A music trade tax knowledgeable outlines methods to take advantage of your cash with monetary strikes to make all yr lengthy.
by Ron Hart of Spotify For Artists
As you map out the music you need to make within the new yr, it’s additionally the precise time to contemplate U.S. tax methods to take advantage of your cash.
This materials has been ready for informational functions solely, and isn’t meant to supply, and shouldn’t be relied on for, tax, authorized, or accounting recommendation. You need to seek the advice of your individual tax, authorized, and accounting advisors earlier than partaking in any transaction or submitting any tax return.
Chris King, who heads up Nashville’s King Enterprise and Monetary Administration (KBFM) specializing in music trade shoppers, just lately chimed in with year-end artist tax concepts. Now, he’s prepared with extra monetary strikes to start out making now with one other entire yr forward of you.
Table of Contents
Perceive your bills
King says that in the case of bills, he seems “at it as one thing that’s particularly used for enterprise functions. Say [you’re] going to espresso with a writer or one other songwriter… Or, if [you] are going downtown and should pay for parking, any of these issues are reliable bills.” When doubtful, seek the advice of an accountant.
“Usually once we tackle a shopper, there are normally so many lacking bills they need to have the ability to take.” King explains. “Say, as an example, Spotify, which is taken into account analysis. For the conventional particular person, it could be about simply listening to the music, however for the artist it’s not simply listening… The largest factor is protecting observe of all of it, whether or not they’re using on-line banking or different nice finance software program on the market.”
Toss your receipts
“In as we speak’s world, it’s laborious for anyone to maintain observe of receipts as a result of the whole lot is so digital,” King continues. “I inform most of my shoppers to undergo and take an image of the receipt in your telephone. When you’re going to purchase gasoline in your technique to a present, take that image of the receipt proper from the gasoline pump, and write the identify of the present you’re going to and the date earlier than you snap it. Then throw the receipt away. Similar factor if you’re going out to dinner with anyone – take an image of that receipt and write down who you had been with and what you had been there for.”
“Hold observe of all that digitally, this fashion for those who had been audited by the IRS you could have the whole lot backed up in your telephone as an alternative of a random field of receipts. It’s a good way of monitoring the place you had been at, why you had been there and what was happening.”
Set cash apart
“I inform my folks, ‘Hey, for those who can put aside 30 p.c once you get that test in, although you’re going to have bills going in opposition to it,’ It’s higher once you go to file your tax return to have 10,000 bucks [ready] and also you solely owe 5,000, not the opposite approach round.”
“In case you are in a position, put aside cash and neglect it’s there,” he says. “And even open up a financial savings account in a unique financial institution the place you can’t simply switch cash between accounts. Simply know that it’s there for tax time and to not play with.”
“When you see the cash in your account, you’re gonna need to spend it. So if I might do no matter I gotta do that can assist you get that cash out of there so you already know it’s not your cash, we’ll go along with that.
Ron Hart / January 11, 2023A music trade tax knowledgeable outlines methods to take advantage of your cash with monetary strikes to make all yr lengthy.
As you map out the music you need to make within the new yr, it’s additionally the precise time to contemplate U.S. tax methods to take advantage of your cash.
This materials has been ready for informational functions solely, and isn’t meant to supply, and shouldn’t be relied on for, tax, authorized, or accounting recommendation. You need to seek the advice of your individual tax, authorized, and accounting advisors earlier than partaking in any transaction or submitting any tax return.
Chris King, who heads up Nashville’s King Enterprise and Monetary Administration (KBFM) specializing in music trade shoppers, just lately chimed in with year-end artist tax concepts. Now, he’s prepared with extra monetary strikes to start out making now with one other entire yr forward of you.
Perceive your bills
King says that in the case of bills, he seems “at it as one thing that’s particularly used for enterprise functions. Say [you’re] going to espresso with a writer or one other songwriter… Or, if [you] are going downtown and should pay for parking, any of these issues are reliable bills.” When doubtful, seek the advice of an accountant.
“Usually once we tackle a shopper, there are normally so many lacking bills they need to have the ability to take.” King explains. “Say, as an example, Spotify, which is taken into account analysis. For the conventional particular person, it could be about simply listening to the music, however for the artist it’s not simply listening… The largest factor is protecting observe of all of it, whether or not they’re using on-line banking or different nice finance software program on the market.”
Toss your receipts
“In as we speak’s world, it’s laborious for anyone to maintain observe of receipts as a result of the whole lot is so digital,” King continues. “I inform most of my shoppers to undergo and take an image of the receipt in your telephone. When you’re going to purchase gasoline in your technique to a present, take that image of the receipt proper from the gasoline pump, and write the identify of the present you’re going to and the date earlier than you snap it. Then throw the receipt away. Similar factor if you’re going out to dinner with anyone – take an image of that receipt and write down who you had been with and what you had been there for.”
“Hold observe of all that digitally, this fashion for those who had been audited by the IRS you could have the whole lot backed up in your telephone as an alternative of a random field of receipts. It’s a good way of monitoring the place you had been at, why you had been there and what was happening.”
Set cash apart
“I inform my folks, ‘Hey, for those who can put aside 30 p.c once you get that test in, although you’re going to have bills going in opposition to it,’ It’s higher once you go to file your tax return to have 10,000 bucks [ready] and also you solely owe 5,000, not the opposite approach round.”
“In case you are in a position, put aside cash and neglect it’s there,” he says. “And even open up a financial savings account in a unique financial institution the place you can’t simply switch cash between accounts. Simply know that it’s there for tax time and to not play with.”
“When you see the cash in your account, you’re gonna need to spend it. So if I might do no matter I gotta do that can assist you get that cash out of there so you already know it’s not your cash, we’ll go along with that.”