He wants to open a band bank account. You can do that with just a business license. Most cities require one if you work there (though few enforce it on bands).
Enjoy the benefits of a premium membership!
Upgrade Account
-
TalkBass has been independent since 1998. Add your voice.
Create a free account to reply to discussions, view embedded media, and browse with fewer display ads.
Join free Log in
Want zero display ads or expanded classifieds tools? Compare plans.
2022 and 1099's and AB5 ??? ***
- Thread starter mike buzzetti
- Start date
Isn't living in CA great...lol.
Now days the bandleader usually takes the check and pays us out of their pocket minus what they think the tax burden will be.
When I was the bandleader I would itemize on my tax returns what I paid the other members, mileage expense (at 53 cents a mile), gear purchases, food while on the road etc... I usually was able to claim a loss and pay no taxes but it was still a ridiculous pain in the___.
Now days the bandleader usually takes the check and pays us out of their pocket minus what they think the tax burden will be.
When I was the bandleader I would itemize on my tax returns what I paid the other members, mileage expense (at 53 cents a mile), gear purchases, food while on the road etc... I usually was able to claim a loss and pay no taxes but it was still a ridiculous pain in the___.
I do not have a tax license so my first instruction is to contact a tax professional about anything that I write here.
1. AFAIK, any business or individual who pays a business or individual $600 or more during a tax year is supposed to issue a 1099 to the business or individual that was paid.
That means if you cut grass for your neighbor, and he pays you more than $600 over the year, he is supposed to issue you a 1099.
A business will more often issue a 1099 for the tax deduction. Years ago, when almost everyone paid cash, a bar owner would pay the band with cash. Sometimes, not all of the cash was claimed as income for various reasons for the bar owner or the band. Now with so many people using plastic, the bar owner can't "hide" income and needs every deduction he can find to reduce taxes. The IRS is even watching the amount of flour a pizza shop is purchasing to determine if his income is realistic based on the number of pizzas that can be made from the flour purchased.
2. The issuer of this type of 1099 normally does not withhold taxes. You will need to take your withholding from your income and move it into a savings account, so it is there when you need to pay taxes on your music income. Your federal tax bracket, state tax bracket and your net income from playing determine how much you need to withhold.
If you claim no expenses against your musician income, the chart on page 110 may help.
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
Use the bracket you fit into and use the + 12%, 24% or whatever it is plus your state tax %.
Note: you may have business expenses (expenses for the purpose of making an income) for driving to and from practice and gigs, purchasing amps and basses (may need to depreciate these), business portion of an iPad and/ or computer, strings, cables, sometimes food, insurance. Basically, any money you spend to help you earn money. As I have said, consult with your tax professional, they know which expenses may "raise flags". I know at one time, business use of your home was watched closely.
3. Be careful with an LLC. You may not receive any additional benefits than a Schedule C, Sole Proprietor. LLCs have hidden expenses when you file federal and state taxes. In PA, it cost me an additional $700 to have an LLC 15 years ago. That was more than I made on my candy machine route. I set up an LLC in case I was sued by someone who choked on the candy or nuts. (Not my smartest move, but it was a good education) Again, talk to a tax preparer.
The concept of an LLC is to give you added protection in the event of being sued.
IMO, it was a side effect of too many baby boom attorneys 20 years ago. They had to come up with something for all those attorneys. Many times, a good insurance policy will protect you as well, with less expenses. Sometimes, people blend the LLC/ corporation money with their personal money which pierces the corporate vail and defeats the benefit of having an LLC or corporation.
Note: I am not an attorney either.
4. You might want to try your luck with Turbo Tax Deluxe and play with the business income section.
Disclosure: I'm just a guy who has owned businesses and analyzes tax returns, so I picked up a few things. Your situation may be completely different than mine, so consult with your tax advisor.
I hope this helps
So Anyway, when it comes to dollars and taxes, I always defer to Chico Marx.
1. No, but you will know they will be sending you a 1099 if they have you fill out a W-9.
2. Depends on your tax bracket/marginal rate. Probably won't need to be 25-30% unless you are pretty profitable.
3. No, a single member LLC is basically ignored for tax purposes.
JazznFunk
Supporting Member
Lots of good education here. I'll add one thing. Recently I've been up front when booking to ask that if a venue is going to issue 1099s, if we can each submit separate tax forms (W9s) so we are paid separately. That means every person handles their own tax liability individually at the end of the year. If a band is not operating as a business entity formally, and if the venue is okay with handling the accounting that way, it makes approaching the sticky subject of tax liability individually easier at the end of the year.
It also depends on what your business is:
1. You are a hired musician getting paid cash or check and may receive a 1099, you can do a simple Schedule C on your personal tax return
2. You are a band leader which gets paid by the event and receives cash or check and may receive a 1099, and then you are possibly issuing 1099s to the separate band members. The band can be treated as a business on a the band leaders personal tax return Schedule C.
3. The band is an LLC, corporation or partnership and files a separate business tax return.
A schedule C is part of a personal tax return. It is used for sole-proprietors and sole-member LLCs.
Nowadays, in addition to cash and check, venues are also paying with Venmo, Paypal and a variety of other methods.
Are venues paying the bandmembers individually, and therefore issuing separate 1099s?
1. You are a hired musician getting paid cash or check and may receive a 1099, you can do a simple Schedule C on your personal tax return
2. You are a band leader which gets paid by the event and receives cash or check and may receive a 1099, and then you are possibly issuing 1099s to the separate band members. The band can be treated as a business on a the band leaders personal tax return Schedule C.
3. The band is an LLC, corporation or partnership and files a separate business tax return.
A schedule C is part of a personal tax return. It is used for sole-proprietors and sole-member LLCs.
Nowadays, in addition to cash and check, venues are also paying with Venmo, Paypal and a variety of other methods.
Are venues paying the bandmembers individually, and therefore issuing separate 1099s?
buldog5151bass
Kibble, milkbones, and P Basses. And redheads.
If you are that worried, you should be asking a tax professional (and pay them for their time), not anonymous bass players. A lot of what I read here on this topic is wrong.
Side note - I got a 1099K for PayPal sales this year. Wasn't expecting that until next year.
I guess it's both. We're being paid for a service. So, certainly, from a venue's perspective we're a business.
From the IRS's perspective, it's a hobby if you lose money consistently.
Better tax advisors than here at TalkBass anyways.
if its a hobby, you get to claim the income, but not the expenses.
If its a business, you claim the income and deduct the expenses related to creating that income.
The IRS doesn't judge how well you run a business.
You may have reasonable losses for multiple years.
Many new businesses have several years of losses before making money.
Having a chat with a Certified Public Accountant (CPA) or Enrolled Agent (EA) can help. During the early summertime, when business is slower, is one of the better times to meet with them.
If its a business, you claim the income and deduct the expenses related to creating that income.
The IRS doesn't judge how well you run a business.
You may have reasonable losses for multiple years.
Many new businesses have several years of losses before making money.
Having a chat with a Certified Public Accountant (CPA) or Enrolled Agent (EA) can help. During the early summertime, when business is slower, is one of the better times to meet with them.
No. They will do it automatically if they pay you over $600 in a year, and sometimes they'll do it for less. Expect one from every place you play and receive money or other consideration from. I can't answer your other questions, but that one I can.
It is, actually. We're not talking state laws, this is federal. And applies everywhere, because it's federal.
I know, right? I was planning on keeping a list of items sold during 2022, I guess that idea was a year too late.
