Thread: Tax Question - Please Advise

Hi! So I'm hosting my own event: I have the talent, I have the venue. I'm not looking to make a profit, just have some fun. I wanted to charge a $5 cover so that my performers don't walk away with nothing (even though they said they would do it without any compensation). My question is this: if I collect the money and immediately hand it over to them, am I responsible to pay taxes on it?

This might be a question better suited to my accountant, but I wanted to get started on this project now and I don't see him 'til next year. Any bhuz-heads know their way around the American tax system (without cheating it, please)?

Originally Posted by CallistaRaqs

My question is this: if I collect the money and immediately hand it over to them, am I responsible to pay taxes on it?

I am not a tax expert at all, so I think you probably want to talk to someone who can give you some legal advice.

That being said, the short answer is that the dancer is responsible to report his/her income to the IRS and pay taxes on it.

The longer answer is that while the dancer is responsible to report his/her earnings, there are plenty of other things that you might need to consider as well. For example, you might need to ask someone whether or not the performers you are hiring are considered employees. After years of assuming that the dancers & teachers I was working with were independent contractors, I learned from an enforcement officer that they were considered employees by the state. So I had to purchase Worker's Comp Insurance. I'm also supposed to carry Unemployment Insurance.

Do you have a business license? If so, do you have all the proper permits? In my area, there is a ridiculously long list of licensing requirements. There are state licenses, county licenses, and city licenses. I need a license as a "professional promoter", a license to have vendors, a license to sell tickets, a license to sell merchandise. I also have to carry Special Event Insurance.

Do you have vendors? If so, you may be responsible as the organizer to A) get a temporary vendor permit, and B) collect and submit sales tax.

Does your venue have all the proper music licenses?

I think that much of how things are done and how they should be done legally are often 2 different things altogether. Also, there are different requirements in different areas, so you should probably get some real advice.

One more thing...

Originally Posted by CallistaRaqs

I'm not looking to make a profit, just have some fun.

These words are one of the things I hear most out of inexperienced organizers. Here's the thing. If you set out to "break even"... you are far more likely to lose money then if you set out to make a profit. Additionally, if you have no expectation of making money on a venture, then it is a unsustainable venture. Organizers work freaking hard, and deserve to be paid for their time and energy (just like performers). If you are out there doing it for nothing, it's practically the equivalent of undercutting. Please don't take this personally. I don't want you to feel like I'm attacking you. I just want you to take a moment to consider that working for "free" hurts everyone in this business. If you want to make sure you can pay the artists you are hiring, you need to value your own time enough that you pay yourself too.

This might be a question better suited to my accountant, but I wanted to get started on this project now and I don't see him 'til next year.



Why can't you call your CPA now? Unless they are some cheesy shop like Liberty Tax or somesuch, all of us CPA firms are open year round. You really need to do this before you get started.

You should have a business license as a producer, and depending upon where you live it could be a city license as well as a state license. If you charge a fee, then yes, you should report your income, but you also get to report your expenses, including payments made to the dancers. And depending upon your city and how you word your solicitation of admission, you may owe an admissions tax to your city. I have one client who, termed the admission as a donation so that she got around paying taxes on admissions....totally legitimate.

Every city and state is different in terms of their taxing regulations and requirements so I cannot stress enough talking to a professional in your area who can guide you through what you need to do.

Gilana

Originally Posted by Gilana

Why can't you call your CPA now? Unless they are some cheesy shop like Liberty Tax or somesuch, all of us CPA firms are open year round. You really need to do this before you get started.

You should have a business license as a producer, and depending upon where you live it could be a city license as well as a state license. If you charge a fee, then yes, you should report your income, but you also get to report your expenses, including payments made to the dancers. And depending upon your city and how you word your solicitation of admission, you may owe an admissions tax to your city. I have one client who, termed the admission as a donation so that she got around paying taxes on admissions....totally legitimate.

Every city and state is different in terms of their taxing regulations and requirements so I cannot stress enough talking to a professional in your area who can guide you through what you need to do.

Gilana

This is a moment when I wish Bhuz had a "like" button.