Whether you're the weekend warrior or the full time musician Uncle Sam probably knows you exist! There’s a quote that says only two things in life are certain, death and taxes!!😩😁 So today I’d like to give you a brief outline on taking care of your business so you can continue to make music for years to come.
First off, if you're earning money from your music business there's no getting around having to pay taxes. If you're a “legit” business you need a GE license. Not the most glamorous part of being in the music business however it is absolutely necessary. Head down to your local state tax office today and get your GE license now if you plan to take your music playing to the next level (Or earn any money). All reputable clients will require you to have a GE License and/or Federal Tax ID in order to hire you.
Second, pay your taxes! That's right. In 2005 Ronald Isley founder and leader of the Isley Bothers was convicted on 5 counts of tax evasion serving 3 years and 1 month (maximum sentence could have been 26 years) in a Federal Correctional Institution and instructed to pay $3.1 million to the IRS. Lauryn Hill spent 3 months in jail and 3 months on house arrest for tax evasion on monies earned between 2005-2007. And she was still required to pay back her unpaid taxes (plus tax). There’s no evading Uncle Sam. It will catch up with you eventually. The best advice is to learn to put money on the side to pay your taxes. Taxes can be a side blinder if you're earning a nice amount of money from playing music. There are also more than just your GE taxes so learn what taxes you have to pay and set money aside to pay Uncle Sam!
Third, learn how to save all your receipts. If there's any word you want to have in your vocabulary more than taxes, its deductions! It's costing you money to get to your gigs, to buy equipment for your gigs and even to prepare for your gigs. So save your receipts! Even if you have to throw them in an extra empty shoe box in your house, or a file folder in a drawer, just save your receipts! You'll thank yourself (and me) for that simple tip when its tax time.
Now obviously there is much more to running a music business but this is a good first step in the right direction. I'm surprised at how many musicians don't know the basics. If you’re not sure about the music business or are in need of guidance, call someone to ask questions. You probably already know a musician who's business savvy and is willing to help you out!