Finding legitimate tax write-off expenses for your business is a great way to both help your company grow, and cut down your tax bill. With the end of the year approaching, it may be time to think about upgrading your company’s equipment with an eye on reducing your 2016 taxes. Whether you are a DJ, own a production company or run a recording studio, you probably have deductible expenses, and you still have time to acquire a few more this year.
Many people wonder exactly what they can write off, but unfortunately there is not a specific master list that you can refer to. The Internal Revenue Service offers the general principle that any expense incurred in the production of your income can be a valid write-off:
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
Here is a list of several potential deductions that music, theater and entertainment industry employees may find beneficial:
- Computers and other technology needed for your business, including software and online subscriptions or fees
- Continuing education and training for yourself and your employees
- Discounts offered to customers
- Entertaining customers and clients
- Equipment needed to run your business & any equipment repairs
- Publicity or promotional materials
- Gifts for your customers or clients (with a limit of $25 each)
- Your home office or studio
- Licensing Fees
- Travel expenses, including parking and tolls, but make sure you have a record of your destination and travel reasons
- Postage or other shipping costs
- Your phone and utilities
- Your website design, maintenance and hosting costs
Deductible Expense Ideas For Your Business
The end of the year is also a great time to purchase equipment for your business or venue due to the many holiday sales and close-outs offered by your favorite companies. If you are not sure where you should invest, here are four suggestions:
Stands and supports: investing in the infrastructure that holds your lights, speakers and other expensive equipment may not be as fun as buying new instruments or turntables, but it can protect your investments, and make life easier and safer for your onstage and offstage staff.
New Light Fixtures: LED technology has completely transformed concert, theater and house of worship lighting. These new intelligent lighting fixtures can create a huge amount of colors and effects, while using only a tiny amount of power. If you are dealing with a legacy lighting system that is cumbersome and expensive to use, now may be the time to consider updating all or part of it.
Gifts for your Staff or Customers: For your performers, volunteer worship team or music students, saying thank-you is a great idea. With a deduction limit of $25 each, we have numerous affordable options for musicians and music lovers of all kinds.
Updates to Your DAW software: The Digital Audio Workstation (DAW) software that you use to record, edit and mix audio files can be expensive, but most platforms offer updates and upgrades that will allow you to add amazing new features and plugins to your current software.
With only two weeks left in 2016, you still have time to acquire a few more business deductions, but don’t wait too long as miss your chance. Remember to get advice from a professional if you are confused by any parts of your taxes – your CPA should be able to guide you through the rules that govern each individual business’ tax situation.