Last week I was invited to speak to a group of musicians at the DC chapter of the Recording Academy and it was amazing! I was able to share some general advice on how to manage accounting systems and prepare throughout the year, and got great feedback on the industry specific gems dropped, so I figured why not let you in on it?
TODAY I’M DROPPING THREE ACCOUNTING TIPS FOR FOLKS IN THE MUSIC INDUSTRY.
1. TRACK EVERYTHING
I know. I say this all the time. But this can be especially challenging for musicians because so many services could be enlisted for one session or product. So you’ll want to make sure that every dollar spent in pursuit of completing your project is tracked for ease of deductibility come tax time.
2. PAY ATTENTION TO SALES TAX
From merch to digital downloads, what is taxable to you and how often is dependent on the state. It's tedious, but it is your responsibility to know when you need to collect it and where to submit payments. Your third party processor should be able to help you manage, and check out resources like @taxjar for details by location.
3. CLOTHING MAY NOT BE DEDUCTIBLE
There was quite an uproar about this one, but the IRS is pretty clear about what clothing they will and won't allow, stating that “Musicians and entertainers can deduct the cost of theatrical clothing and accessories that aren't suitable for everyday wear.” Make sure that when you purchase clothing to wear on stage or for a performance that you can clearly identify whether it falls within the IRS guidelines for deductibility. Chances are if you could wear it other than for the event, it doesn't count. Thank you to Musicares for having me, and Kokayi for the connect. I look forward to serving again next year!