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The M
e t a project brings together music makers and workers across the British Isles!
B u s i n e s s & C o n t r a c t s
BUSINESS ADVICE FOR MUSICIANS & VENUES
by Dave Cross
Contents:-
 Management
& Agents
Recording
& Publishing
Contracts
Accounting,
Taxes, Employment
There is a
wealth of good advice available to musicians and small
music businesses, based on years of experience, from the
Musicians Union business advisors. Generator urges
musicians in the UK to join and take advantage of that
experience.
Management
& Agents
A manager and agent can bring in a lot of work for a
musician or singer, look after all the administrative
work and ensure that everyone gets properly paid, so it
would be easy to assume that any serious performer simply
has to find that manager or agent and sign up with them.
If only it was that simple.
Choosing the right manager
could turn out to be the single most important decision
in an band's career - so it is worth taking time to
consider some of the options.
A serious problem for any performer to recognise is that
there is an over
supply of talent. In other
words, there are more performers looking for work than
there are venues, audiences, record buyers and TV
producers needing them, and the manager can only give
work to performers when there is a need for them.
The first
consequence of this is that there are less
opportunities for new performers - an agent will
probably want to continue putting their existing
artists forward for work simply because they
already have a relationship with them. Similarly,
the venues, promoters, and TV producers will also
tend to stay with agents who have been reliable
in the past - there will be little incentive to
try new agents and new artists. Of course this is
not quite the whole story, and record companies
and others do genuinely want to find exiting new
talent from time to time, but certainly not to
the extent of creating equal opportunities for
all.
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The second
consequence of this over-supply is that it puts
the booker (whether it is the person booking an
artist from an agent or the manager booking an
artist to perform), in a strong negotiating
position. So if they do consider new talent, they
may only be offering them low fees.
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A third and
worrying consequence is that it creates the sort
of business environment in which unscrupulous
individuals and exploititative deals can thrive.
A good contract might minimise some risks, but we
have to be realistic - there is a temptation to
exploit performers who are desperate for work,
and if the first music business approached
doesn't seem to take unfair advantage, then the
next one might!
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There are many very respectable managers, and they will
all have access to industry standard contracts, with
reasonable variations to suit the circumstances. There
are notes below in the Contracts section which covers
some of the elements to look for in a Management
Contract. Professional managers may be members of the
IMF, the International
Mangers Forum, but might
equally be a reliable friend or relative with
organisational skills, a sense of business and ability to
negotiate constructively.
Duties
of Managers:
At the start of a career, the Manager might be booking
gigs with venues and also doing the driving, setting up
the equipment, buying the instruments and spare parts,
arranging rehearsals, trying to get publicity, and
joining in the discussions about songs, on-stage image,
studio bookings and handling all the money.
A world class performer's manager will be employing
others to do these chores and staff in their business
office will be handling all the financials by post, fax
or email, but they are still looking after the same
practicalities of managing an artist's affairs.
Between these two extremes lies the work of most band
managers: negotiating tour dates and sponsorship,
marketing (from routine gig listings to creating a unique
identity for the band), developing the band towards
readiness for an approach to a record company or
publisher, and preparing the ground for royalty
agreements.
Managers take a fee which is nearly always a simple percentage
of the performer's income. In the case of a five piece band, the Manager
might be considered as the sixth member and entitled to a sixth of
the income. However simple the percentage may be, it might not
be so simple to agree what counts as income; is that before or after costs
are deducted, does it include songwriting royalties which only one or two
band members earn, does it include income from gigs which the band
booked themselves, does it include income for a period after the manager
and the band separate, etc. etc.
Some of these issues are covered in
the Contracts section, below.
It is often suggested that a performer's first manager
could just as easily be a friend or relative - in fact
many young performers do have one of their parents acting
for them in this way. While a friend might be relied upon
to try hard and to have the same interests as the
performer, it's unlikely they will have much in the way
of experience. If there isn't a professional manager
willing to take on an unknown band, then there are some
interesting books available which should help a new-comer
to learn some of the skills, duties and, in time, the
rewards of Management.
Books
to read:
The IMF
Handbook - A Guide to Professional Band Management (Sanctuary
Publishing, London, 1999)
Running a band as a business (PC
Publishing, London, 2000)
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Duties
of Agents:
An Agent's
job is quite different - the agent is a business person
who makes the vital connections between the performers
and, either the venues, the tour promoters or other
business, each of whom will pay for the artist. Quite
simply, they are making the connection between supply and
demand - getting work for the performers. Just as a
travel agent makes the connection between the tourist and
the airline or hotel, then the booking agent tries to do
the same between the performer and the person looking for
a performer. We wouldn't expect an agent to be greatly
concerned in a band's career or future.
Agents generally charge on a percentage basis, and will
only expect to get involved in the details of the
arrangements between the two parties if there is a
reasonable chance that they can resolve any difficulties.
In law, there is an important distinction to be made
between a contract between two people (the usual, simple
contract where one party agrees to do something in return
for a payment from the other party) and an agency (where
there are three parties). The agent normally has some
responsibility to both of the others, and if one of those
others (lets say the performer) fails to keep their side
of a bargain, then the agent will have some
responsibility to the venue to provide an alternative
band or a financial compensation. In fact a good agent
will specifically be offering just that sort of
guarantee. They would be able to offer the venue a
replacement band of similar quality if the band couldn't
appear, and they will be able to offer the performers an
alternative gig if the venue can't stage the show.
Agents are very common in the entertainment industry,
where a simple switch of performer or venue is probably
not going to cause too much grief. The laws of supply and
demand apply to agents just as they do in the simple
arrangements between two parties - if there are more
bands looking for gigs than there are venues wanting to
book them, then the agent can afford be choosy, perhaps
dropping a band who lets them down (even if only in some
small respect such as the drummer turning up late).
An agent must always behave professionally, be credible
and very straightforward in the way they present
themselves and the performers they represent, to a venue.
An agent who oversells or deceives is just going to have
to start building up another relationship with another
venue all over again. But being an agent isn't much of a
mystery and many performers could easily do the job
themselves with just a little research into who promotes
at the available venues. Possibly our own searchable
lists will be of help here.
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Recording
& Publishing
RECORDING
Most bands seem to
think that the point of all their work is either to gain
pleasure from it, to sign a recording contract, or both.
I would always hope that music making is pleasurable, but
have bad news on the recording aspect. Most bands won't
be contracted (its got little to do with quality -
there's just too many hopeful performers), and often the
duties of a recording contract kill off the pleasure!
Much of the problem lies in the way the industry is set
up - it must make a profitable living and can only invest
in developing a few new artists with surplus money
"borrowed" from other, successful, artist's
work. They will expect their investment to be re-paid,
even if you remain penniless. These are tough odds to be
faced with, and it might even appear that a Record
Company's own staff (particularly the young A&R
scouts) are being asked to do the impossible - find good
new talent and develop it with no money!
It IS possible to have a successful recording career, but
the pitfalls are many and should be well understood.
Our DIY feature includes an enlightening
critique of the Record Industry from the point of view of
an unsigned band.
A musician
simply can't expect the negotiation leading towards a
record contract to end with a good deal in an economy of
over supply - if you don't sign, there's probably many
others who will. Also, the first-time musician won't be
able to understand the details which cover all sorts of
future eventualities (which any good contract should do
anyway). Those details contain clauses that seem over
complicated, irrelevant and even look like
"tricks" though quite simply, they are there to
protect the Company's investment in you and their ability
to make a profit out of you. Perhaps the most famous of
these details among critics are "breakages"
(not so common nowadays) and
"cross-collateralisation" (which allows for an
on-going relationship with you over several recordings).
Breakages
often occurred in the first half of this century when
records were very fragile. Rather than have people in
every shop and every distribution company count the
broken records, you were simply asked to agree not to be
paid for 10% or more of the records pressed. This clause
still appears in the CD era where reliability and
durability are far better.
Cross-collateralisation is
the process whereby the money earned from the sales of
your first record will be used to pay for the next one.
In reality, money earned will first be used to pay back
the costs of that first record, the recording costs,
marketing costs, touring costs, administrative costs etc.
etc.. If there is a profit, any further income can be
used to pay for the costs of the second recording - its
income can be used for the costs of the third one, and so
it goes on until, eventually, you are out of flavour and
your most recent record doesn't sell well. Its been paid
for, but there won't be any income left for you.
There are many other issues like these. I'm not trying to
teach you all the details of contract negotiation here, I
just want you to get some idea, by way of some examples,
of what you'd be getting into if you were going to be
agreeing a Recording Contract with someone.
Now please don't think that Record Companies are sinister
exploiters. Many cynics speak as if they are. They are
simply running a business for profit, and all that they
have got to make a profit from is you and other
performers & composers.
When you look at it that way, then the restrictions they
put on the artist and the way they add up the accounts
(you will pay for everything THEY do as well as
everything you do) shouldn't come as a surprise.
You could always try releasing your own record (see
"DIY Recording".)
PUBLISHING
Many musicians don't know what a publisher does, and more
to the point, how a publisher can help a career in music
and earn money from songs.
The publishing company will take your work to agents,
record companies, re-mixers or other producers and to
musicians (via their management), all in order to sell
the rights to use your work for a fee. This is often
called exploitation and for the publisher is as much a
matter of calculating the odds as one of quality (whether
it is music, a song or both). A modest percentage
of a global success (say 50 million copies) will allow a
publisher to take risks with a less well know name or
with a less usual song or composition.
Generally, you will sell or licence to a publisher your
rights to the lyrics of a song and also to its music.
There is no reason why you couldn't offer one without the
other - and in any case, the publisher may only be able
to sell one or the other.
Many publishers are tied to a Record Company, and so will
firstly try to exploit your work to their own Record
Company partner; others may even insist that you sign a
contract with both which doesn't necessarily mean that
you will automatically have a record paid for and
released - but it will mean that you'll no longer have
the right to sign a record contract with any other label.
Most publishers will constantly be on the lookout for new
songwriters and composers who they can add to their
roster of writers. Once signed up, it is usual for a
writer to remain with a publisher for much longer than
with a record company (due to the less volatile world of
publishing). It would be wise, then, not to automatically
assign your rights to a publisher for a long term if they
are also insisting on you contracting to their partner
record company for an equally long term.
In the past, publishers were mainly concerned with
selling the printed music and lyrics as sheet music to
professionals to perform and to private individuals to
use at home. When recording became the bigger earner, the
sale of lyrics and music have remained important. Lyrics
and the music can be sold to record companies for use by
their artists, and the lyrics can be sold as slogans on
magazines, T-shirts and adverts, and in exceptional
cases, both might be incorporated into a TV or theatre
hit. The publisher earns a percentage from these sales,
so it is in their interest to seek as many opportunities
to licence or sell your work to others, performers or
record companies as they can. Once a sale to a record
company has been agreed, the publisher will not earn from
the sales or broadcasts of those records (though you
could!). On the other hand, your publisher will normally
have the right to build on that success, by selling it
again and again, leading to the phenomenon of the
"cover version".
A publisher might show enough interest in your work to
actually help you in developing your writing skills, in
finding co-writers of musicians to suit your style, and
certainly in trying to interest a Record Company in your
work. If they haven't managed to get record company
interest, they might even try to sell it on to another
publisher (at a profit, of course). Professional advice
from your solicitor should have covered this eventuality
when negotiating the contract - to your benefit !
Any work you (or your manager) offer to a publisher will
be your original work, and therefore its copyright will
automatically be yours. However you will need evidence to
show that - (read the Copyright section of this site to
learn about evidence of copyright). Some notably
successful careers have begun by selling a song to a
publisher, and this will definitely be easier if, either,
you are a performer who can attract a publisher to one of
your gigs or with a recording of your work, or, you can
arrange to have someone competent to perform or record it
for you. It is more usual for a first approach to a
publisher to come long after you have begun performing
and have already established a reputation; you may even
have a manager who will do the negotiation on your
behalf. Similarly, a publisher would definitely find it
easier to sell the work of someone already established -
but there are many exceptions including world-wide hits
which have been written by first timers and yet performed
by best selling singers! (eg George Michael's "Angels")
You will find that the bigger publishing companies have
A&R departments, just like a record company, and they
will have much the same function - to look after the
interests of the artists already signed (by exploiting
the rights signed to them) and to look out for new talent
which they may be able to exploit in the future.
Publishers will also associate themselves with particular
styles of music and so you will have to research them
before making a first contact - simply look at the name
of the publisher on several records you're happy to be
associated with to see who is active in your particular
style.
If you do get the interest
of a publisher, you will move towards signing a contract
for them to exploit your work. This should be considered
with professional advice. The level of royalties you are
to receive from their ability to exploit a work is the
critical part - so never under-value your own work when
selling its rights to a publisher (the public can do that
for you by simply not buying it!). You will be able to
negotiate the best rate if you have already got an
established performer to sing / play it. If the publisher
already has an artist in mind to use your work this can
be just as lucrative - though you would need to know
about this if you were going to use this fact in
negotiating the best percentage for yourself. If you are
part of a song-writing team, a solicitor will also help
you draw up a special form of contract which will spell
out how royalties are to be paid while the team is still
working and equally, once the team has split up. This
will specify the percentage split between you, and what
is to happen if one contributor doesn't want the work to
be used when another does.
Finally,
there is nothing stopping you from being your own
publisher. You will have a lot to learn, a lot of people
to meet and a lot of rejections to cope with, but it has
its rewards: more money, more control and a new skill
which you can use if composing or songwriting doesn't
work out.
Contracts
When
starting out on a musical career, there are several
things worth looking out for in a contract - here are
just a few pointers -
Contracts
are often intimidating - there can be a sense in which
anybody being offered a contract to sign feels that they
might be tricked into something they don't understand. On
the other hand, someone who wants to draw up a Contract
can feel they are entering a highly specialised and
mysterious world where, with one slip, they might loose
everything. That's very regrettable because the benefit
of a contract is to make an agreement clear - it makes an
agreement between two people definite and to some extent
it can make the agreement more public - particularly if
there are Witnesses. We should assume here that the two
parties to a Contract WANT to make an agreement, and that
the contract is simply noting who
they are and listing what
they are agreeing to.
For most arts and entertainment, there are sample
contracts which have passed the test of time (and many
disputes) and these are usually available from the Union
that represents the interests of whichever work activity
apply to you.
GIGGING
CONTRACTS
In
addition to contracts with managers and record
companies, there are contracts for individual
gigs which most bands who don't have Managers
will use.
For musicians, the Musicians
Union
offers "Standard Contracts" for many
different situations - live performances,
recording, etc. Although the details of the
wording in these Contracts could be changed, it
is generally advisable to use them exactly as
they have been drafted by the Union so that, in
the event of a dispute, the MU would be in a good
position to argue for the Contract's terms and
conditions simply because they will be familiar
with their own specimen contracts, and also
because it will give valuable credibility to the
sincerity of the two parties if it is clear that
they both intended to be bound by recommended
Industry Standard Terms and Conditions.
Musicians Union sample
contracts are
available free of charge to MU members.
Probably
the most important MU contracts for Live
Appearances are No
3,
"For the Engagement of a Band/Group for
Casual Engagements", and No
14,
"For 'Profit Sharing' Engagements".
In these Contracts, the important points are :-
 to
clearly identify the names
and addresses of
the two parties who are making the agreement
(perhaps the person booking the band and a band
member agreeing to perform)
to
identify the name
of the band who
is to appear (ideally specifying how many band
members),
the date and
venue
where the performance should take place complete
with start and finish times and
the fee payable. If
the one Contract is to cover a tour of several
dates or several bands on the one date, then this
section could be written as a list so that it
becomes obvious who appears where on which date
and for what fee.
how and
when payment is
to be made, and if it is a profit-share (e.g. a
percentage of the door-take) then how that
percentage is calculated
(e.g. a percentage of the gross admission fee on
the door plus advance ticketing - and clearly
showing if VAT is being deducted), and what the
minimum shall be (eg 50% of the gross).
the names,
dates and signatures of
the representatives of each of the two parties
(eg the promoter and the band's leader) at the
end of the Contract.
Other
important elements of a gigging contract would
include :-
how later variations to
the agreement are to be honoured, (there is so
often a last minute change which shouldn't
completely invalidate the Contract - especially
cancellations or additional performances),
who is to be responsible for the supply of equipment
(instruments, back-line, PA, lights, staging
etc).
and who is ensuring safety and
therefore who accepts liability for accidents,
etc. There should be specific reference to whose
Public Liability Insurance will cover any
injuries by the public.
Additional clauses might be appropriate for the
provision of dressing rooms, crew, refreshments,
security, use of equipment by other performers,
the recording of the performance, the sale of
merchandise, etc.
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MANAGEMENT CONTRACTS
The
Management Contract will describe what the
Manager is agreeing to do for the band, and what the
band is agreeing to do for the Manager. The
International Managers Forum can help with
standard contracts.
It will also detail the financial
arrangement
between them, and how the Contract can be ended.
The important points of a Management Contract are
:-
Identity
. Duties . Limitations . Finances
The
answers to the following questions will determine
what clauses would appear in a Management
Contract.
Identity
Who are
the parties to the Contract.
Who will do the managing ? Will it actually be
the person signing the Contract, or will it be
contracted out to one of a team of workers? Will
the manager be personally present at each gig?.
Who are the band? (If the band members change
slightly, is the Contract to continue or is it to
terminate? If the band name changes, should the
contract continue or terminate?)
Duties
What
does the Contract expect the Manager to do?
Does the Manager arrange performances, plan
tours, book the dates, arrange the publicity,
arrange the practicalities of transport,
equipment, food and accommodation?
What
does the Contract expect the Performers to do?
Does it specify that the Performers actually
write any songs or music, play any gigs or record
any music at all?
Which
party makes the decisions about what work to do,
and where and when?
Does it
specify how much work each of the parties should
do?
Will the contract expect the performers to attend
every date booked, every rehearsal booked, every
meeting proposed, every publicity session booked
etc? Will it expect the Manager to book as many
gigs, publicity campaigns, recording sessions as
the performers wish?
Does it
expect any standards of work or for the parties
to Develop?
Does the Contract specify any minimum standards
of work? Will it include a condition stating each
side must work to their best ability to assist
the other party ?
Is the Manager required to develop their skills
in Management and / or promotion? Does it expect
the Manager to do their very best to negotiate
ever better deals for the performances?
Will the contract expect the performers to
develop their musical and writing skills ?
Limitations
Will the
Manager have "Sole representation" of
you (Will the performer only allow deals to be
made for performances through that Manager)
What
territories (countries of the world) does the
agreement cover ? (You might want to give someone
in Australia the right to book some gigs there).
Just
what duties stay with the Manager and which can
be shared with the performers? Will the
performers agree to let the Manager do all the
business with others, even if the band is
approached directly at a gig by someone offering
better and more?
Does the
contract allow the performers to make some type
of arrangements themselves ? (Managers are often
restricted to booking performance agreements -
nor recording, publishing or merchandising
agreements). Does the band want to reserve the
right to make some performance arrangements
themselves? (Does the band want the right to be
booked directly for the singer's sister's wedding
or for a charity recording sessions?)
Are
there to be limits to the marketing and image
developments (will the performers accept ANY
publicity stunts?)
Finances
Will the
proposed split of payments between the artist and
the manager be just as acceptable in times of
wealth as it is in times of poverty (For example,
if there is little or no income from a gig, who
gets paid, and when?).
What
Fees do you agree (15-20% of the net profit on
the work agreed, such as live performances only,
is common)
What
arrangement is there for using borrowed money and
who is responsible for repaying it and with what
guarantees.
What
level of expenses is the Manager permitted to
draw (usually their admin costs will come from
their own funds, while travel to gigs comes from
the band's fund).
The most important test of many contracts is how
well it describes the process of ending
the agreement.
Each party should have a means of ending the
arrangement which is well understood and planned
for. It is important that each party can recoup
some benefit of any investment they have made,
whether that is in time, skill or money. Serious
problems can arise if a performer becomes
financially successful after a contract has
finished, but where that success can be seen to
be the result of the work put in during the term
of the contract.
How is
the contract to be terminated ?
Does it last for a fixed duration ? (One year
with an option for another one or two years'
extension would be reasonable).
Is there a period of notice to be given, or are
there agreed get-outs if either party doesn't
achieve some agreed targets?
What
does the contract say about one side wanting to
terminate the arrangement while the other side
doesn't want it to end then?
What
Fees are payable to the Manager when the contract
is terminated? (Sometimes, 10% remains payable
for a specified period after the end of a
contract).
What
benefits can be received by the performer when
the contract is terminated ? Can they continue
using the publicity and other arrangement which
were contracted by the Manager? |
OTHER CONTRACTS
| The Production Services Association ( www.psa.org.uk
) have a specimen contract for self-employed workers in the
production aspects of the entertainment industry, particularly
aimed at the larger event. That web site has a useful explanation
of the difference between being self-employed and a freelancer
and the implications of that distinction for the liability to Income Tax. |
CONTRACTS IN GENERAL
There are
many standard
contracts available
for common music business arrangements. These can be
obtained from the appropriate representative organisation
(the MU, the IMF etc.) And some can be downloaded from
the Internet. A solicitor with music industry knowledge
may be able to supply a contract "off the
shelf" for a modest fee, and would be able to help
to adapt one for particular situations for a further fee.
You should avoid the temptation to try to write your own
contract in legal-looking wording. If you make a mistake
doing that you could create a serious problem for the
future - when it mattered. If you must
write your own contract then simply write it out as if it
was a letter from you to the other party, explaining that
you want the letter to be the basis of a working
relationship between you, and then list all the points
mentioned here. Send two copies and sign both of them.
The other party should write a letter in reply, referring
to the first letter and the list of terms in it, and
agreeing to them all. Two copies of the second letter
would also be signed and dated. Each party would then
keep a copy of both signed letters.
The mysterious wording in contracts that are often in
large bold italic print such as "Witnesseth"
work as section headings to the two main parts of most
Contracts.
The first section should begin "An Agreement"
and name the two parties to the Contract. For example :-
"An
Agreement
made on the ..... day of ..... between (name) ...... of
(address) ..... of the one part and (name) ...... of
(address) ....... of the other part"
and maybe adding after each persons name that in the rest
of the Contract they will be referred to by some general
description, for example: "hereinafter
called 'The Promoter'."
The second section follows on without a full stop
beginning "Witnesses
:"
or "Witnesseth
:"
and then listing all the things both parties agree to do.
Most of the suggestions above should be included in this
section.
This is the detail of the contract and ultimately it
describes the agreement between the parties.
Both parties must sign
and date
the Contract.
In situations where there might be a doubt that the two
parties ever did agree to what is on the Contract, Witnesses
should also be asked to sign that they actually saw the
other two sign the Contracts. Witness must supply their
address. The most obvious example is where one party dies
and therefore cannot confirm their agreement - this would
be vital in Contracts which define the royalties paid for
recordings even after the death of the composer.
Two copies should have been prepared so that each party
can keep their own signed copy of what they have both
agreed - not just photocopies.
Remember, for a Contract to work, it should be thorough,
understandable, fair and workable.
Each of these should be considered carefully. Thoroughness
means it should cover all the eventualities that matter. Understandable
means that someone else reading it won't interpret a
phrase differently. Fair
means the contract shows how both parties get something
equally useful or valuable out of the agreement. Workable
means that the arrangements are not so complex that the
agreement might fall down if some process doesn't
complete properly (over complex Contracts might refer to
Distribution of publicity or to Ticket outlets. The
Contract probably doesn't have to include all that detail
- that could be in separate letters).
Often, there will be no problem with the work done under
a contract, and no one will want to look at it very often
- but when there is a problem, then that's when the
Contract really needs to work, so it really does need to
cover the arrangements that will apply when something
goes wrong, such as the performers arriving late or a
promoter not having funds available, a record company not
releasing the record etc..
There should always be clauses in a contract which allow
the parties to check on each other- for example, a
performers should have the right to see the books of
accounts at any time, to see the financial position for
themselves. But despite those safeguards, any good
contract should have, at its heart, a spirit of
willingness to enter into an agreement - there is little
point in a Contract which is based on mis-trust and
unreasonable demands. |
Accounting,
Taxes, Employment
Music Industry Accountants are specialists and their
special knowledge of the way in which rights, royalties
and percentage points are counted and traded is vital for
any band with recordings on commercial distribution. But
at the beginning of a career in music, general
accountancy rules should be sufficient (with the two
additional questions of the legal status of the band and
who pays the taxes?).
Those general accountancy rules begin with keeping a
record of ALL
expenses and ALL
income. Keeping
ALL your receipts of income and expenses, and then adding
them all up at least once a year. Don't leave anything
out, ever.
Some people feel that keeping records is not going to
matter because (and there's a long list of reasons here -
and all of them are wrong) such as "we won't
earn enough money to pay Tax", "We're
not doing it for the money - its just for fun",
"its all cash in hand so no one will ever know",
"we'll give all the receipts to a manager if we
get bigger so we don't need to bother just now".
There are many many stories of the Inland
Revenue estimating
a massive income and correspondingly big Tax Charge and
also putting the responsibility on the musician to prove
otherwise - and the rules about admissible proof are not
going to soften for any of the above excuses!
A simple computer bookkeeping system might be helpful in
keeping up to date records. Even a spreadsheet could work
as a primitive list with totals for all the band's
activities. Do try to keep separate columns for money
received, money paid out and money taken by band members.
If you are a band, you will still need to agree, and
write down, who is liable for doing the bookkeeping
and completing the annual Tax
Return.
Under the rules of UK Self Assessment for Income
Tax, there is a penalty of £100 for sending in the
return late - even if it shows that there is no tax to
pay! So get your paperwork started soon !
Whether you pay tax as an employee (where Income
Tax is deducted from your pay by your employer) or
whether you are a self-employed freelancer is often a
matter of debate. However the Inland Revenue have
fairly simple test to determine this and it is very likely
that you should have your tax deducted at the time of
payment. You can read a commentary about this subject
on the International Live Music Forum at www.ilmc.com/secure/SPACEBAR/psa.html
and the Inland Revenue's own guidance on their own web sites
: www.inlandrevenue.gov.uk/pdfs/ir56.htm and
: www.inlandrevenue.gov.uk/ir35/
In the event that you recieve payment for any work without having the tax deducted
then don't spend it, save it. If you don't know what your tax allowances are,
whether you have any allowances unclaimed, and what your deductable
expenses are, you should be saving 22% of your income.
Musicians have, by the admission of many in the UK's
employment service, had a bad deal when it comes to employment
benefits. The "New
Deal for Musicians" is
aimed to help some of the difficulties, but there can
still be a problem for someone who wants to "sign
on" as unemployed and also to gig as a musician for
any money at all.
You probably know the rules: if you've earned any money,
then you should declare it and have that amount deducted
from your benefit payment.
All musicians who are unemployed should ask about the
New
Deal for Musicians and see if it might help them.
There should be a local manager for this scheme in every
major UK City, contactable via the Job Centre
Musicians who already have a job should be prepared to
pay Income Tax on any income they make from the band -
remember that keeping the band's money in a separate bank
account should make it much easier to follow the
bookkeeping, (especially if ALL the bands income and
expenses go through the account) but it doesn't mean that
none of you are liable for Income Tax!
Loose
ends
There are several legal matters that every business must
be aware of . . . .
for Health
and Safety at work, read our Health &
Safety page
for Equality at work, read www.equalitydirect.org.uk
for Disability Discrimination, read the Voluntary
Arts Network Briefing
Note 44 and www.drc-gb.org
for the lawful use of names and address data, read www.DataProtection.gov.uk
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