There is a date that is forever etched in stone on our calendars – April 15. This is, for many DJs, the dreaded day when “The Tax Man Cometh.”
To be adequately prepared for him, here are some important items to consider well in advance of meeting with your accountant or attempt preparing your own return.
As we sort through the piles of credit card receipts, purchase invoices and notes we made throughout the year as it relates to expense. There are often a number of deductions that are frankly overlooked or missed. These common errors often result in the difference in you “owing” Uncle Sam or the IRS sending you a post holiday season bonus.
Meals and Entertainment
Have you accurately recorded all your travel mileage for meetings with potential clients, travel to events and new business development? The current deduction rate is $0.565 per mile.
The cost of meals, airline tickets, taxis, and hotel rooms for trade shows such as the DJ Expo in Atlantic City or the Mobile Beat Show in Las Vegas are deductible; however your losses at the blackjack table are not.
While traveling away from home for an event did you incur lodging and meal expense that was not reimbursed by the client.
Did you take any prospective clients to breakfast or lunch or pick up the tab for coffee while making a sale?
Did you take a referral source such as another vendor to dinner or a sporting event? If it was business related its deductable.
Any lighting or sound equipment, electronics, software, accessories or other items you purchased for your business in 2013 may be fully deductable in the same year it was put into service. (Section 179 expensing). If you have been holding off on some equipment purchases you may want to consider making them before the end of the year and offsetting those cost against income reported in the same year.
Be sure to review all your expenses as it relates to promoting your business. We often deduct for print advertising but also forget about what we pay for on the internet, professional services for ad design and marketing consultations. Any expense related to advertising your business may be deductible.
For larger events did you rent lighting or sound equipment that was part of the overall expense of preparing for an event? You will record the income, but to earn that income you out of pocket expenses.
You are not permitted to deduct the value of your time you donate to a charity but any direct expense such as mileage, meals and lodging may be deductable in either whole or part.
Often we forget about the little things that we take for granted everyday such as office supplies, ink for the printer, postage, pens and paper that we need to make sales and run our business. All of these items are tax deductable.
Getting older in inevitable and regardless of when you get started in the DJ Business, you need to plan for retirement. Selling you equipment or even your business is not going to get you into a Penthouse Suite on Miami Beach. You need to consider setting aside a portion of the millions you make each year as a Mobile DJ for the golden years on the porch at the retirement home for “Vinyl DJs.”
To learn more about tax deductions for small business owners I recommend the following links: http://www.irs.gov/businesses/small/article/0,,id=109807,00.html and http://www.bankrate.com/finance/money-guides/a-dozen-deductions-for-your-small-business-1.aspx