Frequently Asked Questions
Frequently asked questions
Do I have to report cash?
What if there’s no Form 1099?
Can I deduct my recording costs?
Can I deduct my pressing costs?
Can I use the per diem method?
Can I deduct my meal expenses?
Do I have to report per diems paid to sidemen?
Self-employment tax on mechanical and performance royalties?
Do I need a CPA?
How do you bill for your services?
When do I need to start paying taxes?
Do I need to withhold taxes for my sidemen?
When should I form a limited liability company, corporation or partnership?
Are payments from investors, patrons, and crowd sourcing taxable?
Involved in every aspect of entertainment?
Recognized as expert in any of these areas?
Yes. There are many ways the IRS can find this out, and we know what those ways are. We suggest using a Daily Road Sheet.
Yes. Taxable income is taxable income whether you receive a 1099 form on it or not.
Generally, no. The IRS wants you to “capitalize” those costs and to write them off over the useful life of the master, which means you can write off some of the costs in the first year and the rest of the costs in subsequent years. This is also the case with demos.
You can, but only if you have none of the CD’s left over at
You should use whichever method yields the most deduction for the year for your out-of-town overnight meals. You should use actual meal expense for entertainment-type meals. You may not generally use the per diem method for hotels.
For per diem rates within the US: Click Here To View
For per diem rates outside the US use the local meals rate: Click Here To View
No, you can only deduct 50% of your meal expenses whether you use the actual method or the per diem method for the year.
No, only 50%.
Generally, yes. They are reported in the same manner as your performance income.
In a spiritual way, you need one when you start losing sleep over your tax and bookkeeping responsibilities. In a more tangible way, you should at least consult a CPA when you start performing as your full time job.
One of three ways – hourly rate, fixed fee, or percentage of gross income. We will set up a billing method to fit your situation. Our basic billing philosophy is to set up a system between us and our client where the bill is an amount that the client can afford to pay and that we can afford to bill.
You start incurring self-employment (social security) tax when your net income goes over $400. After your net income exceeds the total of your standard deduction and personal exemption amounts, you start incurring federal income tax. Generally, if you are making a living at what you do, you should be paying estimated taxes in quarterly at a rate of at least 15% – 20% of your net income.
Yes. If they walk and talk like employees, generally the answer is yes. The IRS can go back three years and calculate the taxes that you should have withheld and collect them from you… along with interest and penalties. IRS now has an amnesty program that might be right for you.
Usually the first two factors that come into play are limited liability issues and ownership rights – who actually owns the band name, who are the main songwriters, who signs the recording contracts, etc. There are of course many other issues that need to be considered such as tax savings, fringe benefits, etc.
Generally, yes, unless you set it up as a loan or as equity investment (eg., partnership interest, stock ownership interest, etc.). Basically if you are not required to pay it back (like a recoupable advance from a record label), you are taxed on it when you receive it, so careful tax planning may be required if you are able to raise a sizeable amount of money for this purpose.
Yes. The generic term “Music Industry” encompasses many different types of businesses and services. Although it is virtually impossible to be involved in every aspect of the music industry, we routinely perform accounting, tax and consulting services for the following types of music clients:
- Professional Musicians
- Music Store Retailers
- Recording Studios
- Music Teachers
- Independent Record Labels
- Personal Managers
- Booking Agents
- Entertainment Attorneys
Yes. We have a significant amount of experience working with musical performers and bands, as evidenced by the large number of our musician clientele throughout Austin, in Texas and many outside of Texas.