Join Richard Stim for an in-depth discussion in this video Sole proprietors and partnerships, part of Taxes and Accounting for Music.
- How you categorize your music business,…that is whether you are a partnership, corporation,…sole proprietorship or LLC,…affects how you prepare your taxes…as well as how much taxes you pay.…In this video, I'll summarize the rules…for the two most common music business forms,…sole proprietorships and partnerships.…Sole proprietors.…If you're making music on your own,…that is you're not apart of a musical group…and you haven't formed an LLC or corporation,…you're a sole proprietorship,…a music business that is owned and run…by just one person, for example,…a solo artist or session musician.…
As a sole proprietor, you file a Form 1040…and attach a Schedule C to report your music income…and deductions.…If your music business loses money,…you can deduct that loss from income from other jobs,…reducing your total taxes.…As a sole proprietor, you have some other…tax obligations.…You must pay self-employment taxes…and you may have to pay quarterly estimated…income taxes.…As a sole proprietor, you are also eligible…for tax-sheltered retirement plans.…
In this music business course, author Rich Stim covers the most important tax issues for musicians. He starts with the basics: determining if music is a hobby or a business for you and how that affects your deductions. He then discusses money and the sources that determine gross income. From there, he shows the items you can deduct from your gross income—mileage, studio spaces, touring expenses, and other miscellaneous deductions—that can add up to big savings. Next, he covers the different tax rules for individual musicians, bands, general partnerships, LLCs, and corporations, and explains how to get an Employer Identification Number (EIN) when you need one. Finally, Rich navigates through the tax forms, including Form 1040, Schedule A, Schedule C, Schedule SE, Schedule K-1 (Form 1065), Form 4562, Form 8829, and Form 2016, and provides advice on hiring a tax preparer or going the DIY route with tax software.
DISCLAIMER: This course is taught by an attorney (or other instructor) and addresses US law concepts that may not apply in all countries. Neither LinkedIn (including Lynda.com) nor the instructor represents you and they are not giving legal advice. The information conveyed through this course is akin to a college or law school course; it is not intended to give legal advice, but instead to communicate information to help viewers understand the basics of the topic presented. The views (and legal interpretations) presented in this course do not necessarily represent the views of LinkedIn or Lynda.com.
- Managing bookkeeping
- Counting income
- Claiming expenses and other deductions
- Understanding tax entities such as LLCs
- Getting an employer ID number
- Preparing and paying taxes