Music Composers Unite!
I have been composing for a while, now, but just started putting my work out there to make a profit. I love what I do and plan on doing this for as long as I can. My question is, when do you file as self employed? I am now just freelancing , when I can. I am making money but not a big profit. My income isn't solely based on my money that comes from taking jobs, right now (although I am working toward that).
So, when did you file as self employed or as sole proprietor?
Also, when renting or buying a home, how do you make sure you are taken seriously, as self employed? Do you keep spreads on your profit , or use a separate account (for business and tax fees)? When paying yourself, do you write up your own 'paystub' for references?
My apologies if these questions are a bit simple. I just feel a bit overwhelmed and do not want to put myself in a financial down spiral. I want to start off right and make smart decisions.
Any advice would be appreciated.
The three best pieces of advice that you will ever get are;
1) Find a CPA (Certified Public Accountant)
2) Find a CPA who knows the arts.
3) Find a CPA who specializes in the arts.
At the very least, they can answer your questions and concerns and set you up with the proper information to make these decisions. They can also instruct you on what records you need to be keeping. Once you are set up, using a decent accounting program will be enough until you get rich and famous and require their services full time.
Any information you get here or on any other forum will be anecdotal at best and could possibly be wrong enough to get you into trouble.
The investment in this service will more than pay for itself over time if for no other reason than the piece of mind.
A visit with a good attorney would also be a wise investment. If you are serious about doing this as a profession, you need to take the business side of it just as seriously.
Don't know what country you're in, so not sure what rules apply.
I'm in Australia, and in '95 I started a recording studio and registered as a sole trader. I got a good accountant - as advised - and one of his most important tasks every year is to calculate the depreciation on my assets. With this constant deduction, I have managed to make a loss on paper every year, so I pay no tax on it. This sometimes means I have to buy some new gear every now and then to keep up, and how I hate acquiring shiny new stuff!
Here, you also get a business trading number, and some of my clients require you to have a BN so they can claim your invoice on tax.
Make sure, though, if you're working from home, not to mix home and business expenses (electricity, phone, etc), as that gets really sticky, both with the tax man and the asset value of your house