It is that time of the year for millions of people to complete their taxes. For many it is pretty straight forward, but for many DJs there are a lot of questions that are commonly asked. DJing can be a pretty awesome job and when done right the pay can reflect that as well. Unlike a typical hourly or salary job, DJs often bring in sums of money that is untaxed. Whether it is a personal check from a wedding, cash from a bar, or a direct deposit from a booking agency. It is important to understand what you have coming in, and how much you may need to put aside for taxes.
Every state and country is different when it comes to their tax rules, however there are some general rules to apply to make sure you don’t end up behind on your taxes or in debt. First thing is to create a small business for yourself. This will help separate your personal finances and deductions from your DJ life. Yes, they often intertwine, but it is important to distinguish a separation between the two. Even if the business is simply your DJ name, it will benefit you in the long run. Any business expenses you incur due to becoming a business (fees, consultation, etc) should be written off from your taxes when it comes to deductions.
After you have proudly secured your DJ business, it is time to research your respective tax codes and see what items are available for deductions. Since being a DJ is your business, everything you require to become a DJ is consider a business expense. Your new (and old) equipment, the record pools you pay for, the suits and other attire you wear to gigs, and the cost of travel are all things that you should be able to deduct from your taxes and not have to pay taxes on. Your lunch meeting with a client to discuss an upcoming event, you can treat them to lunch and make a good impression, then keep the receipt and write that off on your taxes.
Also be aware of your tax rates, and plan ahead. If you know you have to pay 20% of your income to your state taxes and 10% to your federal government, then get into the habit of putting away 30% of what you make when you receive those checks. Make sure that you are charging your clients the correct state taxes in your rates. There is no reason you should take the burden of the clients sales tax. The grocery store does not pay the sales tax on the bread and produce that you purchase. You are providing a service, and the client should be responsible for that.
When in doubt, seek a pro. Yes it may cost some more to do so, but typically, a well reviewed tax-expert will ensure you apply the correct deductions and pay taxes on the least amount within legal limits. This is is also considered a business expense and should be written off on your taxes as well. Simply following these general rules can save you hundreds if not thousands of dollars each year in taxes. So go ahead and purchase the new Reloop set up if you have the means, then write it off.