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I’m a CPA. AMA!

#42
Ok, so let me get this straight: first we start learning on our own time, then we need to start taking busted guitars to pros, then we are taking boken amps to qualified amp techs, now we are going to professional tax people. Next thing you know musicians will be considered professional.

Please not a friend of mine (non musician) lost a huge chunk of coin by doing his own taxes.

My first crack at my own business I did an experiment on the taxes. I did my own then went to a pro (CPA), who promptly saved me about 40k in 1999 dollars.
 
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#45
This is an interesting thread. I've always used a CPA. I have two college teaching gigs that cover my tax burden. My other income is performance. At the end of the year I HATE doing all the work to put my deductions together, etc.
Would you @Sonoma Bass and @Greenman72 recommend using a bookkeeping app like Wave or another non Quickbooks app to keep track of things through the year, and how important is it for me to have a separate bank account for my performing and private teaching income (and another credit card)? Is an app overkill? I'd love to use one of the ones that do mileage, as I use mileIQ now. I report everything. @edwinhurwitz I got a cassette of Garuda's Groove from a friend when I was in high school (91?). I'd love to hear more if you still have any more Shockra somewhere online!
 
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#46
dylanjohnson said:
This is an interesting thread. I've always used a CPA. I have two college teaching gigs that cover my tax burden. My other income is performance. At the end of the year I HATE doing all the work to put my deductions together, etc.
Would you @Sonoma Bass and @Greenman72 recommend using a bookkeeping app like Wave or another non Quickbooks app to keep track of things through the year, and how important is it for me to have a separate bank account for my performing and private teaching income (and another credit card)? Is an app overkill? I'd love to use one of the ones that do mileage, as I use mileIQ now. I report everything. @edwinhurwitz I got a cassette of Garuda's Groove from a friend when I was in high school (91?). I'd love to hear more if you still have any more Shockra somewhere online!
Click to expand...
Everyone is different in what they "need" to keep track of income and expenses. I've been an independent contractor for 30+ years and have managed to keep things straight with Excel and a single bank account covering personal & business expenses. If you've got a ton if expenses and income streams, an app or Quickbooks might be necessary. Start with your CPA and ask: is what I hand you enough to do the job for a reasonable cost? Does there need to be more structure to minimize risk and annoyance? Go from there. Business accounting processes can quickly become the tail wagging the dog if they are unnecessary.

Depending on your political views, the new president says he'll eliminate income taxes with tariffs. THAT would simplify record keeping, but I wouldn't hold my breath on this one.
 
#47
Obviously, the answers to almost all these questions is "it depends".
You don't HAVE to have a separate bank account, but it certainly makes the recordkeeping easier. I have a lot of clients that do their books using bank statements and an Excel spreadsheet. Heck--I've even done that myself for clients, and some of them are multi-millionaires. So it doesn't have to be really complicated.

Did that answer your question?

(edit - Sonoma Bass" beat me to it. He gave pretty good answers.)
 
#49
Another factor not mentioned here - Having a licensed CPA file electronically lowers the likelihood of a random audit. It's also gotten me out of the IRS's crosshairs where I was for 5 years due to their own errors.

I pay a CPA $500 a year to handle my personal, contract business and music (also contract) business taxes. I keep track of revenue and expenses, including what I pay others, and provide him with a summary and details. I also provide him with personal and SSN info for musician/contractors I pay $600 or more to for the year - He then sends out 1099's using my DBA & EIN# (just did early this week).

He's worth it.

And I get to expense the $500 the following year.
 
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#51
Pocket Dave said:
Another factor not mentioned here - Having a licensed CPA file electronically lowers the likelihood of a random audit. It's also gotten me out of the IRS's crosshairs where I was for 5 years due to their own errors.

I pay a CPA $500 a year to handle my personal, contract business and music (also contract) business taxes. I keep track of revenue and expenses, including what I pay others, and provide him with a summary and details. I also provide him with personal and SSN info for musician/contractors I pay $600 or more to for the year - He then sends out 1099's using my DBA & EIN# (just did early this week).

He's worth it.

And I get to expense the $500 the following year.
Click to expand...
I do the same. Absolutely worth it.
 
#52
Serious question- the wife, now retired was a comptroller with a pretty big government agency- she’s competent. We are having difficulties with PayPal’s listings on my sales. For example- every sale I completed was tagged as “Pedal A”, whatever. PayPal’s records do not reflect this. Their records simply show I received X amount of dollars. I do not sell for profit; i think I typically lose 10-15% once shipping is calculated but there have been enough sales both here and on Reverb that pushed me over the $5k limit that I received 1099 forms. How do i link these sales with what i purchased these items for? Can i simply pull up a dollar amount listed on a sale and match it with another PayPal purchase? TIA…
 

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