Ugh, taxes! Nobody likes them, and it’s the last thing you want to think about as a DJ. But, you know what worse than paying taxes? Getting in trouble for NOT paying taxes.
So repeat after me: I am a professional DJ running a professional DJ business, so as a professional, I will pay my taxes.
To be clear, I am not a tax professional and this is not meant to be advice on HOW to file your taxes. This is simply a method of organization to help make filing easier. If you haven’t filed taxes for a business before, I highly recommend you find a good accountant to help you. And, this doesn’t just apply to DJs. Anyone who is self-employed can use this same method.
After years of struggling with this myself, I’ve come up with a easy-to-use system for tracking my income and expenses for tax purposes. In fact, it’s so easy, I spend about 15 minutes a month tracking, and I can do my entire tax return for my DJ business in less than 30 minutes!
My secret is using an online money management tool. I personally use Mint, but you can use another site like Personal Capital or You Need A Budget. The key features you need are the ability to pull all of your account transactions into one place and custom transaction categories.
Mint pulls together all of my transactions from all of my accounts into one giant list. Then, on a monthly basis, I go through and categorize each transaction. I made the following custom subcategories under Business Expenses:
- DJ Income
- DJ Advertising/Marketing
- DJ Business Meals/Entertainment
- DJ Music/Subscriptions
- DJ Supplies
- DJ Training
- DJ Travel Expense
- DJ Utilities
I came up with these by going through the IRS Schedule C deductions and only picking out the ones that pertain to me and how I do business. If you are filing a different form, or live in a different country, just make your categories whatever is on the form you need to complete. You can also make generic categories, which is what I did to get started. After a couple years of filing, I learned where each expense was going each year and made them more specific.
Once you have the categories, just spend 5-15 minutes a month going through and categorizing your transactions. I’ll be honest here, sometimes I forget. But, it’s just as easy to do a few months at a time. Mint also has a feature where you can categorize recurring transactions once and apply the category every time in the future. This is a huge time saver for me. I find that most of my expenses are done for me now, like Spotify, iCloud storage, and Promo Only DJ Pool subscription.
It’s also a good idea to track your mileage to and from events. This one’s easy, just make a spreadsheet somewhere for each year. From the IRS website:
9. How do I keep track of my business miles?
https://www.irs.gov/pub/irs-regs/travel_entertainment_faq_v1.pdf
In order to keep track of the business miles, you should keep a logbook in your vehicle and record the date, the miles, and the purpose of the trip for all business travel. You should also record your odometer readings at the beginning and end of the year so you will have the total miles driven.
Make a new spreadsheet each year, and log your vehicle’s starting mileage. Then, make a new habit. Every time you look up directions for an event you are playing, copy the number of miles into your tracking spreadsheet. Think “Map? Spreadsheet!”, “Map? Spreadsheet!”, and eventually you’ll associate the two. That way, you never miss a mile.
So, now you’ve tagged all your expenses and tracked all your miles. It’s just a simple matter of getting your annual totals and typing them into your tax form. Mint has a Trends tab where I can pull a report for the whole year and just copy the numbers into my Schedule C. If your money management site can’t do that, you can always just export to Excel and total up there.
If you’re interested, I’m using TaxAct.com to file my taxes. I find their prices are very reasonable for self-employed filers, and they use a very simple question-and-answer method like most tax software does nowadays. I usually will get 40-50% off as a returning user if I pay in advance the year before.
If you’re worried about filing yourself, then take all your year-end data to whatever tax chain or accountant you feel comfortable with. You may even have them show you what they are doing with all of your numbers so you can do it yourself next year.
Once you’ve got everything set up once, it should take you no more than 5 hours per YEAR to file your DJ business taxes. You spend more time than that brushing your teeth. The secret is to just get started. Do it now! Use the links above to sign up for a money management site, get your accounts in one place, create your categories and start tagging. With just a couple hours of work, you can make all of your tax worries disappear.
