Deductible Expenses without Profit to show

Discussion in 'General Discussion' started by mikecheck1212, Jan 16, 2011.

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  1. mikecheck1212

    mikecheck1212 Active Member

    Nov 12, 2010
    Hi I'm new here --> Accounting Question:

    Here is my situation... I am an artist that has started a Indie Label-an S Corp. I've spent a lot of money in the past year putting my project together as well as costs to get the company up and running (recording studio mostly). All expenses were under my name, not the company credit card that I JUST got.

    I've done several shows but have not been paid for any of them, and the company hasn't brought in any revenue yet either.

    MY 1st QUESTION is, can I deduct any expenses without showing any income? And if so, do I deduct the expenses under my personal taxes, or the company? I know it is possible to deduct so many things as both an independent musician, and a company, but not so sure when I am not bringing in any revenue yet.

    Also - how can you find a good accountant for musicians? I've googled to no avail..i'm in NY, NY. Any advise, or a finger in the direction of someone that can help, is greatly appreciated.

    Some of the expenses I have include the following:
    Studio time
    CD Production
    Things of that nature
  2. TheJackAttack

    TheJackAttack Distinguished Member

    Mar 20, 2008
    currently Billings
    You need to see a tax professional. No one here can advise you unless they are a tax professional for their day job. I know you can deduct expenditures without showing a profit (though it raises a red flag with the IRS) but you have to show paper trail.
  3. dvdhawk

    dvdhawk Well-Known Member

    Dec 18, 2008
    Western Pennsylvania, USA
    Any accountant worth their salt should be able to help you out. The music business is just like any other - you have to keep records of all of your income and all of the expenses. All of the things you've listed are potentially legitimate expenses, just have all of your receipts / records organized and contact a local tax professional.
  4. natural

    natural Active Member

    Jul 21, 2006
    Generally, if this is your first year in biz, your uncle is understanding that you're going to have start up costs.
    Everything should be paid by the company. If you bought something under your name you can't deduct it from your personal tax but you might be able to sell it to the company.
    But as John above mentioned, you're going to need an accountant as the rules change from year to year. I would think that NY is riddled with them. You don't necessarily need a music accountant, almost any accountant will do. And they could certainly refer you to someone else if need be.
  5. kmetal

    kmetal Kyle P. Gushue Well-Known Member

    Jul 21, 2009
    Boston, Massachusetts
    Home Page:
    generally (not knowing your status, DBA, CO. INC, ect.) a new business can be in the 'red' for the first three years. I am not an accountant. You should show profit, w/in this period. You need to prove that your expenses are applied to your business. you need to seriously learn what a CO. INC. DBA is.
  6. Thomas W. Bethel

    Thomas W. Bethel Distinguished Member

    Dec 12, 2001
    Oberlin, OH
    Home Page:
    Rules are different in every state and depending on how you have your "company" set up. I would go with a really good tax person. Stay away from the mass merchant tax accountants like H&R Block as they are more "formula" driven and their "advisers" don't really understand a lot of about doing business taxes.

    You can look in the Yellow pages or on line. Choosing a good tax person is vital to your bottom line. Chose wisely.
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