How much should I worry about the legal aspect of music?

P

pM of impk21.co

New member
I was thinkin about some things and figured this would be the place to for some answers.

What I mean by legal is, how do I know when to report earnings as far as tax purposes?, does it matter if I am a legit label (so to speak)? cuz right now Im just a name, nothing in legal writting saying Im for real. I have a website and thats it and I make beats for various artists and other people within our group. Should I worry about being legit, will it affect things down the road if Im not. Most projects will be going under a another label that is Legit, meanig theyve signed papers and documented they are, so to speak, a business. Should I worry about it? Most of you probably know that any money earned really dont go anywhere but into the next project, advertisments, new studio gear, etc. Basically Im just producing beats right now and recording material for our projects. At the same time I wanna cover my ass on all things. Everything.............get at me, thanx, pm
 
I'd get an accountant if I were you. Soon.

For the most part, they're not that expensive if you do most of the legwork, and a lot of them are happy to let you know what the legwork is.

Once you get a handle on everything, it can be quite cheap to keep track of. I use QuickBooks for everything and send it to my accountant at the end of the year. I keep the receipts (that's part of the legwork... Entering all that info) and he takes care of the IRS's paperwork. Maybe $100 a year.
 
basically, you need to keep an income and expense record. If you're not making a profit, it's all cool, but you should report that. And I'll second getting an accountant. Especially as you're dealing with bands on labels and so forth; they are probably reporting what they pay you as an expense, and if you're not reporting the income, the gov may take a look at you.

If you make a significant profit (a couple thousand bucks or more), expect to get hit with some taxes. But better to pay some taxes than get audited.
 
Hmmmmmmmmmmmm

Well, there will probably be no profit.

Just curious, from Feb, 2003 to March 2004, Ive spent over$2500 - $3000 in gear, materials, n other things. Ive got reciepts for everything. Does that make a difference? I had a job up til 11/03, then new laws prohibited my companies work ablitity. So Im unemployed, can any of this work to my advantage? Thanx, pm
 
If you have expenses and no income you can take a write off. The Feds let you expense several thousand (vs. depreciation) subject to certain conditions.

Technically, the Feds expect you to show a profit in 2 out of every 5 years - or they then look at your activity as a hobby vs. a business. However, certain works in process (ie: a song that has been published, but not yet shown a profit) can be used to "work around the 2 in 5 year thing. Candidly, I prefer to delare myself as a songwriter rather than a musicain or studio - to best utilize the work in process.

But, I agree that you should spend a few $$ for an accountant. Tax regs can be very complex (do you expense or depreciate, what accounting methods do you use, etc. etc. etc.) As indicated if other people use your services, pay you and declare that as an expense - you could be in the IRS radar.

I am very aggresive in taking every possible tax advantage I can (regardless of how creative I need to be) however, between my day job, my wife's day job, gig income and studio income, I pay plenty of taxes, so I have no shame in taking every tax cut I can.
 
My bad, I thought this thread was dead. Currently, Ive spent over $1100 on music required gear and supplies for this year already and last year I spent over $2500 on gear. I havent made any money yet. We are looking at having my guys album completed by this summer. We do shows, but usually for free or get enough $ for gas and food and thats about it. So, other than that, I dont know. Im really not considered a legit business unless I have like a tax id # or something, correct? I mean I couldnt claim any of those expenses w/o at least being registered as a small business or record label, right? So right now my production name is just what it is, a name I guess that is the way I have been looking at it, LOL, maybe Ive been looking at it all wrong, thanx for your reply...................pm
 
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