5 Steps for Handling the Finances of Hired Musicians
Finances are the number one concern of every musical artist on the planet. Not only do you want to make money, but keep your spending costs down as well. This article goes over how to handle the finances for any hired musicians you have under contract.
Whether you’re a hired musician or the one doing the hiring, even a gig that sounds good at $300 for an hour might not be worth it.
With the tax preparation involved, the cost of equipment, and the expenses for getting to the gig and back, the actual take-home could be very low. Hired musicians have never been more shrewd than they are now when it comes to how much gigs pay.
Here are 5 things to remember when managing the finances of your hired musicians.
1. A Band Is a Business
Whether you’re a solo artist or a 50 person orchestra, you’re going to have to get comfortable thinking of yourself as a business.
A business has expenses, with money coming in and money going out. There are day-to-day costs of doing business and then an overall foundation of money to invest so that you can go on tour or repair equipment.
Even though you might get paid in cash, you need to think ahead. If you want to take this career beyond the place of a hobby, you need to make sure all your money is accounted for. Small lock boxes are good, so long as everyone knows where to put the money they earn and who has the keys.
Every act should have a bank account. There needs to be one centralized location where you can all find money when you need it. If you’re not making enough to pull a salary yet, you can at least keep account of how much you’re currently making vs. how much it costs to keep the lights on.
If you have a bank account, open a business account so that you can pay your hired musicians.
When you hire musicians, you need to pay them fairly. Making promises you can’t keep will ruin your reputation among the community of musicians around you. Everyone deserves a fair wage, including you, so if you’re not getting enough to pay your musicians, you need to do something for them.
2. Put Aside Money For Taxes
While you might be tempted to pay everyone in cash at the end of the night, that’s not always feasible. You need to calculate deductions for taxes. You don’t want to be saddled with a huge bill at the end of the year with your hired musicians nowhere to be found.
You should have a lawyer that you work with on a regular basis. You should also have an accountant to handle your finances. While you could do some of this work on your own, it’s better left to a professional.
Factor taxes into how much you quote your hired musicians as well as how much you ask for from a venue or a contract. If you’re only getting paid $130 per musician, you may want to quote them closer to $100 so that you can deduct some for taxes.
Talking to your accountant can help to answer some of your most basic questions.
3. Use Spreadsheets
While it may be annoying at the start, it only gets easier and easier to do your taxes every year. Since you’ll be running an operation with hired musicians, you need to take all of these things very seriously. The time you devote to your spreadsheets now is in direct inverse to how many headaches you’ll have later.
Keeping track of your income and expenses is never a bad idea. If you can account for how much is coming in versus how much is going out, you can predict how much you’ll make in the following year. You could also start deducting how much you think you’ll be paying now to make your tax bill lighter.
Spreadsheets can help you see your income over the course of a year. You can see whether or not you’ll have time or money to tour. If you don’t have the money before you leave, it’s going to be hard to make it through those first few gigs.
Spreadsheets have the added, albeit strange, benefit of allowing you to watch the trends in your career. You can see how one album did over another, whether one spring, income went up or went down and see where you tend to shine.
Most of all, spreadsheets help you organize, which is a skill most musicians are lacking.
4. DIY All The Time
While you should hire some professionals to take care of some of the issues you have as a businessperson, you should try to learn to do it on your own. If you’ve never been an accountant, or never have balanced a checkbook, this could be an interesting adventure. You could learn music business 101 just through doing it.
If you’re lucky enough to get an advance, don’t blow it. Put it in the bank. You’ll have to pay taxes on it later, and it’s money that’s devoted to helping your band succeed.
Try to avoid using your own money or advance money when advertising. Keep your loans and your advances small. Let the rewards come after you’ve released your next project.
5. Set A Budget
Setting up studio time costs money. Hiring musicians costs money. Feeding them and taking care of all of the staff in the studio costs money.
WIthout a proper budget, either you’re going to lose them, or they’re going to have justification to sue you or drag your name. Get to know how much the staff in a studio need to work.
Pay everyone fairly, and you’re sure to get treated with respect from everyone you work with. Pay poorly, and the rumor mill will start spreading the word around.
Hired Musicians Can Make or Break a Project
While it might seem like the life of hired musicians is glamorous or exciting, it turns out it’s not quite what it seems. You have to know more about business than anyone working at a major company making a whole lot more. However, the work you get from a hired musician can be like nothing you could have done on your own.
If you’re looking for a lucrative music job to fund the project you’re hiring musicians for, check out our guide to finding one that pays.