Treating Your Band as a Startup – Interview with “The Lean Musician”

The Lean Musician: An entrepreneurial guide for musicians.

The Lean Musician: An entrepreneurial guide for musicians.

I recently had the opportunity to talk with the author of “The Lean Musician,” a book about treating your band like a start-up business. After reading through the book and pulling out some of my favorite takeaways from its 98 pages, I invited the author to answer a few questions about making money, mindset, and what he thinks indie musicians can start doing differently to treat their career more like a business and not just play the same bars, clubs, and dead-end coffee shops across the country.

The book is available for $4.99 on Amazon.

Although he’s still working on getting the website up and running, more information about the author and book will soon be available at http://theleanmusician.com.

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10 Tips to a Successful IndieGoGo Campaign from IndieGoGo themselves

Wanted to share this video/post that I found earlier today. I’ve followed RenmanMB for a while, but have never actually shared his content. Karen Bair, head of music at IndieGoGo goes over the top 10 most successful tips she has for reaching your funding goals on IndieGoGo. And if you haven’t already subscribed to RenmanMB, I highly recommend you do.

And-The-Giraffe-Press

The True Cost of Free Music [CASE STUDY]

While it’s damn near impossible to calculate the life-time value of a fan for an up and coming independent band, the short term gains and costs are easily available. Below, I’ve run through what it looks like to be in an indie band and how free downloads both benefit and hurt our bottom line while trying to make a break in the industry.

I see all too often people thinking that independent bands are somehow making huge amounts of money playing live shows and by distributing their music independently. I’m here to show you that we don’t make as much as you think.

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The Low-Down on Music Publicists

A common question for many new bands is “what do publicists do and do I need one?” Although brief, I hope I can expand upon the idea of hiring a publicist to do your promotion and press for you without boring you to death.

What Does a Music Publicist Do

In short, a publicist is someone who (theoretically) has contacts within the music blogosphere and with press outlets and who has a proven track record of suggesting good music and bands for them to cover. Publicists are like taste-makers in their own right. Because their worth hinges so much on their word, if they don’t consistently pitch good bands to media outlets to cover, they’ll eventually be blacklisted and shunned (maybe not that extreme, but you get the idea…)

So, when you’re looking to hire a music publicist, you should hire one that you trust and one who has a proven track record with getting placements for indie bands.

Side Note: A music publicist will never guarantee placements. Because the tastes of the listeners on the other end of an email will never line up perfectly with the publicist, expecting guaranteed placements is ludicrous. You can however establish contracts with publicists to only pay them if and when they deliver results of a certain kind. A common one is after “proof of attempt,” meaning the publicist can show you a list of emails or phone calls they sent out in an attempt to get you placement.

How Much Does a Music Publicist Cost?

This varies wildly, but typically, any publicist worth their weight in gold will charge about $2,000 – $3,000 per month. This is for a full-time publicist who will work to highlight your record for about 3-4 months before the release date. In some cases, these fees will include the cost of postage to media outlets, so be sure to ask your publicist if they’re going to need extra green down the road to pay for postage!

When Do You Need a Publicist?

As soon as you can afford it! That’s with a caveat though. Publicists are only valuable if they have a proven track record. Online, it’s often hard to tell who just has a giant email list they scraped from the internet and who has actually been a publicist for a while. Ask to see their previous artists and placements if they don’t have them listed on their website (they should have them listed), and make your decision from there. If you can’t find a publicist who is of sufficient quality, keep doing things yourself. You’ll save money and learn plenty of things along the way.

I’d also like to add that you want to make sure that there’s a market for your music as well. Publicists try to work with artists they know they can pitch. You have to hold up your end of the “bargain” as well when contacting people, as going into it without any proof of success (meaning plenty of downloads, shows, and show attendance), you’ll be hard pressed to find someone to represent you. The “as soon as possible” recommendation only holds true if you’re already proving things on the scene and need someone to put in a good word for you.

Finding a Publicist to Help You

After you’ve figured out whether you can afford a publicist to help you, it’s time to start looking for one. This is where being well-versed in the local and regional music scenes can be very beneficial. A good place to start when searching for a publicist is finding bands that are similar to your own sound and seeing who currently represents them. Bands with publicity will usually put their publicist’s name and email address (and hopefully a website) on their Facebook/Website etc. Find a dozen or so bands that you think might be a good fit publicity wise and send an email to their publicists to request more information and a…

Request for Proposal

When you reach out to a publicist, you’re looking for them to send back a proposal and information packet about what it is they can offer to you along with their rates. A request for proposal is a simple way of asking for a reply and information about the publicist’s career. You should include who you are, links to your music, current “stats” such as downloads, press, and tours you have going on, as well as an outline of what you’d like to achieve. The more specific you can be (i.e. “we’re looking to get more people to come out to our shows on the following dates in a few months), the better results you’ll get.

Notes

1. You should contact a publicist about 5 months before you plan on releasing your newest album or project such as a tour. 3-4 months of “lead-time” are required for a publicist to do their job well. This is generally the amount of time needed to get all of the radio stations, blogs, and newspapers in an area interested in covering a particular story about a band coming through town.

2. If possible, try and negotiate the rate they’re charging to best fit your band’s finances. Not all bands have $8,000 to shell out on the front end of a project, so try and figure out some sort of payment plan with your publicist over the course of the next few months as your record sales start to come in from the new release.

3. BEWARE of cheap publicity rates. As said earlier, anyone worth your time is going to charge a modest sum that can’t be avoided. Paying $150 to your friend’s buddy’s brother in law to promote your band for a few weeks may sound great, but it ISN’T.

4. Check out this post from a music publicist about what they’d like to see when you contact them and what they expect of musicians.

Top 9 Tax Tips for Musicians

I know that tax season is a few months away still, but there’s still no excuse that you shouldn’t be keeping track of your finances all year round. I’m going to go over a few things that will help not only make tax time easier, they’ll save your band money while you’re on the road or buying things related to the band.

Track Everything

Almost all of your business expenses can be deducted from your taxes, but you need some kind of documentation to prove to the men in charge that you actually did spend the money you say you did. This can be done in a fancy accounting software like Quicken every day when you check into the hotel, or you can just keep a pen and paper log (a simple one) to keep track of everything as you go and fill it in later on.

Although it’s not necessary, I recommend on keeping receipts for everything that a band purchases. Be it a new set of strings or a guitar, if it costs the band money, a receipt will be kept for it. In addition to the receipts, just keep a simple log in a notebook on a page by page basis of what was spent and on what. Like this:

[Pete]
Breakfast: $7.33 (McDonalds)
Lunch: $1.82 (Protein Bar)
Dinner/Snack: $2 (Homemade Spaghetti/sauce – this is an estimate of the cost of the food because the ingredients were canned and bought in the store and it would be impossible to know how much each band member actually spent)
Picks: $4.36 
Show: Tonight we played a show at Lucie’s in Atlanta, GA. 

Driving Expenses

This one is going to be the hardest to do because musicians are such space cadets and it’s damn near impossible to remember socks in the morning, let alone tracking mileage on their van. To combat this problem, I suggest buying an adhesive Post-It note pad that you can stick to the dash. Every time you get into the car to drive somewhere for band related business, write down what the odometer reading is before you leave and as soon as you get back. Do the quick math with the calculator you also have taped to the dash (joke) and figure out how many miles you’ve driven.

**Alternatively, if you’ve got more money than a post-it note book costs, you can head over to Office Depot or Amazon and pick up a mileage log book (also called an “Auto Log Book” where you record the mileage driven, gas used, and where you came from and are going to.

While on tour, every time you get into your van, your driving counts for business. So, if you’d like to simply record the odometer reading before you leave for tour and when you get back, that might make things a hell of a lot easier, right? WRONG. You need to have an itemized list of each “business trip” you take, meaning you have to record your driving from city to city every night. Trying to track the entire trip in one mileage count is a red flag come tax time and will end up causing more headaches than it’s worth. Track each trip you make to avoid any sort of confusion that might arise.

There are two ways that you can deduct your driving expenditure.

1) Standard Rate: The standard rate is a flat rate of reimbursement per mile that the IRS announces each year. For 2013, it’s 56.5 cents per mile. This changes somewhat infrequently, but it’s a good idea to check on the IRS website (irs.gov) to see what the current mileage rates are for the year. I simply searched for “mileage” in the search box on the site to get 2013’s rates.

2) Actual Expense: If you’re so inclined, you can calculate the actual driving costs for your vehicle for the year. Track your total miles traveled in the year, total repair costs, and total fuel costs, and after keeping track of all of the miles driven for band related business, you can take a percentage of the total costs for your vehicle to charge to the IRS. Because this is a lot more complicated than the other method (and usually only applies to expensive cars), I recommend just using the standard rate to keep things simple.

Home Office, Anyone?

So, this is a pretty cool tax tip I learned a few months ago and I wish I’d known it sooner. Any space that you use in your home to conduct band business can be used towards a tax deduction on your mortgage and utility bills.

Let’s say that you use the garage as a practice space, make phone calls and reply to business emails at the kitchen table, and use one of the bedrooms in the house as a storage room for all of your band’s merchandise, all of that space is deductible.

But how do you calculate all of that? Square footage of course. So, if out of your 1,500 square foot home that you’re sharing with the band, you use one bedroom to store merchandise (120 square feet), you practice in the garage/basement (300 square feet), and you use half of the dining room to file paperwork, answer emails, and make phone calls (100 square feet), you divide the total square footage used for your business by the total square footage of your house and get a percentage (In this case, 300+120+100=520/1500=34.67%). Then, however much you pay for utilities and rent, or mortgage, multiply by this business percentage and get the number you’re allowed to deduct for taxes. You should keep a copy of your rent statement and utility bills every month to cover your ass on this one.

Feast like a King

Unbeknownst to most touring bands, you’re able to deduct 50% of your food expenses on your tax return. While you’re on the road, all of your meals count as “business meals,” so treat them as such. You can either keep track of the exact cost of every meal that you have (which is recommended if you’re spending a lot on food on the road and high-protein/high-fiber diets are necessary to keep you fit as a fiddle (terrible pun intended)) or you can use the federal day rate per person. This method is not recommended for up and coming bands who are still eating almonds and peanut butter, thinking they can get the federal rate of about $50 deducted from their taxes each day. WRONG. Deducting the maximum rate for food every day is a huge red flag to the IRS and you’re almost guaranteed to get audited. Keep your receipts and deduct the actual cost of food for each person. Trying to swindle the IRS out of money is harder than breaking into Fort Knox.

Live with Your Band

After you’ve registered your band as an LLC, it’s time to start living together. Well, kind of. Having a home of some kind allows you to leave somewhere to go on the road. In the eyes of the IRS, if you’re not leaving home to go out on the road, you’re not entitled to collect any sort of business travel expenses such as the other tax tips mentioned in this article. This can prove troublesome if you spend most of your working days on the road and don’t crash anywhere besides your parent’s couch while playing shows. Wherever you are registered to vote and receive mail is your home. Use it as your “Home” address on everything and ensure that you’re actually paying rent or property taxes on the place to maintain it as a place that you’re leaving whenever you hit the road.

Your Gear is Depreciating!

Not in the traditional sense that it’s becoming less valuable the longer you hold onto it, but rather in IRS tax terms. Depreciating your gear is a clever accounting technique to help keep your taxes down at the end of every year. Let’s say you buy a new guitar for $1500 and you say that the guitar has a “useful life” (fancy term for how long you plan on using it before needing a new one) of 5 years. That $1500 you spent on the guitar can either all be deducted from your taxes the year that you purchased the instrument, giving you a $1500 tax break in one year, or you can use a method called “straight line depreciation” to divide that $1500 up over the course of the 5 years you plan on using it.

That means that for the next 5 years you can deduct $300/year from your taxable income. If you’re not making a lot each year, spreading out this type of purchase may be wise, but if you have a great year one year, buying a new guitar to deduct the entire $1500 from your taxes that year may be the better option.

It’s important to note that if you ever sell the instrument after you’ve depreciated it down to $0 of worth to you, any profit you make will be taxable income. The basic idea is that if you buy a new computer, after 5 years it will be obsolete and you’ll have a hard time even giving the thing away. So, companies depreciate their equipment for 5 years and don’t bother selling it. In the case of a guitar though, it probably still has a lot of value in it after 5 years, leaving you with the burden of having to pay taxes on the money you make from selling it later on.

Extra Members?

Anytime you hire another musician to be in your band and pay him/her more than $600, you have to issue them a form called “Form 1099.” This is a form for an independent contractor. The same holds true if a venue pays you more than $600 in a night. You were an independent contractor for them and should receive a 1099 from them as well. Remember, every time one of these forms is issued or received, the IRS knows about it. So if you fail to fulfill your end of the bargain by reporting that income to the IRS after receiving more than $600 in a night as a band, the IRS may be knocking at your door shortly thereafter.

Also, if you pay any independent contractors less than $600, you can deduct these as “commissions and fees” on your own tax statement. That means that if you pay the extra guitar player in your band $50 as well as the venue owner for helping you with your gear, you can deduct these from your taxes as well.

How to File Your Taxes

As a business, you’ll be filling out a Schedule C form and submitting it alongside your Federal Form 1040. If you’re self-employed within your band, you’ll probably also need to fill out a Schedule SE form as well (You must fill out one of these SE forms if your net earnings during the year were more than $400).

On the Schedule C form, Line A will require you to know the business code for your musical endeavors. Typically, this is code 9811. It can be found under the branch of Services – Personal, Professional, and Business – Amusement and Recreational Services. This code can also be applied to people who are music agents, producers, and those that perform in musical theater. If you’re struggling to find the forms you need for the tax deadline, you can use the IRS website to help you.

Be Honest

These tax tips aren’t meant to try and help you scam the IRS out of extra green every year. They’re not stupid. Trying to deduct expenses that are more than you actually spent is guaranteed to at the very least get you audited, or worse, get you put in jail for tax fraud. Be honest with all of your receipts, costs, expenses, and spending. With documentation for everything, you’ll be able to defend your case to the big men upstairs should the need ever arise.

Best, -Sunshine