The holiday season has begun and that should signal year-end planning and assessment. Some acts may be performing a great deal during the holidays, with private parties and special events scheduled. Others may be entering the “slow” season and find you have some extra time on your hands. This is a great time to take stock of your supplies and inventories, evaluate how well you did financially and do some end of the year tax planning.
The first place to begin is to review this past year’s income. Gather all of the touring expense receipts and personal expenses. Make an appointment with your accountant to do a preliminary review if you haven’t been tracking your income and expenses throughout the year. Whether you are working with an accountant, (which is highly recommended) or doing your accounting on your own, this preliminary review can provide the necessary information regarding the tax liability with which you will be faced this year. With a heads-up before the end of the year rolls around you can take some pro-active measures to reduce your tax bill and ensure that you are well stocked to begin the next touring season. If you find that you don’t need any additional deductions this year, you might delay spending money on some of the items suggested below until well into the next year or delay payments for the items until after January 1.
Let’s start by looking at your office supplies. If you keep a stock of computer paper, labels, business checks, notepads, calendar systems such as Day-Timer, CD-Rs, etc., this may be the perfect time to stock up for next year. By spending the money on the supplies now, you can expense these items in this year’s tax return. If you mail-order the supplies in bulk, you not only save money on the sales tax and on the per item cost, but you won’t have to spend extra time while you’re busy touring doing last-minute shopping for office supplies and pay premium prices.
Merchandise inventory might also be getting low. T-shirts and CDs might need re-ordering for the winter and spring touring season. This may be a difficult time to push your job through at the manufacturers since they may be swamped getting their orders completed by Christmas. If you need some additional deductions, you might place your order with the manufacturer and send a deposit before the end of the year even though the job won’t be done until the beginning of the next year. You are still able to take the deduction for the deposit in this current tax year. If you are confident about your manufacturer, you may pay for the whole job in advance.
This is a great time to review your promotional material. Does it need an update featuring some of the new and exciting career developments that recently occurred? This is also a great time to think about next year’s tours and create any new thematic posters, flyers, one-sheets or set up a new photo session. By planning ahead for next season’s tours, you will be ready to send out new materials to prospective bookers and the media. Again, any expenses incurred in this last month can be deducted in the current tax year.
If your financial review reveals the need for some major purchases, you might first consider whether you have maximized your contribution to your retirement plan. If you have not, or if you haven’t started a retirement plan, there is no better time to do so than immediately. Again check with your accountant or a financial planner for a plan best suited to your needs.
Once the retirement plan is in place and fully funded for the year and you are still looking for additional expense items, consider the state of your instrument insurance—do you have any? If not, consider adding a rider to your renter’s or homeowner’s insurance. Check with Clarion about their instrument insurance.ASCAP also provides instrument insurance.
Now that you have taken care of some very important financial considerations and still find room for further deductions, perhaps you can purchase some long needed stage equipment, a new instrument, a new computer or peripherals. Check with your accountant, some of these purchases may only qualify for depreciation rather than a full expense deduction. Perhaps you can make plans for a marketing campaign or pay ahead for conference registrations and organizational memberships. By tracking deadlines for registrations, not only will you benefit from the expense deduction in the current year you will more than likely save money on the early registration discounts offered by the various conferences. Look ahead to the next year to determine whether any upcoming expenses can be paid ahead during the current year to benefit from the deductions. Or, if you are set for this year’s tax deductions, you may need to consider delaying payments on certain purchases until after the New Year and take the deduction in the next tax year.
This is a great time to take advantage of a year-end review for tax purposes and do some very strategic planning for the next touring season. Not only will you reap the benefits this year, but you’ll jump-start your planning for next year as well. Good luck!
And, I invite you to learn more about this and other topics important to your career development and to sign up for free weekly audio Biz Booster Hot Tip! Every Monday you’ll get another valuable strategy and technique that you can put to use immediately. You’ll find helpful books, career development seminars, Booking & Touring Success Strategies & Secrets online course and information on booking tours, the music business and performing arts. It’s all waiting for you at https://www.performingbiz.com. Jeri Goldstein is the author of, How To Be Your Own Booking Agent The Musician’s & Performing Artist’s Guide To Successful Touring, 3rd Edition.
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