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Discussion in 'Andy Sneap' started by Executioner213, Jun 1, 2008.
Is it even neccessary?
Secondarily, has anyone here gotten like any type of Fine Arts grants or anything here? If so, did it require a business liscense?
I guess the only concern would be if someone were to report you. I have thought of that scenario if another legit studio was losing more business to you and suspected or knew that you didn't have one.
I would be more concerned on the tax paying side of things than opperating a business without a license.
ive been paying taxes on my studio income for the last 5 years and my tax guy said that was probably enough for a studio in my home. if you are renting a commercial space, i would definetly get one.
You saying you payed so much tax money if you had all that money you could have built a home studio?
I think he's saying since it's a studio in his home, paying taxes is enough, and he doesn't need a license.
I have the studio set up as an LLC, don't mess with the IRS homie, it isn't worth it.
If you are making a few hundred bucks here and there I wouldn't worry too much. If you are getting a substantial amount of your income for it, I'd advise you to go legit. Especially if you are taking clients from other commercial studios, somebody will get bent out of shape and turn you in. It's a very competitive business and I have heard horror stories about home studio guys getting a serious fucking from the man. Just sayin.
im saying i pay taxes on my taxable income and also write off expenses.
i do have a really good home studio even with paying the taxes. i want to cover my butt with the irs. eventually i will get a business license as well. writing off expenses allows me to buy more gear. you have much to learn young jedi.
Yea i just was confused about what you said. I just took it different than what you were trying to say. I know all about writing stuff off and taxes though and hopefully if my studio gets built here i will be doing the same. I'm definitely going the LLC route also.
I don't know whats the thing in the states, but in Finland you can do it a few ways:
- Just pay the taxes from your own tax record, but the downside is that for example I have 45% tax percentage after 12000 euros
- Become an independent entrepreneur (we call it a "toiminimi"), for example it comes a lot easier to send legit invoices and you only pay 22% taxes and its deductable, and it has all the advances compared to just paying taxes, except you cant hire anyone as a worker
- Form a company with a friend
I've never understood writing stuff off as business expense...Does it mean you literally get the money back through your return, or does "writing it off" mean it comes off your taxable income (i.e. you don't literally get 100% of what you paid back)?
In income tax calculation, a write-off is the itemized deduction of an item's value from one's taxable income. Thus, if a person has a taxable income of $50,000 per year, a $100 telephone for business use would lower the taxable income to $49,900. If that person is in a 25% tax bracket, the tax due would be lowered from $12,500 to $12,475. Thus the net cost of the telephone is $75 instead of $100.
Writing off means that it subtracts from your taxable income. It is great. Since I own my own music business, I can write off nearly anything related to music, much like large companies do. (Gear, CDs, concert tickets, computers, etc, etc, etc) I would get an accountant who can give you a list of everything that you can write off to make it really easy.
I'll break down what iekobrid and Zack wrote into simple english, cause even though I know exactly how it works, those definitions confused me ...
1) let's say you make 50k a year
2) let's say the tax you pay for making 50k a year is 15k
3) so you'd end up with 35k left for yourself and you paid 15k
4) now let's say you write off 5k for buying something work related, like a cool preamp and a microphone
5) you would then have costs or loss of 5k, which makes your turnover 45k instead of 50k
6) now the tax on 45k is maybe 12,5k
7) so you end up with 32,5k left for yourself, but you got 5k worth of stuff for your company and you paid less taxes (2,5k less) to the man
Thanks guys...That's what I figured it meant, but the way some people talk, it's like free gear or something
I think I'm going to become/start/whatever an LLC so I can do this. At least going legit, I'll be able to recoup some $$$. Seems like I spend all that I make in recording back into the "business", though...What if your expenses are as much or more than what you made?
hey man. you dont have to be a llc to do write offs on your taxes. i am not saying it isnt a good idea, i am just saying you dont have to. get a good tax guy to do your stuff for you. save receipts. some years as a small studio you will spend more than you make. those years you will get a bigger refund or pay less if you owe. as long as you pay taxes and report your income you aren't screwing the irs. they just want you to pay taxes on the money you should. my tax guy is a musician and has a studio himself and does taxes for other people with studios as well. a good tax preparer will let you know all the info you need. good luck.