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Declaring yourself a DJ business

DB_CooperDB_Cooper Manhatin' 7,823 Posts
edited October 2007 in Strut Central
Hey all-I'm looking for information on how to go about declaring myself a DJing business, i.e. how much do you have to make in income each year, what agency do you deal with, etc. I'm in Massachusetts. if that helps.Also, I recall folks talking about standard contracts that you can pick up at Staples a while back. Any specific recommendations about which ones to use, how to properly use them, etc?Thanks in advance!-GBH

  Comments

  • yoigotbeatsyoigotbeats 1,667 Posts
    in most states it's as easy as setting up a DBA at your country clerk's office. Then you can get an Employee Identitication Number from the Fed gov and that will get you a bank account not tied to your social. After all that's done, make sure to keep records at good as possible cuz Uncle Sam will come a callin!
  • DB_CooperDB_Cooper Manhatin' 7,823 Posts
    in most states it's as easy as setting up a DBA at your country clerk's office. Then you can get an Employee Identitication Number from the Fed gov and that will get you a bank account not tied to your social. After all that's done, make sure to keep records at good as possible cuz Uncle Sam will come a callin!

    Thanks! I'm actually banking on the Feds paying attention, since I'm looking to write off as much record/equipment expenditure as possible.
  • djkingottodjkingotto 1,704 Posts
    i am looking at the same thing soon. my regular square job was bought out by another company and since they don't need all of us, i got the boot - as of april 30th. the sizable severance will pay off my truck and credit cards leaving me with just a mortgage that i can easily handle with my djing. i'm gonna use the unemployment and take advantage of the schooling thats offered but mostly i hope to maintain a living off djing/mix tapes/selling these beats! looking forward to working 16 hour weeks and taking home as much as i did at the last jobby job! finally.
  • DJBombjackDJBombjack Miami 1,665 Posts
    GET A GOOD CPA!

    I cannot stress that enough. I set myself up as a S-Corp here in Florida. All checks paid to the company then I pay myself from the company. Better for tax reasons. Keep receipts for everything, including restaurant bills. Gas. Insurance.
  • yoigotbeatsyoigotbeats 1,667 Posts
    GET A GOOD CPA!

    I cannot stress that enough. I set myself up as a S-Corp here in Florida. All checks paid to the company then I pay myself from the company. Better for tax reasons. Keep receipts for everything, including restaurant bills. Gas. Insurance.

    and you don't need an S-Corp unless your "profit" is more than 15K
  • DjArcadianDjArcadian 3,632 Posts
    in most states it's as easy as setting up a DBA at your country clerk's office. Then you can get an Employee Identitication Number from the Fed gov and that will get you a bank account not tied to your social. After all that's done, make sure to keep records at good as possible cuz Uncle Sam will come a callin!

    Thanks! I'm actually banking on the Feds paying attention, since I'm looking to write off as much record/equipment expenditure as possible.

    Remember the following.

    Equipment needs to be depreciated. Don't think you get to write off $3000 when you buy that sampler.

    You need to show a profit at sometime within the first 5 years. Actually, I'm not certain but I think you may have to show a profit 3 out of 5 years. Otherwise they'll classify your business as a hobby and you lose all your deductions.
  • DJBombjackDJBombjack Miami 1,665 Posts
    GET A GOOD CPA!

    I cannot stress that enough. I set myself up as a S-Corp here in Florida. All checks paid to the company then I pay myself from the company. Better for tax reasons. Keep receipts for everything, including restaurant bills. Gas. Insurance.

    and you don't need an S-Corp unless your "profit" is more than 15K

    But also as an S-Corp the company doesn't need to file quarterly taxes. At least that's how it is here in Florida.
  • DjArcadianDjArcadian 3,632 Posts
    GET A GOOD CPA!

    I cannot stress that enough. I set myself up as a S-Corp here in Florida. All checks paid to the company then I pay myself from the company. Better for tax reasons. Keep receipts for everything, including restaurant bills. Gas. Insurance.

    and you don't need an S-Corp unless your "profit" is more than 15K

    But also as an S-Corp the company doesn't need to file quarterly taxes. At least that's how it is here in Florida.

    Apples and Oranges.

    If you're a corporation you're technically an employee of the company and are required to file taxes monthly or weekly depending on how much you pay yourself. It's a Form 941 tax deposits which requires quarterly filings of Form 941. Your state will require similar paperwork.
  • DB_CooperDB_Cooper Manhatin' 7,823 Posts
    Remember the following.

    Equipment needs to be depreciated. Don't think you get to write off $3000 when you buy that sampler.

    You need to show a profit at sometime within the first 5 years. Actually, I'm not certain but I think you may have to show a profit 3 out of 5 years. Otherwise they'll classify your business as a hobby and you lose all your deductions.

    Great stuff. I don't think it'll be a problem to make the numbers work. As long as I write off less than I earn in three of those years, I'm good, right? As in, say I make $3000 and have $5000 in record receipts. I could just pick out $2950 in receipts and write those off, showing a profit of $50, right? Or is there a threshold you have to cross in order to be considered profitable?

    And how do you determine depreciation? Is there the equivalent of a Kelly blue book out there that lists turntables, mixers, and the like?
  • DJBombjackDJBombjack Miami 1,665 Posts
    This is exactly why you need your own CPA. I'm sure each state has different requirements for filing.
    Technically as a director of your company you can pay yourself any salary you want, even $1, then pay yourself a dividend at the end of the year. A CPA will advise you on the best route to take as it will depend on your earnings.

    *EDIT*
    You can have receipts for more than your earnings, but your CPA will make it work for you. And the golden rule is to pay SOME taxes. Don't even think of trying to work at a loss.
  • DB_CooperDB_Cooper Manhatin' 7,823 Posts
    This is exactly why you need your own CPA. I'm sure each state has different requirements for filing.
    Technically as a director of your company you can pay yourself any salary you want, even $1, then pay yourself a dividend at the end of the year. A CPA will advise you on the best route to take as it will depend on your earnings.

    *EDIT*
    You can have receipts for more than your earnings, but your CPA will make it work for you. And the golden rule is to pay SOME taxes. Don't even think of trying to work at a loss.

    Again, great stuff. I definitely don't want to draw the ire of the IRS, so a CPA sounds like the way to go.
  • DjArcadianDjArcadian 3,632 Posts
    GET A GOOD CPA!

    I cannot stress that enough. I set myself up as a S-Corp here in Florida. All checks paid to the company then I pay myself from the company. Better for tax reasons. Keep receipts for everything, including restaurant bills. Gas. Insurance.

    and you don't need an S-Corp unless your "profit" is more than 15K

    The amount of money you make really has nothing to do with whether or not you should incorporate. It's a matter of your exposure versus your assets. If somebody could sue you and take your house, car, and other assets then it's advisable to incorporate. However, if you rent, have a cheap/no car, etc. then remain sole proprietorship.

    There are 2 primary reasons to incorporate. Saving money through distribution of profits (i.e. pay less taxes) and reducing your exposure.

    The biggest downside to incorporating is the paperwork and fees. It costs money to incorporate (don't do those $99 internet incorporations!), you have to file 2 taxes (one personal, one corporate) and you have an $800 annual fee. If you bring on a partner you need a buy/sell agreement too. Even more $$$$
  • DB_CooperDB_Cooper Manhatin' 7,823 Posts
    It's times like this that I realize how little I really know about the nuts-and-bolts of business.
  • DJBombjackDJBombjack Miami 1,665 Posts
    you have an $800 annual fee.

    Not to sound like a broken record but I think this varies from state to state. Florida's annual fee is around $250.

    But yeah, some pros, some cons. Talk to your CPA and see what they say and judge for yourself.
  • DjArcadianDjArcadian 3,632 Posts
    And how do you determine depreciation? Is there the equivalent of a Kelly blue book out there that lists turntables, mixers, and the like?

    Speak with an accountant. I doubt the IRS has a depreciation tax table for DJ equipment but the music industry is huge so I wouldn't be surprised. Basically figure out the life of the item. Let's say an SL1200 has a club life of 3 years and cost you $500. You could deduct $167 a year until it's zero. If it breaks or you sell it you can write off the remaining balance. The music you purchase would probably also be an asset too. You should probably contact some professional wedding DJs and speak with their accountants for advice.
  • DjArcadianDjArcadian 3,632 Posts
    you have an $800 annual fee.

    Not to sound like a broken record but I think this varies from state to state. Florida's annual fee is around $250.

    But yeah, some pros, some cons. Talk to your CPA and see what they say and judge for yourself.

    That's a federal fee. Should be the same everywhere.
  • DJBombjackDJBombjack Miami 1,665 Posts
    you have an $800 annual fee.

    Not to sound like a broken record but I think this varies from state to state. Florida's annual fee is around $250.

    But yeah, some pros, some cons. Talk to your CPA and see what they say and judge for yourself.

    That's a federal fee. Should be the same everywhere.

    Nope. In the 4+ years i've had my corp i've never incurred that fee. Weird.
  • DjArcadianDjArcadian 3,632 Posts
    This is exactly why you need your own CPA. I'm sure each state has different requirements for filing.
    Technically as a director of your company you can pay yourself any salary you want, even $1, then pay yourself a dividend at the end of the year.

    No, not really. The IRS requires you to pay a reasonable salary meaning a salary that is at an industry standard. I'm sure you're thinking of Steve Jobs and his $1 salary but that's a completely different ballpark.

    However, there is no defined "reasonable salary" but if you were audited you'd have to explain why you were paid the salary you were. Don't expect to get away with paying yourself minimum wage and then getting a $100K distribution at the end of the year.
  • DjArcadianDjArcadian 3,632 Posts
    you have an $800 annual fee.

    Not to sound like a broken record but I think this varies from state to state. Florida's annual fee is around $250.

    But yeah, some pros, some cons. Talk to your CPA and see what they say and judge for yourself.

    That's a federal fee. Should be the same everywhere.

    Nope. In the 4+ years i've had my corp i've never incurred that fee. Weird.

    Hmmmm, you might be right now that I think about it.
  • DB_CooperDB_Cooper Manhatin' 7,823 Posts
    Don't expect to get away with paying yourself minimum wage and then getting a $100K distribution at the end of the year.

    Haha! While I'm sure some folks out there make $100K a year DJing, I'm not one of them, not do I expect to ever be one of them. I just want to write off my records and be square with Uncle Sam.
  • DjArcadianDjArcadian 3,632 Posts
    Don't expect to get away with paying yourself minimum wage and then getting a $100K distribution at the end of the year.

    Haha! While I'm sure some folks out there make $100K a year DJing, I'm not one of them, not do I expect to ever be one of them. I just want to write off my records and be square with Uncle Sam.

    Talk to other professional DJs. Again, full time wedding DJs can probably hook you up with a good accountant.
  • matamaticmatamatic 488 Posts
    did anyone address the issue of getting paid under the table? Do you still declare it?
  • ExtraExtraExtraExtra 209 Posts
    did anyone address the issue of getting paid under the table? Do you still declare it?

    legally you have to declare everything.

    you don't need a CPA for a DJ business. CPAs make bank doing their jobs and unless he's a friend, probably won't have the time for your biz.

    Theres probably a local small business association near you that can offer advice. I did a case study on small business's like this about a year ago. The most important thing is to make sure that keep good records and treat your DJing professionally. As in contracts for all gigs, database of contacts, seperate checking account, ledger. If you do that you should be straight because things as simple as that are what end up distinguishing a business from a hobby.
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