Music might be more than your hobby – it could be your whole life. By its very nature the music industry draws some of the most creative people, and while following a passion can be all-encompassing, getting set up for a successful career means getting your finances set up properly.
Getting it right at the start can help save you from headaches, confusion, lost income and disputes in the future. And if you’ve already started and it’s all getting a bit messy, it’s never too late to get things back on track.
Darkwave’s Meredith Fannin appeared on the Your Music, Your Business podcast to dish out her top tips on funding, superannuation, taxes and finances, and you can read the key takeaways below.
So how do I set up a music business?
Whether you’re an artist manager, a solo artist, or part of multiple music collectives, it’s important that you know what money is coming in, and what money is going out.
If you’re a solo artist – or sole trader – you just need to set up an ABN (Australian Business Number) which is linked to your personal TFN (Tax File Number).
Setting up an ABN is free.
If you’re part of a band, or multiple creative endeavours, it’s important that each project has a Partnership ABN. While it may be tempting to use your own personal ABN, this can get really messy and complicated if you’re involved in multiple projects, and one of them starts to find more and more success.
The next step is deciding whether you want or need to register a business name, which you can do with the Australian Business Register when you set up your ABN. If you’re not quite sure if you want a business name – or what to call yourself – you can come back and do this later via ASIC (Australian Securities and Investments Commission).
After the registration processes are complete, it’s time to set up a bank account for your business.
Again, it may be tempting just to use your existing personal account or credit card, but when it comes to tax time it’s infinitely easier to see what expenses are associated with your music business venture, and what you’ve actually earned, if you have a dedicated account.
Sometimes bands or music business partnerships have everything run through one member’s account, but this gets complicated when it’s mixed with their other income. It’s messy from a transparency and record-keeping perspective, and also messy from a personal and professional perspective. Other members might start wondering if they’re owed money, if taxes have been paid correctly, if all expenses are accounted for, or if they’re accidentally footing the bill for another project you’re working on.
A lot of artists are involved in multiple ventures, so if it’s all mixed together it can take quite some time to pull it all apart. In short – any time you save by just whacking it all in one messy account, is well and truly lost once you need to unravel it all.
From here, the next steps would be to look at websites and domain names, if you want them. If you have an ABN, you are entitled to register a .com.au website.
Next up is thinking about accounting/ admin software and whether or not you need to register for GST. Depending on how much activity there is going on, you can use a basic spreadsheet, or employ any of the myriad software options out there – Hnry, Thriday, Xero, Rounded, the list goes on and new ones are popping up all the time.
Then think about whether you need insurance. Do you have a lot of equipment which could be at risk of loss or damage with extensive travel and touring? Do you need public liability insurance? Basically, what’s at risk that you need to protect?
The idea is to try and make the business record-keeping and all the associated admin as simple as possible, so you can focus on the fun, the creativity and the music.
For more tips and tricks for keeping your finances in order, listen to the full episode of the Your Music, Your Business podcast, episode 25 “Funding, Super and Finances with Meredith Fannin”
