Jump to content

venues n taxes......another venue, wanting to tax


race81

Recommended Posts

  • Members

On our NYE gig....I was paid at the end of the night by check, and inside they slipped a w-9 form in without me knowing. We only play about 2-3 times a month and hardly make enough to pay taxes on that. We all have daytime jobs, and music is just a hobbie. How do you deal with owners about this. the check is not made out to the band, but me personally. I know the other bandmembers will not pay taxes, its been discussed before, and even dropped a venue because of it earlier this year. I was wondering if we asked for more money to compensate for the taxes, how much would that be 25-30%? If this venue wasnt a decent gig, we would just move on. The venue already has us booked for 4 nights into july this year. Just looking for ideas, and some experience in this.

Link to comment
Share on other sites

  • Replies 50
  • Created
  • Last Reply
  • Members

You need to document this to an accountant what you spend on the business and how the tax laws apply to your band by your state taxing jurisdiction as well as federal taxes. Need to cover your butt or they will eventually audit you as a sole prop as it shows you made that taxable income which sooner or later you have to pay.

Link to comment
Share on other sites

  • Members

I understand running things as a business......if I did it that way, the business would always lose money. I know I did this with my racing business for years. Some years we would break even, but most we lost money because it was a hobby/business. Music is the same way with us a hobbie. If we did decide to pay taxes on this venue....how much more does that figure in to the pay to cover taxes? How would you ever gig knowing some places make you file taxes and some dont.......

Link to comment
Share on other sites

  • Members

If you get a 1099 from anyone who you filled out a w9 for, you'll have to report it. I didn't report one time a long time ago and paid about 5x in penalties on what I would have paid if I had reported it. I won't do that again.

If you get a 1099, fill out a schedule C business profit/loss. Write off everything you can- gear, miles on your vehicle, and report anything you paid out to the band members as a subcontractor expense. If it's under $600 each you don't need to send them a 1099 if it is more, then you do. If you spend more $$ on gear than you make in a year, then you should be reporting it all and get the tax break. I report everything, not just 1099 gigs. I also write off everything I'm allowed to- miles to and from gigs and rehearsals. Clothing used only for the band. Gear expenses. Meals at gigs. Etc...

Talk to an accountant. Regardless of whether you want to treat it as a business or not, don't short sell yourself on your rights as a tax payer, and don't renege on those obligations, you'll eventually get bitten!

Link to comment
Share on other sites

  • Members

Dude, if I were you I wouldn't admit to not paying taxes on a public forum like this!

Fact is, any money you earn gigging is income and taxable. If you run it like a business and the business loses money, that's actually a good thing for your taxes. Just keep records and take your deductions and you'll probably come out ahead on $$$ by the end of it. The one thing that sucks is, it will probably increase your chance of getting audited so make sure your ducks are lined up.

Link to comment
Share on other sites

  • Members

The club owner wouldn't be able to declare all of the money he pays out to bands for the year if he didn't send you a 1099.

As far as on your end ... you can lose money as a "business" for 3 years. After that the government views it as a hobby and you can't deduct expenses on a hobby.

Link to comment
Share on other sites

  • Members

There are enough advantages for most people that it makes sense to declare the income. With the government promising more audits of individuals and businesses moving forward, and the relatively low cost of setting up an LLC, you're crazy if you have a regular situation and don't cover yourself.

Link to comment
Share on other sites

  • Members

If the band is a relatively small-time deal---less than a few thousand per member a year---the easiest thing is to issue 1099s for each band member and let them deal with their own share however they see fit. It's very easy to come up with that much in music-related expenses for each person to off-set the increase in income.

If the band is earning quite a bit of money every year, I'd look into setting it up as an LLC and dealing with it as separate entity so you're not entirely responsible for everything.

Link to comment
Share on other sites

  • Members
Quote Originally Posted by dboomer View Post
The club owner wouldn't be able to declare all of the money he pays out to bands for the year if he didn't send you a 1099.

As far as on your end ... you can lose money as a "business" for 3 years. After that the government views it as a hobby and you can't deduct expenses on a hobby.
I was not aware of that rule. Do have any authority for that?
Link to comment
Share on other sites

  • Members
Quote Originally Posted by jimiv View Post
I was not aware of that rule. Do have any authority for that?
It's a myth. Some people go decades with their small business ventures without showing a profit. You don't have to show a profit, although I suspect that the longer you don't, the more it sends a "red flag" to the IRS and might trigger an audit.

The main thing you need to do is show that you INTEND to make a profit. The more "legitimate" you have your business set up, the more it looks like something real rather than a hobby. Keep good records of income and expenses. File taxes on it regularly.
Link to comment
Share on other sites

  • Members

Three years is what they gave me for my racing business too, but they never came knockin at my door. Racing was much more expensive than music. I think they give you a three year as areference but have never heard of anyone told to shut theyre doors.......the not making money to support your family should be enough appeal for anyone to close the doors.

Quote Originally Posted by guido61 View Post
It's a myth. Some people go decades with their small business ventures without showing a profit. You don't have to show a profit, although I suspect that the longer you don't, the more it sends a "red flag" to the IRS and might trigger an audit.

The main thing you need to do is show that you INTEND to make a profit. The more "legitimate" you have your business set up, the more it looks like something real rather than a hobby. Keep good records of income and expenses. File taxes on it regularly.
Link to comment
Share on other sites

  • Members

My wife used to do a lot of tax work when she was practicing law, and there are a lot of folks who get audited because of their "businesses". Stables, recording studios, etc.--the IRS sniffs these things out. As for the OP, pay your taxes. They pay for the roads you use to get to the gigs, subsidize the electricity you're plugging into, cover the salaries for a good cut of your audience, make sure your comped liquor won't leave you blind, etc. I am the band "accountant", and take a cut for the band fund every once in a while, and fill out the paperwork for the taxes and pay for it out of that.

Link to comment
Share on other sites

  • Members

 

Quote Originally Posted by race81

View Post

Three years is what they gave me for my racing business too, but they never came knockin at my door.

 

You would be looking at a minimum of 3 years after the filing year before an audit to show up, there are bigger fish in the sea to catch. And they probably wouldn't come knocking unless it was a substantial amount on the books, say 10 K or over, instead you get a registered letter in the mail.
Link to comment
Share on other sites

  • Members

If i payed taxes on the venues that wanted us too last year...the amount it would be on is about $300. Most venues here pay cash. I pay plenty of taxes from my 8-5 non musician job. If your the band accountant....do you pay the taxes on all the members behalf?? Or do they need to do it seperatly. I have no problem upping the cost to the venues to cover the tax expense if thats the way they want too. But what little I make, it wont come out of my pocket.

 

Quote Originally Posted by Chicken Monkey

View Post

My wife used to do a lot of tax work when she was practicing law, and there are a lot of folks who get audited because of their "businesses". Stables, recording studios, etc.--the IRS sniffs these things out. As for the OP, pay your taxes. They pay for the roads you use to get to the gigs, subsidize the electricity you're plugging into, cover the salaries for a good cut of your audience, make sure your comped liquor won't leave you blind, etc. I am the band "accountant", and take a cut for the band fund every once in a while, and fill out the paperwork for the taxes and pay for it out of that.

 

Link to comment
Share on other sites

  • Members

 

Quote Originally Posted by race81

View Post

If i payed taxes on the venues that wanted us too last year...the amount it would be on is about $300. Most venues here pay cash. I pay plenty of taxes from my 8-5 non musician job. If your the band accountant....do you pay the taxes on all the members behalf?? Or do they need to do it seperatly. I have no problem upping the cost to the venues to cover the tax expense if thats the way they want too. But what little I make, it wont come out of my pocket.

 

Sorry I wasn't clear--I take out out of the band account, which is funded from gig money and CD sales, and it covers copyright fees on the CDs, postage for press packs, poster printing, etc. I pay the taxes out of that, and it's money we've earned together, but that I keep in my sock drawer and record on a google doc spreadsheet that everyone has access to.
Link to comment
Share on other sites

  • Members
Quote Originally Posted by race81 View Post
If i payed taxes on the venues that wanted us too last year...the amount it would be on is about $300. Most venues here pay cash. I pay plenty of taxes from my 8-5 non musician job. If your the band accountant....do you pay the taxes on all the members behalf?? Or do they need to do it seperatly. I have no problem upping the cost to the venues to cover the tax expense if thats the way they want too. But what little I make, it wont come out of my pocket.
You seem to have a very odd way of looking at things. "the venues that wanted us to pay taxes"... It's your tax obligation, not theirs. I'm not sure why you think it has anything to do with them "wanting" you to play taxes or not. If they pay cash and therefore are willing to pay a higher tax bill than they otherwise need to... Or if they aren't claiming that income (where does this money they "pay you in cash" come from? The tip jar?) then that's their issue.

As far as paying the taxes on the members' behalf goes--no. Issue them all 1099s and then you're done with it and you're only responsible for your individual share. If you're a drummer, and your tax bill is as low as you say it is, you probably spent more than you made on sticks and heads anyway. The only tax expense might be the cost of having somebody to do them for you if you can't do them yourself.
Link to comment
Share on other sites

  • Members

+1
1099 the other musicians if you have the total amount of the payment is made out to you. If they don't like it, get other musicians unless you want to pay their taxes. BTW, the taxes you pay at your day gig have nothing to do with your music income. You could always play for free if you don't want to pay taxes. I hate taxes-I paid an obscene amount for the last few years, but that has nothing to do with paying additional tax on gig money. As far as getting the club to pay more, you ought to factor in the cost of doing a gig-gas, supplies, your time, and taxes before quoting a gig. If you can't cover the expenses, then it really is a hobby which might be better pursued outside a business situation.

Quote Originally Posted by modulusman View Post
Start treating the band as a business. Pay taxes on what you owe or stay home. I have been paying taxes on band income my entire career of 35 years.
Link to comment
Share on other sites

  • Members

Everything for us is documented and "by-the-book". I pay all of the band's taxes, but I also claim all of the band's expenses. It's worked to my advantage so far - and helped me transform our detached garage into a climate-controlled rehearsal studio.

Link to comment
Share on other sites

  • Members

This {censored} ain't rocket surgery. Assuming that you've served as the "bandleader" throughout the year and all 1099's issued to the band were reported under your social security number - process is simple:

1. Calculate the total amount that was reported on all the 1099's you receive. Then calculate how much of that total was paid to each band member - and generate a 1099 from you to each band mate (the simplest way to deal with that is to use an online service ... these guys will create the 1099's AND submit all the related government filings associated with issuing a 1099 for $3.50 per 1099. That's a $14 expense if you're a 5 piece band. https://www.onlinefiletaxes.com/e-fi...FQSg4Aod4iIAWQ

2. Prepare a Schedule "C" - or Schedule '"C - EZ" form - and report the total of all the 1099's you've issued to your bandmates. The following link will help you figure out which form best fits your situation - and provides a link to the form itself. The "EZ" version has always been the right fit for a weekend warrior like me ... http://www.irs.gov/Businesses/Small-...hedule-C-EZ%3F

3. Plug the "net income" figure from Line 3 of the Schedule C-EZ form into Line 12 of your Form 1040 - and you've included your "net" band income in your tax return - and will be taxed accordingly when you calculate the rest of your Form 1040.

Personally - I don't dink around with other deductions such as mileage, equipment depreciation, meals, etc. Each of these may have documentation requirements that I probably don't meet (i.e., I don't keep receipts for meals, I don't maintain a mileage log, etc.) - and may be a trigger for an audit. As long as I account for all the income that reported against my SSN on the 1099's I've received - and have the documention showing what I passed along to bandmates - I'm happy.

Link to comment
Share on other sites

  • Members

 

Quote Originally Posted by mstreck

View Post

Everything for us is documented and "by-the-book". I pay all of the band's taxes, but I also claim all of the band's expenses. It's worked to my advantage so far - and helped me transform our detached garage into a climate-controlled rehearsal studio.

 

You've lost me with the "I pay all of the band's taxes" comment. How can you pay taxes on money that you've paid to your bandmates? If you call them "employees" - you'd be liable for payroll taxes - and they'd be liable for taxes on the money you've paid them since it would be considered "income". If you deem your bandmates as "contract labor" and issue them 1099's - they are responsible for whatever taxes the additional income has on their personal tax situations. If you simply pay the cash under the table ... well, that too runs afoul of the tax laws. How can you pay "all of the band's taxes"?
Link to comment
Share on other sites

  • Members

Interested myself.

 

Quote Originally Posted by SpaceNorman

View Post

You've lost me with the "I pay all of the band's taxes" comment. How can you pay taxes on money that you've paid to your bandmates? If you call them "employees" - you'd be liable for payroll taxes - and they'd be liable for taxes on the money you've paid them since it would be considered "income". If you deem your bandmates as "contract labor" and issue them 1099's - they are responsible for whatever taxes the additional income has on their personal tax situations. If you simply pay the cash under the table ... well, that too runs afoul of the tax laws. How can you pay "all of the band's taxes"?

 

Link to comment
Share on other sites

  • Members

 

Quote Originally Posted by SpaceNorman

View Post

they are responsible for whatever taxes the additional income has on their personal tax situations.

 

You're right. I never really took that into consideration. I figured I was just saving everyone the hassle by being sole proprietor and paying them myself, but it would in fact be different depending on their individual situations. Thanks!
Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.


×
×
  • Create New...