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I’m a CPA. AMA!

#21
I am not a "paid musician" so alas I cannot write off any of my gear...even though I play every week (praise band at church)....it's a bit frustrating but I live with it.

I own my own business so I know "why" and the rules about such things but still.....a bit frustrating.

I also donate quite a bit of time performing valuations for people who donate certain medical related items (I do equipment valuations) and again, the IRS does not allow "time" to be written off as a donation...again - a bit frustrating...

That being said, I do both because i want to give back...not for any gain, but a tax break is always welcomed!
 
#22
I’m not a CPA but I know a guy who is, and he went broke and filed for bankruptcy. He started buying property like crazy, then 2008 happened. Happened to a lot of people, but you’d think he would have known better to over-extend himself, when a CPA is supposed to warn their clients about such perils.

Now, back to our regularly scheduled post.
 
#23
Is G.A.S. a medically recognized condition, and if so are purchasers AND dealers eligible for refunds based on any purchases based on whimsy, and are any ill informed purchases eligible for refund, or just the purchases made with reasonable research?
 
#26
Greenman72 said:
Depends on the situation and what constitutes a "small time band". (Note - never played in a band myself.)

The best thing to do would be to create some kind of entity (probably an LLC) and put all the income/expenses into the LLC and distribute profits periodically. That accomplishes a few things:
1. It makes itemizing the income/expenses easier,
2. It allows for cool legal "stuff" to happen. So if you had, say, a drummer that was cool, and you wanted to play with him and pay him, but not give him any ownership of the LLC, you could do that. He would have no say in the LLC or the administrative direction of the band.
3. It allows the tax burden to be shared proportionally. Otherwise, the person who receives the income will have to bear the tax burden. (i.e. the 1099 will be in some person's name, not the band name)

This would be the ideal situation. Whether it's cost-effective is up to you. But sometimes it's worth it to pay somebody else to deal with all these things before they become problems.
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Overkill for most bar bands. In California, there is an $800 annual tax on LLCs. And that's before you start paying the CPA. Easier for one guy to take the cash and disperse it with 1099s, and have everyone file a Schedule C. (My wife's a CPA and I used to be a registered tax preparer.)
 
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#29
N. Kentucky Bass said:
Overkill for most bar bands. In California, there is an $800 annual tax on LLCs. And that's before you start paying the CPA. Easier for one guy to take the cash and disperse it with 1099s, and have everyone file a Schedule C. (My wife's a CPA and I used to be a registered tax preparer.)
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Agreed. Except the $800 thing is CA only. Costs nothing here in OH and in most other states.

Also, as a CPA you are not necessarily expert in tax. (Wife of Ukiah Bass is quite good at her job). Auditing, financial statements and accounting are a big part of the CPA exam and experience. I was an auditor during my time in public accounting and very little exposure to tax. When I went back into public I picked up a Masters in Taxation to bolster my skills. I was in classes with folks who were EAs (enrolled agents) and they were just as good in tax world as the CPAs in the class.

A good tax advisor is someone who has experience and is knowledgeable in tax. A CPA or an Enrolled Agent are good places to start. And my advice is to keep thigs as simple as possible. Needless complexity adds to your cost and you often end up shooting yourself in your foot.
 
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#31
N. Kentucky Bass said:
Overkill for most bar bands. In California, there is an $800 annual tax on LLCs. And that's before you start paying the CPA. Easier for one guy to take the cash and disperse it with 1099s, and have everyone file a Schedule C. (My wife's a CPA and I used to be a registered tax preparer.)
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Let's be honest here. A lot of people still getting paid in cash to play bars, and if you don't need to, why would you ever deposit it in the bank?

Now if you're playing at a higher level, then yeah maybe its worth it.

Kinda like financial advisors are most useful for people with decent levels of disposable income.
 
#32
N. Kentucky Bass said:
Overkill for most bar bands. In California, there is an $800 annual tax on LLCs. And that's before you start paying the CPA. Easier for one guy to take the cash and disperse it with 1099s, and have everyone file a Schedule C. (My wife's a CPA and I used to be a registered tax preparer.)
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I would probably agree with this.

Have one person be the AD (Administrative Dude--don't know what you call them in the band world) and he would be responsible for collecting money, depositing money, writing checks, and issuing 1099's. (Presumably he would get paid for doing that.) Then everybody reports their own income/expenses on Schedule C. (And then you can write off your musical equipment.)

I think the separate LLC which is handled as a true "partnership" is the theoretical best way to go. But that's like taking a class on multivariate calculus, when all you need is a little algebra.
 
#34
Micha84 said:
What is a CPA?

Nevermind. Maybe it's common knowledge in the US, for everybody else who was confused like me, this is what Google comes up with:
"A Certified Public Accountant (CPA) is a trusted accounting professional who has gone through a rigorous exam process. They have completed and mastered the three branches required for this accounting license, which are education, experience, and exam."
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This comment highlights just how much taxation in the US is an industry unto its own. The rest of the world doesn't force its citizens to go through onerous and confusing forms on an annual basis, and hasn't created the false need for CPAs, tax preparation software, the IRS, etc. It doesn't cause poor people to desperately search for every loophole possible to retain their wages, while the wealthy can just hire a CPA to find the loopholes for them.
 
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#36
abarson said:
This comment highlights just how much taxation in the US is an industry unto its own. The rest of the world doesn't force its citizens to go through onerous and confusing forms on an annual basis, and hasn't created the false need for CPAs, tax preparation software, the IRS, etc. It doesn't cause poor people to desperately search for every loophole possible to retain their wages, while the wealthy can just hire a CPA to find the loopholes for them.
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As much as I enjoy the rant, but I just didn't know that abbreviation. Otherwise your situation sounds just like Germany to me (where I'm from). Except that the people you can hire to do your taxes for you here will outright refuse you if you are an average citizen - not enough money in it for them.
I bet I could get some money back on my yearly tax declaration, but I am afraid of committing tax fraud by accident :D

But we are drifting off topic...
 
#37
In the late 80s, I had an all original band and we started gaining some traction. We played bars and some theaters and all of a sudden we got a letter from the IRS requesting 4 years in back taxes for the band and for each member. I guess the colleges we played reported the income, and maybe the theaters. We had been told, erroneously, that we weren't making enough to report. So, we got an accountant and gave him all of our records. He charged us $1k for all the returns and we owed as a band $300 to the IRS. The guy was a miracle worker. Sadly, he hightailed it back to Sicily after catching some heat from someone (IRS? Boston Mafia?). Then, we got a management and our income ballooned to over a quarter million within a year. then our drummer quit to live in a cave in Hawaii which imploded the band.

Since then, I have always insisted on reporting everything and creating a legal partnership for the band. Having lived through one audit, I don't want to go through another.

These days, my day job is being an attorney (albeit immigration, although I have assisted a number of fantastic musicians get green cards), but 25+ years of full time musicianry was eyeopening in the business world.

At the very least, keep track of expenditures and mileage. It adds up quick.
 

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