Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 So...am I being silly for bringing this up to the band before our first paying gig? From what I'm reading in this thread, folks are all over the map on it. Melmech's comment about any band being paid $600 total for the year from a venue is supposed to receive a 1099 from that venue makes me think a little. Even if the band is only paid $200 per gig...those repeat gigs can add up pretty quickly even for a casual bar band. Link to comment Share on other sites More sharing options...
Members J the D Posted August 2, 2005 Members Share Posted August 2, 2005 No, Jeff. You are being smart. Getting things settled before the money starts flowing is a great way to avoid conflict later. Link to comment Share on other sites More sharing options...
Members Rowka Posted August 2, 2005 Members Share Posted August 2, 2005 Before your first paying gig is exactly when you want to bring this up. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by J the D No, Jeff. You are being smart. Getting things settled before the money starts flowing is a great way to avoid conflict later. What can you tell (links to info would be great) me about this so that I can address it with the band in a professional manner? I've been called "silly" for even bringing this up as we've yet to get paid. Folks are kinda joking about paying taxes on their $20 cut. I can see the humor too, but it just seems that it can get complicated pretty quickly without some planning. Link to comment Share on other sites More sharing options...
Members Rowka Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom Folks are kinda joking about paying taxes on their $20 cut. But the club won't pay each band member $20. The club will collect one Tax ID number (SSN, EIN) and pay to the holder of that ID. That person is then responsible for the tax burden, unless he 1099's the other members. So, if you end up gigging regularly, it can add up to one heck of a bill come April. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by Rowka But the club won't pay each band member $20. The club will collect one Tax ID number (SSN, EIN) and pay to the holder of that ID. That person is then responsible for the tax burden, unless he 1099's the other members. So, if you end up gigging regularly, it can add up to one heck of a bill come April. Does this happen often...meaning that a club wants a SSN? I don't want to make this complicated, but I also don't want to open myself up to liability. I have an EIN for my consulting business (a sole-proprietorship). Would it be appropriate to give my EIN to a club (if asked) and then issue 1099's to the band? To me, maybe the bigger question is to ask the band, "What will we do if the venue asks for a SSN/EIN for the band?". Some of the folks have said that if you're not in the musician's union, this (getting paid) is a moot point anyway. Link to comment Share on other sites More sharing options...
Members Rowka Posted August 2, 2005 Members Share Posted August 2, 2005 I play at one place that pays us cash (no tax ID), but everyone else requires us to fill out a W-9. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom So...am I being silly for bringing this up to the band before our first paying gig? From what I'm reading in this thread, folks are all over the map on it. Melmech's comment about any band being paid $600 total for the year from a venue is supposed to receive a 1099 from that venue makes me think a little. Even if the band is only paid $200 per gig...those repeat gigs can add up pretty quickly even for a casual bar band. In the strictest legal terms, you should report this income, whether the bar gives you a 1099 or not. It is your responsibility to report all income. Of course, once you start making money playing out, you can start deducting things like mileage, gear and anything else required to make your band go. Link to comment Share on other sites More sharing options...
Members Emprov Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by WillPlay4food In the strictest legal terms, you should report this income, whether the bar gives you a 1099 or not. It is your responsibility to report all income. Of course, once you start making money playing out, you can start deducting things like mileage, gear and anything else required to make your band go. No doubt! Heck, on a $200 bar gig (for the band), you'd probably wind up being much farther ahead by reporting it than you would had you just pocketed the money. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom Does this happen often...meaning that a club wants a SSN? I don't want to make this complicated, but I also don't want to open myself up to liability. I have an EIN for my consulting business (a sole-proprietorship). Would it be appropriate to give my EIN to a club (if asked) and then issue 1099's to the band? To me, maybe the bigger question is to ask the band, "What will we do if the venue asks for a SSN/EIN for the band?". Some of the folks have said that if you're not in the musician's union, this (getting paid) is a moot point anyway. I would look to creating an LLC for band activities. This way you shield yourself and your assets from personal liability should anything bad occur. If you use the EIN of your sole-proprietorship you make yourself personally liable if you get sued for some reason, and we know how much people love to sue nowadays. Link to comment Share on other sites More sharing options...
Members picker13 Posted August 2, 2005 Members Share Posted August 2, 2005 I would say that unless you are making a living by playing music, it will NOT be worth the expense and effort to create an actual business for it with it's own accounts. And in Texas, it's next to impossible to open a business account unless you have a federal tax ID number, articles of incorporation, and a DBA certificate from the state (which means you're on their business tax radar). However, from the first time you get paid, you should keep an accurate accounting of your equipment (when purchased, how much), travel (gas, vehicle, lodging, food, and/or miles) expenses, disposables (strings, cables, etc.), your share of promotional costs (phone calls, promo packs, demo CD's), and other costs (share of PA costs, lessons, etc.). You want to be able to have your expenses be greater than your income, which for most of us part-time professional players is not too hard or uncommon. Hold on to those records for several years. That way if your are ever questioned, you have the records to prove that the reason you didn't file is that you had no real income from the activity. If for some reason you're audited (one of those complete "rectal exam" enforcement type audits), the most you might pay would be some type of penalty for not filing a schedule C, and it's likely you could appeal that in your favor since there was never any real income. If you do actually make income, remember that it's added onto your day job income for purposes of determining your total tax burden. There is no "limit" or threshold that you need to exceed to start paying taxes (unless it's your sole source of income). And you will have to pay the full social security tax as well as the complete medicare tax (if you not self-employed, your employer pays about half of these for you, but when you're self employed, you pay all of it, even though you get to deduct the cost of your SE tax on your 1040). Bottom line: if you're making money after expenses, you need to file. But honestly, it's rare! Now it might not be a bad idea to have an account at a bank, in some TRUSTWORTHY band member's name, where, say, 1/5 of the bands proceeds are deposited in order to save for band expenses. These might include recording costs, promotion costs, new PA equipment, etc. You could even draw up a simple agreement that each of the band members had an equal share in the account funds. and describe how funds could be spent (like majority vote, for example). Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by Emprov No doubt! Heck, on a $200 bar gig (for the band), you'd probably wind up being much farther ahead by reporting it than you would had you just pocketed the money. I think where my band is trying to make their point is that there are 8 (yes 8) of us, so this $200 payday becomes a $25 payday...gas money. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by WillPlay4food I would look to creating an LLC for band activities. This way you shield yourself and your assets from personal liability should anything bad occur. If you use the EIN of your sole-proprietorship you make yourself personally liable if you get sued for some reason, and we know how much people love to sue nowadays. There's no way that the band will go for the LLC idea. I'm the only one (out of 8) that seems to be concerned at all about this. Maybe I am over-reacting. Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Found a cool link. From the link: "Income for the musician is: all payments for gigs, income from teaching, sideman work, session work, etc. regardless of whether you receive a 1099 at year-end. It is a common misconception that if you do not get a 1099 then it is not reportable income. This is untrue. If you have income in any form, it is required to be reported on your 1040. The form 1099-MISC tax form is supposed to be filed on any payments made to an individual for services amounting to more than $600 in any calendar year. In the case of bands, club owners typically don Link to comment Share on other sites More sharing options...
Members Rowka Posted August 2, 2005 Members Share Posted August 2, 2005 That's what I said. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom There's no way that the band will go for the LLC idea. I'm the only one (out of 8) that seems to be concerned at all about this. Maybe I am over-reacting. Well, the LLC idea might be over the top, but I certainly wouldn't want to put my house, car, etc. on the line in case one of the bandmembers gets really drunk at a gig and trashes the place or hurts someone or something. If you're only looking at $25/person then you need to figure out a way to make your expenses more than this $25. Now you can keep gas receipts or track mileage and take the 0.395 per mile or whatever the deduction is, but there can be limits on how you deduct mileage. Your best bet is to keep receipts for all the gear you buy from now on. Any purchase over $500 you'll probably need to amortize over multiple years using MACRS tables. Except in your first year where you can write off all of your purchases up to a certain amount as startup costs. If a bar starts asking for SSN/EINs then you really want to start tracking everything. I mean everything, after all you don't want to leave your ass protection from the IRS to someone else, would you? Link to comment Share on other sites More sharing options...
Members J the D Posted August 2, 2005 Members Share Posted August 2, 2005 If the payor does not get Form 1099 he is supposed to withhold 28% of your pay as backup withholding. The IRS is looking more and more at this and assessing some significant fines for not doing so. Link to comment Share on other sites More sharing options...
Members WillPlay4food Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by J the D If the payor does not get Form 1099 he is supposed to withhold 28% of your pay as backup withholding. The IRS is looking more and more at this and assessing some significant fines for not doing so. I thought the payor distributes the 1099? I always was on the receiving end of a 1099 at the end of the year (I was payee). Maybe you mean a W-9 form? Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 Originally posted by Rowka That's what I said. Don't roll your eyes at me! I was just looking for some backup documentation. I didn't just want to tell the band that some guy in FL said "blah blah $600 blah blah". Link to comment Share on other sites More sharing options...
Members basschaplain Posted August 2, 2005 Members Share Posted August 2, 2005 Find a smart tax accountant. It'll cost you anywhere from nothing to $150. But he or she will ask a bunch of questions and then help you reach a conclusion on how to set up your band (partnership, sole proprietorship, etc.) Actually almost all bands are legally partnerships even if they don't set it up formally. As such, every member is financially liable for the deeds of fellow members while out on gigs. Also, any accidents that occur can result in all the members named on a law suit, as well as other responsibilities. A good tax accountant will also give you lots of information regarding how to spend your money and ways to keep most of what you earn.No matter what else you do, pay your taxes.rar Link to comment Share on other sites More sharing options...
Members Thunderbroom Posted August 2, 2005 Author Members Share Posted August 2, 2005 My band has basically told me to STFU. Link to comment Share on other sites More sharing options...
Members The Insomniac Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom My band has basically told me to STFU. I wouldn Link to comment Share on other sites More sharing options...
Members mrcrow Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by Thunderbroom This issue has come up with one of my bands. Some in the band have commented that taxes are due on money earned from paying gigs. While others have said that it's not a big deal and those folks that are concerned about it at this point (only one paying gig booked with another potential one booked in October) are being silly. It was also suggested that the band open a bank account for purchasing things such as a stage banner and to keep track of funds, however meager, that the band has.Your ideas? keep records of any income and expenditure...all expenditure connected with earning the income firstly its good business sense and it will show you if you really are making moneyvalue your gear at 25% original cost...have receipts for thisand allow something for clothing and use of home..naturally all your travelling and subsistence is tax deductable..tote it all up and see whether it is really necessary to declare anyway...i would say you need to be earning quite a bit to make it business wise..but keeping records and perhaps asking the IR for guidelines shows willingness and intent not to defraud..tax avoidance is the name of the gametax evasion...well you lose everything then. play it safe..up front..and you will get fair treatment..imho:) Link to comment Share on other sites More sharing options...
Members lug Posted August 2, 2005 Members Share Posted August 2, 2005 Doesn't a National Sales Tax instead of income tax look nice aboot now? Link to comment Share on other sites More sharing options...
Members J the D Posted August 2, 2005 Members Share Posted August 2, 2005 Originally posted by WillPlay4food I thought the payor distributes the 1099? I always was on the receiving end of a 1099 at the end of the year (I was payee). Maybe you mean a W-9 form? No. He is still required to provide a Form 1099 but if you do not provide him with Form W-9 he is supposed to institute backup withholding. Link to comment Share on other sites More sharing options...
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