Starting a recording studio

Discussion in 'General Discussion' started by Oge, Mar 14, 2006.

  1. Oge

    Oge Guest

    If I started a recording studio recording bands, voiceovers, commercials and other things of that nature.. And I bought a bunch of equipment with my own money..In the first year how much would you have to make in order to write most of the equipment off on the income tax? I plan on buying at least $2000 worth of stuff.. I already have alot of equipment and I know a few bands that would probley give me some money to record them..Help??
  2. TVPostSound

    TVPostSound Member

    Feb 15, 2006
    You really need to consult an accountant regarding these things.

    Two words come to mind:

    Amortization deductions.
    Section 179 deductions
    Business deductions.

    OK 3, but see an accountant.
  3. Thomas W. Bethel

    Thomas W. Bethel Distinguished Member

    Dec 12, 2001
    Oberlin, OH
    Home Page:
    First before you do anything else sit down with a pad of paper and make up a business plan. How much money you are going to spend, how much money you are going to make, where your clients are going to come from, how much recording you think you will be doing in a week, month, year. ETC. Once you have this all thought out take it to a good accountant and show him what you "think" (which is basically what a business plan is all about) you will be doing. Ask him or her to go over your figures and see what he or she thinks. You can also ask him or her your questions about equipment write offs. There are many rules and regulations that are not only on the federal level but on the state and local level and most good CPA's know all about the laws that govern what businesses can and cannot do. It is money well spent.
  4. dwoz

    dwoz Guest

    Go online to, and find two forms, and their instructions:

    first, Form 1040 Schedule C;

    next, Form 4562, Depreciation and Amortization.

    Here's the concept: when you buy equipment, its considered an ASSET. Its not deductible as an expense, because you just changed some dollars into equipment...and you've still got it.

    However, when you use that equipment in producing income, you are almost certainly DEPLETING it...its wearing out, its loosing market value, etc. So the tax codes have this concept, "depreciation", that lets you write down the value of the asset, bit-by-bit, as it gets "used up". Section 179 expensing is taking ALL of the depreciation in the year that you bought the stuff...and it makes the most sense for you to use, to bring your earned income down. But you can section 179 expense a sum larger than your gross receipts, thus showing a net LOSS...which is good if you have other income that you want to offset with a loss, but generally, you'd do good to talk to someone knowledgeable about tax stuff with YOUR NUMBERS in front of him/her...we can talk in generalities here, but it doesn't mean diddly for your SPECIFIC situation.

    For what you're talking about, you will almost CERTAINLY want to do a section 179 expense, where you take the depreciation of the asset all at once (or some portion of it). Otherwise, most electronic gear will follow a 5 year depreciation plan, where you take some fraction of the value of the gear away each year.

    Lots of gotchas there...

    Don't be intimidated by tax forms...its not that hard. But don't just blow through them without really understanding them, either.

    You're not in a position where you can cost yourself a lot of money by doing the wrong thing...but you CAN make enough mistakes to get the attention of the IRS, and have them look you over carefully. That's not exactly the best possible outcome!

  5. Oge

    Oge Guest

    WOW you guys rule! Thanks a million for all your help!!
  6. backinthelab

    backinthelab Guest

    Without promoting any tax evasion or the like, you may want to consider keeping this as a hobby. Take cash for your services, don't register as a business, and don't worry about deductions until you're really making good cheddar. You'll find that the whole process of finding tax deductions will probably cost you more down the road! Business startups aren't cheap!!!

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