How to Make Money in Music: A Guide to Accounting for Musicians

This means that you are responsible for paying your own taxes, which include self-employment tax. This tax is a Social Security and Medicare tax for those who are self-employed, and it is calculated based on your net income from your music business. Business Expenses As a musician, you can deduct a variety of business expenses on your taxes. These include things like the cost of instruments, music lessons, and other business-related expenses.

Advantages of Hiring a Tax Professional

So get organized, start tracking your income and expenses, and make smart decisions about your money. With a little effort, you can make sure that your music career is profitable and sustainable. We provide litigation support for the music industry, including expert witness services, reviews of recoupable expenses, penny letters, tour budgets, depreciation schedules, and tax planning. My friend’s band has started to make a little more money at gigs, about $600–800 a show.

Established Artists

It’s important to note here that every country operates on a different legal system, so if you spend a lot of time working abroad, you might want to check the tax requirements in each country you visit. To verify that someone is a certified public accountant that can help your company with its finances, go to the CPA verification page. There, you can verify their credentials and track their license accountant for musicians renewal dates. Our accounting package is perfect for contracting professionals and will take the hassle out of accounting, which means you will have more time to spend with family and friends, as well as your hobbies. If you are self-employed and work from home then we can advise you on household costs which can be offset including heating, using a room as an office and phone services.

Does hiring an accountant really save you money?

My recommendation is to only write-off music-related expenses against music-related income. For example, if you bought a drum set, write it off against the money earned playing shows, rather than the money earned at your non-music related day job. The IRS pays special attention to income and expenses related to creative pursuits, such as musicians, photographers, and writers. They may consider these to be hobbies, in which case expenses are not allowed.

• Managing money in the music industry can be a daunting task, and if you don’t have the right accounting software in place, then it can be an even bigger challenge.
• When you pay a professional to do your taxes, you are getting the added benefit of numerous other services, including accounting, record-keeping, tax consultation, and auditing.
• If you find yourself working with a tax preparer that seems like they do not understand you or your business, it would be better to go elsewhere.
• We can also liaise with agents and promoters, handle invoice payments and your bank accounts for you, and by the end of the tour we’ll have created the accounts and registered any taxes you need to pay.

Guides, Tutorials, Interviews, Hacks, Tips, & Inspiration

Contact us for confidential advice and a no-obligation review on any aspect of accounting for people working in the entertainment industry. Covering all aspects of accountancy whether that’s day-to-day accounting, bookkeeping or filing accounts for you, or your business. We’ll go over the most important things that independent artists should know when it comes to taxes and deductibles in the U.S.

At the end of the year, it simplifies the process to figure your total income and parse out your expenses when they are localized to one account. I have also seen people use spreadsheets or logbooks to track income and expenses. Quickbooks is useful too, but there can be a steep learning curve with learning that software. At the end of the day, hiring an accountant can start a fruitful relationship with a financial consultant.

Profit & Wealth Tax Advisors

Software preparation tools may be faster, more efficient, and more convenient as they can be used at your discretion. At Gorilla Accounting, our all-inclusive accountancy package will give you access to your very own dedicated accountant, who will always be on hand, be it by phone, email, videoconference and, of course, in person. I’m Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality. The tours are going further, the stages are getting bigger, the band is getting busier – and YMU is with you all the way.

• There are three versions of the form to choose from, and each of these options requires you to enter all of your income.
• An example is Zoho Books, which offers advanced features, such as time tracking and project accounting.
• If your tax situation is simple, say you work for a company and need to submit your W2s, it may cost less to hire an accountant.
• Registering as an LLC is also a good idea because it protects your personal assets in the case of a legal battle or lawsuit against your business.
• Atlanta-based Alexis Louis (fka Alexis Kimbrough) is the founder of Growth Group, a music-focused accounting firm that works with musicians, record labels, and recording studios.