Entertainment is a multi-billion dollar industry. While there are several megastars in the world of entertainment, the industry is also made up of many individuals earning a modest salary and engaging in average jobs in front of and behind the camera.
If you find yourself in this position, you are likely concerned about personal bookkeeping, paying taxes, and covering your mortgage as opposed to buying a Bugatti and multi-million dollar properties. Still, there are several personal bookkeeping challenges you may face that can impact your bottom line, especially for tax planning.
Deductions & Tax Planning In The Entertainment Industry
You may find it challenging to prepare your tax returns as an entertainer. Many entertainers are aggressive about finding tax deductions while simultaneously complying with the law.
If you are like most entertainers, you may not have an agent, so you may schedule meetings and hustle to get appointments. This could mean that you are paying for meals, training, traveling, and doing research. Most personal accountants would agree that these items are tax-deductible. However, you will need to draw the line between what is a professional and personal expense.
Talk personal CPA to see if you can include some of the following things as deductions:
· Continuing Education – This may include education that your employer requires you to get to keep your job or education to help you maintain your skills in the entertainment profession.
· Promotion Expenses and Supplies – These items must be ordinary and necessary for your profession as an entertainer.
· Equipment Purchases – Musical instruments, physical training equipment, computers or other electronics, and all other job-related supplies might be tax-deductible. A personal CPA may provide suggestions on how to document these purchases and keep them separate from everyday expenses.
Keep Your Personal Expenses & Entertainment Business-Related Expenses Separate
Personal financial advisers may recommend that entertainers set up two bank accounts. One account is for their personal expenses and another one is for business expenses. From there, create a personal profit-and-loss statement. This can allow you to track your income and spending for yourself and your business.
Having separate accounts will make it easier for you to justify deductions. This may limit frustration when the taxman comes knocking.
The Importance Of Accurate Financial Planning For Entertainers
You have likely seen from your own experience that the length of an entertainer's career is not as predictable as more traditional professions. For this reason, you may enjoy working with personal financial planners who have a proactive, holistic approach to financial planning.
This could mean managing your cash flow and your debt, establishing and sticking to an annual budget, and planning for things like long-term disability and retirement.
Increasing Productivity: Bringing In Professional Help
As an entertainer, you may be responsible for multiple state taxes or have a foreign income that needs to be accounted for. You may be considered an independent contractor who receives a 1099 or an employee who receives a W-2. Personal financial advisors can help you keep the necessary records as you manage your financial affairs. Fortunately, here at Fusion CPA, we offer CFO advisory to assist those working in the entertainment industry. We are based in Atlanta, Georgia and but we also offer services throughout the USA including but not limited to basic accounting, tax preparation, financial planning, and bookkeeping services. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive