This is Part Six (Money Matters) in a seven-part series that addresses the essential pieces a classical guitarist needs in place in order to build the business side of a music career.
Money is often seen as a private matter and in many circles, it is not talked about in any great detail or depth, if at all. Most artists don’t see themselves as money savvy and in some respects, the economic instability that many musicians experience brings up shame. Moreover, many often romanticise the economic struggle an artist’s life is often associated with. However, there is nothing romantic about being broke. It is difficult to play music when you can’t pay the rent or put food on your table.
The old adage that “Money can’t buy happiness” is often spewed from the mouths of those that don’t have it. I agree with them. Money doesn’t buy happiness. However, money does allow you to practice and share your art more fully and unreservedly. It provides a certain ease in life and can create opportunities for you and your music. Money in it of itself isn’t the problem. As the biblical perspective points out, it is the “love of money” that is the problem.
From a musician’s standpoint—and this is the real kicker that most musicians struggle with—money can also be the partner that helps you make better art or improve your music-related service. Money can also be the means that allows more people to hear your music or enjoy your music-related service.
So, how can you make money work for you? Well, I am not a financial advisor or money guru (and you really should consult with someone who has the credentials and experience in the area of finance) but here are a few things you should consider as a young musician that can help you with your finances as well as creating your art.
✅ Have your business structure set up
Just like most types of music have some kind of compositional structure, a structure regarding the business of your music can help promote and maintain organization. The three most common business structures in the music industry are sole proprietorship, partnership, and corporation. Each structure has pros and cons and it is worth looking into to see what legal entity works best for you. That said, most independent classical guitarists are a sole proprietorship as you do in fact operate a business and make all the business and creative decisions.
✅ Chosen a business name
As mentioned previously under the topic of Branding and Marketing, a business name can help you present a professional image, but it can also help you with your finances. For starters, it separates your business finances from your personal finances. A business name can also be helpful when filing tax returns. For example, a particular type of business structure may provide certain tax breaks, depending upon what kind of business structure you setup for yourself.
✅ Open a separate bank account for your music activities
As far as I am aware, having a separate bank account for your music activities is not a legal requirement. However, it is REALLY important to keep your “music money” separated from your “personal finances.” Tracking your income and expenses is much easier and very clear when you have separate accounts, which will save you a lot of time when filing your tax return.
✅ Have setup a bookkeeping system to track income and expenses
Having an accounting system helps you manage your money. First off, you can easily review your financial resources and costs. The data can provide feedback to you regarding how well your music business and activities are doing and the information can inform your decision-making, help you set financial goals and prepare your taxes.
✅ Setup a system for receiving payment
Setting up different ways of receiving payments from customers or supporters saves you time and prevents potential loss of opportunity. Providing payment flexibility means you are making it easier for your fans to support you. You also get paid faster and consistent payments result in greater financial stability.
✅ Have determined tax obligations
Knowing and understanding about taxation means you can make sure you are compliant to your country’s tax regulations. Understanding how taxation works also empowers you to have greater control of your money. It also means you can take advantage of different tax breaks (e.g., knowing what deductions you can make to reduce your taxes), and knowing what tax obligations means you will avoid costly mistakes.
✅ Are aware of multiple streams of income that you are possibly interested in developing
Can you name 50 ways to make a living in the music industry? Knowing the opportunities can make or break a career. Most musicians have what is commonly referred to as portfolio careers. Instead of one job, most musicians have 3-5 sources of income. Creating multiple sources of income can stabilize your earnings. In addition, having multiple steams of income helps you weather financial storms, especially when a source of income dries up or drops significantly.
✅ You are aware of and can apply for alternative sources of funding
Knowing alternative funding sources can help you in supporting your artistic endeavors. For example, some projects may not have broad commercial appeal but they do have cultural importance and you can receive funding to bring those projects into fruition. For example, funding may be available for, recording, hiring a marketing firm, physical & digital advertising campaigns, video production, or even attend a conference. These additional sources can help you stimulate your career and generate more income.
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Classical Guitar Career Masterclass 2021