The Added Value of SMC’s Tax Workshop
By Nikhil P. Yerawadekar
About five years ago, my barber recommended an accountant to me, and since then I’ve been happy to pay a comparatively small fee to get our paperwork prepared and filed. Because of our combined financial circumstances (my partner works a full time job and receives a W2, while I am self-employed and receive a ton of 1099s), we’ve been fortunate to consistently receive tax refunds, which have increased noticeably since we started working with him.
So when SMC conducted our first tax workshop in February 2018, I attended mostly to support, without expecting to learn information that I really needed. I kept my receipts and 1099s and “my guy” handled the rest. I figured the workshop was mostly geared towards people in our creative community who did their own taxes.
This wound up being true to some extent-- in addition to getting an easy-to-understand overview of how the tax system works and how best to prepare for filing, one of the major perks of the workshop is that Q&A time is set aside. It’s super valuable to be able to get your specific tax questions answered by a professional accountant from our workshop partner Brass Taxes.
But an unexpected takeaway from the workshop wound up being more holistic-- after all, SMC is committed to sharing knowledge in a way that empowers our fellow community members-- and I was surprised to find my mind blown by an Excel spreadsheet.
For me, a valuable takeaway from this workshop was a new, clearer perspective on my own record keeping and approach to spending money on my music projects. SMC co-founder KP and the Brass Taxes team have created a Financial Record [AVAILABLE FREE - HERE] that makes it super simple to see balance, or lack thereof, in the economics of one’s creative pursuits. As long as you can handle the very simple discipline of inputting expenses and profits, you will always be in tune with how financially healthy your work is, and when tax time comes around you will have very little work to do.
To be honest, I cannot overstate the value that this document has had on my creative endeavors, and on my overall well-being. When I began my Nikhil P. Yerawadekar & Low Mentality project, I went in with great admiration of bandleaders who made creating their top priority and spared no expense or effort towards realizing their vision. I was fortunate to have earned, nepotism’ed and stumbled my way into generating income with the Low Mentality band here and there even though we have no representation and don’t really sell tickets in NYC. But because of my sporadic good fortune and sense that blind confidence was important, I now realize I was approaching spending money for the band with a vague “if you build it, they will come” mentality. I’ve gotten decent money here and there, and that will probably continue, so eventually we’ll make more and it’ll be all good!
Once I started keeping track of all my expenses, it quickly became clear that I needed to re-evaluate. The band now has t-shirts, which has already quickly proven to be a huge part of making money at shows, as many of my peers realized long ago. For years I was only selling vinyl and CDs. We occasionally got audience members who didn’t own a turntable buying 45s just because they wanted to support. But all those shows I could have made way more money and perhaps some drunk audience members would remember the band better if they brought some merch home.
I also got to see exactly how much money I was spending on outside contractors hired to help me make the stuff I was working on, whose work I often didn’t even like that much. Four years ago I’d approach creating with a “ok, I’m getting a hooked up rate here so it’s all good for me to drop a couple of hundred” outlook. I’m certain these types of costs added up real quick. Since then I’ve learned basic photography, graphic design and have gotten to the point where I feel confident mixing my own music, having only mixed less sensitive commercial type recordings before.
Perhaps folks reading this are already doing a solid job of record keeping. I would still suggest checking our document out, as it also allows you to further organize your expenses by categories recognized by the IRS, helps you note whether your expenses should be counted towards 1099s to send out to people you hire, and does some automatic calculations that save time and prevent mistakes.
Counterintuitively, being more on point with money has allowed me to feel more creatively free and less scared to try ideas, because I begin thinking about them with a more sustainable financial framework. I’ve adopted a view that overinvesting in recording sessions makes no sense for me, whereas earlier on in my career I was greatly influenced by older musicians around me who came up in an area where money flowed way more freely in the music business and viewed modern recording techniques as “cheating,” for example. I’ve since grown cynical at how many items and services are marketed to musicians with “magic” in mind. Yeah maybe you’ll get a “magic” result from the $3,000 mic, but you’ll be stressed and will not be able to quiet the nagging voice in your head. If the song was well written and people gave good performances or programmed well, you probably could have used an SM58.
