Tax

Mike,

So how do you handle taxes? Iím getting killed with the 1099ís every year!

Tom


Tom,

I am not a tax guy, so please take this advice and research it yourself thoroughly before filing your taxes OK? My tax guy, and probably the best entertainment tax guy around is Keith Clark in Burbank, CA. http://www.hnrclark.com/contact.html.

I have an S-Corporation called ìMcKnight Sounds Inc.î in California. Whenever someone insists on paying me without taking out payroll taxes I have them pay me through my S-Corporation. Whenever possible, that is how I do all of my billing, although many companies and TV shows still prefer to pay me as an employee with holding taxes. Thatís fine with me, because at some point weíve all got to pay! I try not to get paid as an individual without taxes being taken out as I am liable for not only paying my own income taxes, but also a pretty hefty self employment tax for social security. Having an S-Corporation really helped me out there, but again research it and speak to your tax adviser to see if itís good for your situation. Whenever possible, the best thing for my situation is to have a tour pay me half in salary (income taxes, and social security paid) and half paid to my S-Corporation for equipment rental, and other services rendered. That way Iím paying the taxes that need to be paid, and have more capital available to re-invest in my company.

Also, keep in mind that if youíre touring a lot you have to pay taxes in each and every state that you perform in. This is a huge pain in the a–, but has to be done or they will come after you.

Some very basic tips: Keep really good records! Be aware of how much you can ìexpenseî each year on musical equipment, and whether or not itís a better idea to depreciate your gear instead. For example, if you had a great year and bought a lot of gear, and feel pretty certain that next year may be a bit slower it might be a good idea to elect to ìexpenseî your gear this year for the most tax write-off. If you donít need the write of, then depreciating over 3 to 5 years is a good idea.

Almost ìeverythingî that you buy (within reason) for your trade is tax deductible until you have too many years in a row operating at a loss then the IRS calls your living a ìhobbyî and disallows your expenses, so please get the best tax guy you can find and follow their advice. I play by the rules, and pay my taxes, but I have absolutely no problem getting the maximum deductions allowed by law! Mike

Mike McKnight Sounds Inc.

34145 Pacific Coast Hwy, Suite #302
Dana Point, CA 92629
U.S.A.
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