Tax Tools and Tips for the Working Musician

CPA expensify independent contractor independent musician mileage iq quickbooks taxes

ThePedalGuy | Tax Tips

Rather than offer up a pedal related post this week, I thought it might be a good opportunity to bring up a subject that we all love to hate, taxes.

April is a wonderful time of the year. Time to start putting away the cold weather clothes, dust off your exercise equipment, and start getting your music gear ready for the upcoming tour season. But there’s still that one day in April that looms over all Americans every year like a dark cloud, April 15th, Tax Day. This year is an exception, as Tax Day has been moved to April 18th, so you get a couple extra days to sweat it out.

As a born procrastinator, Tax Day is the holy grail of events that’s caused me to wait until the last second and become one of those people you see in line at the post office on the 6 o’clock news come April 15th. However, I made a promise this year that I wouldn’t wait ‘till the last minute and I’m proud to say that I will not be one of those last-minute patrons in 2017. When you start a business, it’s better just to rip the band aid off quickly rather than prolong the pain of pulling it off slowly.

Having said all of that, I felt it might be a good idea to offer up some tools that may help you avoid the pitfalls of procrastination as there are so many great apps available that make tax preparation an easy process. After all, a lot of us in the music industry are working musicians and as we would rather play than pay, these tools may help optimize your time and possibly put a little money back in your pocket.

Quickbooks Self Employed (https://quickbooks.intuit.com/self-employed/)

Quickbooks is simply the best app on the planet for easy accounting. It includes all the tools of the trade needed to keep track of your expenses and can quickly prepare the info needed to generate a tax return. Quickbooks Self Employed is an affordable and easy to understand lighter version of QB that you can use with your computer or smartphone. Plus it has some handy features such as tracking your mileage, helping you separate your personal and business expenses, and Schedule C preparation for your deductions. At $10/month it’s a solid investment for you to consider. Better yet, it’s on special for $5/month now, which means one less latte a month for you. A worthy use of your $60/year.

Now for those that don’t want to use Quickbooks, here are a couple of alternative apps that will help you with your expenses.

Expensify (https://www.expensify.com/)

Used by companies like Reddit and Kickstarter, Expensify is a simple app that keeps track of your expenses in real time from your smartphone. When you make a business purchase, take a photo of your receipt and Expensify uploads that photo and links it to the corresponding expense on your credit card statement. It will save you a step and it will avoid the need of sifting through your receipts at the end of the year.

Mileage IQ (https://www.mileiq.com)

Mileage IQ is a simple and effective way to log your mileage. It boasts a very simple to understand interface, includes a swipe feature that allows you to differentiate between business and personal trips, and effortlessly tracks your mileage each time you leave your house with minimal battery usage. It also keeps up with the current rate of deduction per trip, as the mileage rate tends to shift around from year to year. There is a free version that will track up to 40 drives per month and a subscription plan that tracks unlimited trips.

 

While all these tools will certainly help you with Tax preparation, I would also submit that if you’re planning to buy new equipment for your upcoming recording sessions and/or tours, you should consider consulting with your local Certified Public Accountant (CPA) to clearly understand the process of declaring deductions and how to avoid raising any red flags with the IRS, something that these applications won’t do for you. A good CPA is worth their weight in gold, as they can both advise you and will likely help represent your best interests should you ever find yourself on the receiving end of an audit.

Now…back to those pedals that we love so much!

 


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