front of you every day can be a huge motivator to get out there and hunt for new business. How is this, you ask? This is why. Saving money is ridiculously simple, and yet it seems to be an impossible task for most people to grasp. Savings occur when you have an excess of money earned, versus money spent in a given month.
This is accomplished by either raising your income level, reducing your expenses…or hopefully both! Sadly, the majority of Americans live deeply in debt, and this will prevent them from achieving real wealth in life.
As a self-employed person, overspending can harm you far more than the average person! They probably have a stable job that, while it requires them to work 40 hours a week, they can be sure their paychecks will continue to clear.
Granted, they may very well spend most of their life at a job they hate, but they may not suffer any severe consequences…right away. In other words, these people are living on borrowed time.
We all have bills to pay, and you must have savings if a moneymaking gig goes belly up. The last thing you want to do is live paycheck to paycheck as a DJ.
You can, however, make it suck less by being financially prepared. Personal finance guru Dave Ramsey suggests everybody have six months of living expenses on hand in case of a sudden job loss. Anybody who has ever been in a bad situation with a nightclub can attest to what a lifesaver a financial safety net can be.
A whole host of bad things can happen to a DJ that can take us out of the game. Even Hot Since 82 himself has occasionally been prevented from gigging because of hearing loss from tinnitus.
While less tragic, but unfortunate, I once knew a DJ who was prohibited from coming into work after he had gotten into a car accident that required him to wear a cast.
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