You’re about to play your first gig, and your bandmates are talking about getting new gear. Before you dip into your savings (or your credit card balance!) for new amps and your share of a PA system, listen to advice from Troy Von Haefen, CFP®. He advices Nashville musicians and was a professional guitar player for over 15 years.
1. Treat Your Band as a Small Business
What is the purpose of your band? Is it a hobby - or would you like to make a career out of it? If it’s a hobby, allocate part of your funny money(disposable income meant for entertainment) towards your band budget. If it’s a career, you’ll want to solely use a percentage of revenue from future gigs to pay for equipment upgrades as you need them.
2. Consider Taxes Among Expenses
It’s a misconception that you don’t pay taxes if your business makes less than $600. You may consider your band a hobby, but as soon as you get your first paid gig, you have income that needs to be included in your individual tax return. Von Haefen says, “The IRS states that we are taxed on all income. In fact, we are taxed on worldwide income.” It looks like “The Man” will be riding along with you for your Eastern European tour.
The good news is that along with business taxes come business deductions. If you bought a guitar for a gig, it might be tax-deductible. Gas expenses for traveling to venues is also a possible deduction. Just remember to keep proper documentation. Save receipts and mileage logs, and most importantly, don’t buy things you normally wouldn’t in the name of ginormous tax refund checks. You’re not going to get all your money back on a $1,000 guitar purchase from a tax refund.
3. Follow the Natural Process
“When I was in high school I played guitar. I got some friends together, and we learned a few songs. We had a ragtag PA system that cost $400, guitars, a keyboard, and a couple of microphones,” says Von Haefen. “We played a couple of pep rallies, and then we had a chance to play a paying gig and we upgraded our gear.”
As his career moved along, his gear improved. He used the fish system: He started off as little fish in a little pond, and then he became a big fish in a little pond. In a few years, he was playing guitar in stadiums. His gear - and money spent - aligned accordingly.
4. Buy New Gear Based on Your Needs and Ability
Everyone in your band owns their individual equipment, and some members want to upgrade faster. It may be because they’re getting better and better and, naturally, want to move on to a bigger band or bigger gigs. It also may be because your bandmate has plenty of funny money. Whatever the reason behind upgrading is, you should move at your bank account’s pace. This includes PA systems and group equipment. You should feel comfortable with any investment, and not everyone has to own the same percentage of gear.
4. Look Towards Mentors for Advice
Is there a successful local band in your area that you’ve seen quite a few times? Ask them how they decided to purchase new gear and how they divide expenses as the need arises. As your career grows, keep looking for someone in the next stage of career success for advice.
Have fun, rock out, and hopefully you’ll make some money, too. Don’t forget to be conscious of all your life goals when it’s time to fork over more cash.
Reyna Gobel is a freelance journalist who specializes in financial fitness. She is also the author of Graduation Debt: How To Manage Student Loans and Live Your Life.