Keeping Track of Your Music Business Finances
One of the questions, I’m frequently asked by musicians, whether singer/songwriter, guitarist, or percussionist is about how to keep track of the money made and the money spent in their music business. Whether making money playing shows or spending money traveling to performances, musicians and other artists should keep good records. Glad you asked!
Keep Record of Other Musicians You Paid
Whether you’re paying a backup singer or a set musician, recording how much you paid other musicians comes in handy for a few reasons:
- You can write-off the amounts paid to other musicians on your tax return, as a music business expense
- You’re able to track whether your performances are profitable after you’ve paid everyone out
- You can budget for your music business income and expenses
Using a software like Xero, which we utilize for all of our music industry businesses, makes keeping track of what you’ve paid your fellow musicians.
Keep Track of Tour Travel Costs
You’re on the road again, and that costs money. Whether you are paying for plane tickets to cities on your tour or a hotel room in the city of your next performance, keeping record of your travel expenses is important. If you’re frequently on the road touring, how do you decide if you’re on target with your tour budget or which cities cost the most to visit without great records?
Travel can also be local. Are you driving with your band to a rehearsal space? recording session? local venue or show? That local performance costs add up! Do not forget gas, car repairs, maintenance, and even washing. Missed taxi fare and parking receipts are likely the biggest culprit of lost tax deductions for traveling musicians.
To keep great records of your travel expenses, I recommend Receipt-Bank . The Receipt Bank iPhone app allows you to take a photo of the receipt from your phone. I’ve previously chatted about iPhone apps for music entrepreneurs and each are helpful with tracking and managing music business expenses.
Keep Up With Album Recording Costs
How much did your latest album cost you to create? Recording studio fees, new equipment, mixing and mastering, album art, graphics, and photography… the list goes on. The physical CDs you order are only one part of the cost of recording an album.
I recommend you keep your music and personal funds separate. Having a separate bank account for your music business helps you keep better track of the costs of making an album. For our music industry customers, we have chosen Xero track album expenses.
What tools are you using to keep track of your music business expenses? Continue the discussion on the Growth Group Facebook Page.