Karaoke Forums

Here's a nice dry question, but I seriously want the answer:

I am an independant KJ and, as of now, get paid under the table and don't pay taxes on it.  I was wondering, are there any incorporated independent KJs out there. Could you tell me about the tax advatages/disadvantages?

Like:

Can you write off equipment/disks, your vehicle, travel, gas, etc. as business expenses?

Can you depreciate your equipment/discs, etc.?

Are there any small business grants available for incorporating a karaoke business?

Any info along these lines would be appreciated!!

I do all that now w/o being inc.

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LIKE Lonman on Facebook - Lonman Productions Karaoke & my main site via my profile!

So I assume you also pay taxes on your KJ earnings??

Every bit!  Kind of have to, the clubs I work require my tax number so they can report the entertainment costs & where they go to.
All my employees pay taxes as well.  I hire them out as sub-contractors so the burden is not on me, but on them so they need to take of it themselves - but I do report these payouts as well.

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LIKE Lonman on Facebook - Lonman Productions Karaoke & my main site via my profile!

There are many here that run a karaoke business that allows you to do everything you mentioned.

Incorporating is something that is sometimes done to 'insulate' the business owners assets from the business.  The problem is that it doesn't work so well when the business is a sole propreitorship....  and it's sometimes expensive.

Getting a business license and running above board allows you to write off much of your income against equipment, discs, and possibly even a home office.  You can do this even if you are getting paid 'under the table' and makes it easier to explain where all the equipment comes from and you go from having a 'hobby' to having a business.

If you're interested in getting a loan try checking with your local small business associations for more information.

I am registered/licensed through the County Clerk's office, which is necessary to do business under a different name, though not incorporated.    I write off the typical expenses (equipment, music, mileage, advertising, insurance, pro-rata business use of residence for utilities etc.) whether 1099'd or not.   For schools, service organizations, corporate events, I'm often asked for an invoice and/or a IRS W-9 (taxpayer ID) form.   Before establishing my business I did my own taxes, but after getting into this, I hooked up with a tax accountant.  If nothing more, the time saved is worth a lot alone (and of course, their fee is deductible in the following tax year).

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Sounds Great! Entertainment
Bartlett, Illinois

I am an incorporated KJ. I run over 30 shows a week with my company, and I am by far one of the largest, if not the largest karaoke company in the southeast. We pretty much run Atlanta, and it's suburbs... Anyhow, there are several benefits to incorporation. #1 Imitators cannot use your name... we have bars advertising that they have us all of the time to try to pull in business... when we see this, we either get them to hire us, or make them stop. #2 you only pay taxes on what's left in your account at the end of the year.... say if you spend $175,000.00 on equipment, as long as each item is under $300.00 in value, you can take it right off the top as a deduction. You can write things off without being incorporated, but you do get the distince advantage of sheltering more income. larger items must be amoritized.

I write off 100% of my:
gas
discs
hummer
trailers
speaker systems
computers
prizes, giveaways
books
tv's
any electronics I buy
lunches
clothes
haircuts
vacations
microphones
advertising
health insurance
car insurance
bar tabs
etc.............................

you also get legal protection.... I actually had a mackie srm 450 pushed off stage by some drunk chick who was getting rowdy, and it landed on a guy who was facing the other way... he never saw it coming.... luckily he was not hurt badly, but he did have a lawyer call me.... when he saw that I was incorporated, and leased all of my equipment from myself, he saw that I had no assets to get, and basically forgot about the whole thing.

see, I own 9 Full mobile karaoke/ DJ setups. I then lease them to my company for a low rate. this makes it so the company doesn't own any equipment. if someone sues my company, they're essentially broke. I only pay personal income taxes on my rental company.... get it? keep everything seperate.

Incorporation also gives you a few other distinct benefits.... valuation of the company... it's extremely hard to sell a company that's not incorporated, because it's nearly impossible to properly place a value on it's assets and earnings...

incorporation allows you to raise money via the selling of corporate shares if you wish... you probably won't, but you could......

Incorporation allows you to build corporate credit. I had crappy personal credit from a previous divorce, but I can get approved for anything I want with my corporate credit, because it's a seperate entity. You can grow quickly using corporate credit, and if it all goes south, it doesn't affect your personal credit..... woo hoo!

incorporation if anything else offers you a layer of protection you just don't have as a sole proprieter.....

if you're not wanting to pay your takes, and work under the table, that's fine... you most likely could do it forever and never get caught, but once you make a big name for yourself, and have shows all over, and start bringing in the kind of money that would be really hard to pay back taxes if you were caught, you might wanna' think about getting straightened out. if that's your main source of income like it is for me, tax trouble could put an end to it all.... keep good books... that's my #1 recommendation. I would also invest in a payroll service if you can afford it... that way your KJs are all taxed accordingly, and the deductions are all taken out, paychecks are sent every week, and you're not left scratching your head at tax time.

Even a one man show with 1 cdg player, and one show a week should be incorporated..... it only costs $100.00 to $150.00 depending on your state. go to your state's secretary of state site and fill out an application online.

it's quick and painless....

I'm no C.P.A. but I do know that incorporating has allowed me to legally keep a larger portion of my company's income... definitely worth it.

Steve

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Evolve or die bitches!

You can actually write off hummers?  Wow, I had no idea.  Do you need a receipt?

OK, I'll go back to behaving now.  

HAHAHA!

Depends on what part of town... some around here even take credit cards!

That's not Right!

-Steve

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Evolve or die bitches!