Register your dj schtick as a biz and save on taxes?

[Prince HiFi]

Somebody mentioned something about saving your receipts for taxtime and got me wondering:

Are there tax savings to be had by registering your dj habit as a business and using record and equipment purchases as expenses and your gig fees as revenue: the inevitable losses would mean a savings on the taxes you pay annually from your day job.

Anybody have any insight into this?? Perhaps this doesn't really work?


Prince HiFi

[David Le C]

I think this could only work when it's your full-time profession, but I don't know a lot about it either, eager to learn though...

[nev m]

Originally posted by Prince HiFi:
Somebody mentioned something about saving your receipts for taxtime and got me wondering:

Are there tax savings to be had by registering your dj habit as a business and using record and equipment purchases as expenses and your gig fees as revenue: the inevitable losses would mean a savings on the taxes you pay annually from your day job.

Anybody have any insight into this?? Perhaps this doesn't really work?


Prince HiFi I used to do this years ago when I was running it as a business. Just like any business your expentiture is tax deductable so you can claim for all sorts. (it is the entertainment business after all)!! graemlins/cheering.gif

[Tenyu]

yes, all you have to do is show intent if you file as a dj, you can deduct all equipment, all records, all related traveling expenses, and even your rent if you use it as your studio. you can turn your losses into a fat return check every year if you are one of the myriad of wannabe djs like me on this board

[imported_Gman]

I did this for 3 years. There is a rule I think that says you have to show a profit at least two out of 5 years. I was able to deduct all expenses related to DJing (records, equipment..etc). If you spend a lot of money on Djing this can mean a substantial savings on your taxes. This is a good idea. Do it now ! graemlins/OLA.gif

[rob gregory]

Peace.


Is there some kind of ratio between what you spend and the profit?

If I sold mixed CD's for a nominal fee, could that be my business; hence I'm able to write off my expenditures?

If my questions make no sense it's because I have no idea how this works.

[Querck]

This is an interesting topic. Makes me wonder what the full-time dj's claim as their income, considering the impossibility of tracing all the cash.

[Koffy Brown]

great information....so as far as the 2 out of 5 years rule, it doesn't matter which 2 years, just as long as you show a profit dealing with DJ'n right?

[Austin/Dallas]

careful...any incoming revenue will also be taxed from events you catered to and received pay unless you state that you had no revenue and that your busines is in the process of development.

[martino]

Originally posted by David Le C:
I think this could only work when it's your full-time profession, but I don't know a lot about it either, eager to learn though... thats not necessarily true. if you have a day job and you dj a few nights a week/month, you separate the two incomes. your deejaying is your freelance business that pays you as an individual. your day job is just a secondary job...hopefully its one that deducts all the taxes out of each cheque that way youre not going crazy during tax time. But Because its freelance in the entertainment field you can claim so much it gets insane. from parking/gas to records to lunches. there is a balance you should try to reach though.

[Bill Blake]

Wouldnt you also have to report and pay taxes on any income you generate?

[mhd]

Originally posted by dannyboy:
This is an interesting topic. Makes me wonder what the full-time dj's claim as their income, considering the impossibility of tracing all the cash. same as any cash based business, or waiters, dancers restaurants, etc. and yes you would have to declare income and could possibly be subject to tax liability. you don't have to necessarily "register" you could operate it as a sole proprietorship. amazing that cats are not taking advantage of this, its worth the investment to speak to an accountant or do some research on the web, there is a ton of information out there

[imported_Gman]

Originally posted by Jamie Lennox:
Wouldnt you also have to report and pay taxes on any income you generate? Yes but the idea here is most of you have huge losses because you spend way more than you bring in.

[Bill Blake]

True

[Koffy Brown]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Jamie Lennox:
Wouldnt you also have to report and pay taxes on any income you generate? Yes but the idea here is most of you have huge losses because you spend way more than you bring in. </font>[/QUOTE]so keep the record purchase receipts...

[Dr. Freud]

Originally posted by Ashaki:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Jamie Lennox:
Wouldnt you also have to report and pay taxes on any income you generate? Yes but the idea here is most of you have huge losses because you spend way more than you bring in. </font>[/QUOTE]so keep the record purchase receipts... </font>[/QUOTE]Yes, yes... this is KEY. A friend of mine was audited recently and it saved his ass. ALWAYS keep receipts especially when paying with cash. Regarding the rule that GMan brouoght up, you must prove that you profited 2 of 5 years: this means that you made more money by DJing and selling mix CDs than you spent on records, equipment, travel, gas etc... so be careful what you do. You will have to pay taxes on those profits.

[rob gregory]

Peace.


Do you have to declare yourself a business in any offical way?

[mhd]

Originally posted by PhoreAyem:
Peace.


Do you have to declare yourself a business in any offical way? you in cali right? each state is different, you can always incorporate, under the different forms of corporations, or you could operate as a sole owner of your business, which in many states does not require "declaring" or registering anywhere. the real question is do you make enough money at it or do you spend enough money on it (as a business, not as a hobby) to justify seeking professional help from a cpa or attorney. because the professional can establish you in the best position to take advantage of the tax laws instead of the other way around

[nev m]

Originally posted by PhoreAyem:
Peace.


Is there some kind of ratio between what you spend and the profit?

If I sold mixed CD's for a nominal fee, could that be my business; hence I'm able to write off my expenditures?

If my questions make no sense it's because I have no idea how this works. Yes you could do that! Infact it's a brilliant way of subsidising your record purchases! (What a wicked post man! Make the fat man a little less fat!!!)

[nev m]

Originally posted by Jamie Lennox:
Wouldnt you also have to report and pay taxes on any income you generate? Yeah! (But don't forget the hustle Jamie!!) biggrinangel.gif

[imported_Gman]

I recently did this for Linda. Her business was called ArtWare. She has her Art work for sale in a shop that she shares with 10 other people. She pays a monthly rent for the space and she has her own website (www.artware.com). If you use one of those Tax programs like Turbo-Tax it was pretty easy to do. She did not have to fill out any special paperwork for her business and her social security number is her business ID. She was able to deduct all her Art supplies and equipment. The program walked us thru all the required tax forms and prompted us to input all the number (expenses and sales).

-G

[mhd]

Originally posted by Gman:
I recently did this for Linda. Her business was called ArtWare. She has her Art work for sale in a shop that she shares with 10 other people. She pays a monthly rent for the space and she has her own website (www.artware.com). If you use one of those Tax programs like Turbo-Tax it was pretty easy to do. She did not have to fill out any special paperwork for her business and her social security number is her business ID. She was able to deduct all her Art supplies and equipment. The program walked us thru all the required tax forms and prompted us to input all the number (expenses and sales).

-G g, you could probably invoice her for the website

[nev m]

Originally posted by Gman:
I recently did this for Linda. Her business was called ArtWare. She has her Art work for sale in a shop that she shares with 10 other people. She pays a monthly rent for the space and she has her own website (www.artware.com). If you use one of those Tax programs like Turbo-Tax it was pretty easy to do. She did not have to fill out any special paperwork for her business and her social security number is her business ID. She was able to deduct all her Art supplies and equipment. The program walked us thru all the required tax forms and prompted us to input all the number (expenses and sales).

-G It's true if you play your cards right you can legitmately make loadsa purchases to do with your business, and obviously you aren't gonna pay tax. Even if your turnover is huge you may as well spend it on yourself as give it to the Fat man.

Which reminds me I have to nip down to the travel agents to book my next record shopping trip in St Lucia!! :D

[imported_Gman]

Originally posted by mhd:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
I recently did this for Linda. Her business was called ArtWare. She has her Art work for sale in a shop that she shares with 10 other people. She pays a monthly rent for the space and she has her own website (www.artware.com). If you use one of those Tax programs like Turbo-Tax it was pretty easy to do. She did not have to fill out any special paperwork for her business and her social security number is her business ID. She was able to deduct all her Art supplies and equipment. The program walked us thru all the required tax forms and prompted us to input all the number (expenses and sales).

-G g, you could probably invoice her for the website </font>[/QUOTE]??? What do you mean

[mhd]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by mhd:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
I recently did this for Linda. Her business was called ArtWare. She has her Art work for sale in a shop that she shares with 10 other people. She pays a monthly rent for the space and she has her own website (www.artware.com). If you use one of those Tax programs like Turbo-Tax it was pretty easy to do. She did not have to fill out any special paperwork for her business and her social security number is her business ID. She was able to deduct all her Art supplies and equipment. The program walked us thru all the required tax forms and prompted us to input all the number (expenses and sales).

-G g, you could probably invoice her for the website </font>[/QUOTE]??? What do you mean </font>[/QUOTE]I was assuming that if linda had a website that you put it together. but if she had someone else to do it they would charge her. so, for example if her income on art sales was 10k and you "charged" her 2k for web design, you could lower her taxable income by 2k and she only gets taxed on 8k. although the tax implications for you is a 2k increase in income

[Light Skinted Wif Good Hur]

I was told you had to show a profit within the first 3 years(don't know if it's 2 of 5, or 1 of 3)--but if you don't do that then it will be considered a hobby and you wil have to pay back taxes + penalties on all those write offs!

[danny webb]

Thinking about what Whyteout says, if in year three you aint making a profit, you just tell them you bought no records, made no expenses etc, this way, your two $200.00 gigs in that year would be a profit, no? Surely that one year of no tax claim makes up with the other two you get in lieu for making a profit in year three, OK they'll notice by year six, but you declare bankruptcy at that point, or just bow out, haviung learned a lesson.

GMan regarding Linda's website (I don't know the benchmark in the US), you could set up GwebDesigns as a secondary business, and considering you only earned $2000.00, you probably won't get taxed at all on it. that's money in both your pockets (obviously cut Linda a slice, then she may ask you to do more updates),rather than the Tax Man.

[mdpm99]

Obtain a DBA....."Doing Business As" -- and you can deduct everthing from your sun glasses 2 your records. You can also buy wholesale and save 45%
on purchases of your records and etc.

d

[Monny JcIntosh]

I have no business brain whatsoever. How could you go about this in the UK?

[danny webb]

Jonny you need to go to inlandrevenue.gov.uk, and fire off an email, there are some stipulations, I think you have to register your company name (although I haven't for my admin business! I may get bollocked yet.). Alternatively you could look for your local government funded Music network, there is one here in Mcr, which helps starters with all sorts of issues.
This does mean you will have to provide invoices where you can, which is difficult with most promoters, cos they mostly won't run you through their books, unless your charging a lot of dollar.

lemme know if you get any help from the revenue site, as I haven't done this yet, but keep meaning to. My mate runs his vinyl receipts through his studio business, and has no problem getting his VAT back.

If you are really small scale with your earnings & spendings (yeah right on the latter), it may be too much hassle, but my recent first ever tax return only took two helpline calls, I did it all online. But I am waiting to see if I did it right.

Good Luck & get back.

[Monny JcIntosh]

Thanks Danny, I just asked an accountant friend of mine who seemed sceptical, especially of convincing customs & excise that your records are wholly and necessarily for your business. But I guess if people are doing it then it's deemed fine. Let us know how you get on Danny.

[danny webb]

Originally posted by Jonny McIntosh:
Thanks Danny, I just asked an accountant friend of mine who seemed sceptical, especially of convincing customs & excise that your records are wholly and necessarily for your business. But I guess if people are doing it then it's deemed fine. Let us know how you get on Danny. DJ's definately do this, ask in Smallfish (or wherever you shop) next time you're there, a lot of DJ's ask for VAT receipts as oppose just till receipts. I'll dig a lil' deeper on the subject for you.
BTW everyone, you need VAT receipts (these show the VAT number, as oppose usual till receipts.), I think you can also get away with writing on the VAT number for ones you forgot to ask for, you nee to ring the store and ask their VAT (is it someythin' else in the US?), number, then write it on each receipt.

[suenomartino]

obviously there are different tax laws for every country, but the basic principal is the same..

the first year I declared my dj earnings (and spending) I got a $4000 return.

worth the effort IMO!

[danny webb]

Sheit, I spent almost £4000.00 on DJing last year, and earned about £40.00.
The investigation starts tomorrow.

Well done Sueno