#1
Well are there people doing accounting or studying?

Anybody keeping their personal business? Like actual real business.


I find accounting is a MAJOR headache but it has to be done. even if you get an accountant you still gotta have your head around it you know just to know what's happening inside your business
#2
assets + liabilities = owners equity.

Both sides of the chart must be equal and it was good. Do not break the balance or god have mercy on your soul.
#3
money - rent = beer money
#4
interest levels flatlining
Quote by archerygenious
Jesus Christ since when is the Pit a ****ing courtroom...

Like melodic, black, death, symphonic, and/or avant-garde metal? Want to collaborate? Message me!
#5
My uncle is an accountant and he's loaded!

Well, he started as an accountant, idk what exactly is his position right now but he lives in a very prestigious place and owns like 3 cars... so he must be doing well.
#6
Quote by zomgguitarz1234
assets + liabilities = owners equity.

Both sides of the chart must be equal and it was good. Do not break the balance or god have mercy on your soul.

I still haven't fully gotten my head around what assets and liabilities are really.

mind giving me a hint/example?
#7
Quote by Mr E Meat
money - rent = beer money

Actually...

Money - rent - gas money used to acquire beer - money for food eaten while drunk = beer money

But you're thinking right.


Gozd in gora poj,
silen ženimo hrup,
uboga gmajna, le vpup, le vkup,
le vkup, le vkup z menoj,
staro pravdo v mrak tulimo,
da se pretulimo skozi to zimo
#8
Accounting is a depressing career.

I should know...I'm essentially an accounting apprentice.

Call me the Mathematical Mickey Mouse.
#9
If you have no idea then go find a book or community college class on basic business accounting, accounting principals, etc.

First, it's ALWAYS best to keep the business separate from your personal - assetss, checking, etc. Business is business and it's not personal. That applies in MANY ways. Debt being a biggie. Expenses being another.

You have INCOME- this ALL money paid to the business. Gig, ads, endorsements, tshirt and cd sales, etc. Technically if the bar gives you beer/dinner that is income also - you'd NOT get that if you were not the paid band, right?

You have EXPENSES - this is EVERYTHING the business spends ON the business. If you think of the band as the business then it owns the instuments, amps, cables, lighting, etc. It NEEDS these items to exist and make music. Optionally YOU can own the gear and RENT it to the band - just as if they band has to rent a PA or truck for a gig. This is a whole 'nother accounting thing - but you do something similar with your car so it's not THAT difficult to do.
You manage the business (band) from someplace - if it's a dedicated room in your house (not shared with your bed, dinner table, etc) then it's legally eligible for a HOME OFFICE DEDUCTION from the IRS. This a GREAT thing. Talk to a CPA about it to get the details as you don't want to mess it up. I have a photography business run from home. 25% of the square footage of my house is used by the business - so I get to deduct 25% of my utilities, property taxes, repairs, etc from my income.

You drive your car FOR BUSINESS then you can deduct the mileas you drive for business. To/from gigs etc. Making a run to the GC for strings? Yep, business miles. At 50c+ per mile this can be a BIG deduction at the end of the year.

Don't forget advertising and promotional costs - your website, flyers, ads, etc. If the band has a custom drumhead, tshirts they wear, etc. Demo CD, youtube video, paid a pro to take pics, etc.

Assets are things the business owns - the amps, cables, guitars, lights, etc. "Expensive" things that last for years are generall considered assets - guitar for example. Strings would be an expense as they wear out. A printer is an asset, toner/ink is an expense. You can break this down further - you make up 500 flyers and that paper is ADVERTISING, where if you print song lyrics for the band it would be OFFICE expense.

Most assets should be depreciated over time - agian, you NEED a cpa for this one. An amp you buy for $1000, depreciate it over 3 years. So each year you deduct $333 worth of it's value off your income as a 'depreciation expense'. After 3 years it has 'no value'. So should you sell it now for $500 you must claim that $500 as income. Remember - ALL money in is income. A business does not have to make money! So even if you feel you lost money (which you didn't!) it doesn't matter, you must claim the income.

You used the amp for 3 years for a 'real cash cost' of $500. You got to deduct 1000 from your taxes and claim 500 in income. It works out ok in the end.

So it's INCOME - expenses = TAXABLE income. This bit is figured on a schedule C THEN the bottom line is attached to your regular 1040 tax form. If there is a profit you pay taxes. If the business lost money (which it can of course do) then that loss is a tax deduction for you!

you need to watch out that the IRS doesn't decide you are running a 'hobby business' - aka, tax write off. If are truly working, advertising and trying to make money at the business then it's not much of an issue. What they don't want you doing is getting all your gear tax free because you say it's a business and deduct the cost off your taxes without trying to actually make money.
#10
Quote by Vendetta V
I still haven't fully gotten my head around what assets and liabilities are really.

mind giving me a hint/example?


Assets are things you have of value, like cash, inventory etc.. Liabilities are what you owe other people.

I did a few accounting modules as part of my business finance degree. Accountancy is probably what I want to do as a career but I dunno yet whether its best to hold out trying to get onto a professional training scheme, or fund my own accountancy qualifications to make getting a job easier.
The plan was to drink until the pain over.
But what's worse, the pain or the hangover?
Who am I? I'm a titan so be expectin' a clash.
#11
Quote by Vendetta V
I still haven't fully gotten my head around what assets and liabilities are really.

mind giving me a hint/example?

I scarcely remember accounting but I remember it goes deeper than that because everything was broken into credit and debit, and credit = debit when you added them both up.

Assets where things you owned and liabilities where things you had to pay in the future obviously, but then theres a bunch of crap like if you set a budget for something and when you write down losses. Also depreciation.

I think if you lost an asset it went from debit to credit (Or reverse i forget) you had a thing for losses th at gained the change in credit/debit and the amount lost went to liabilities. I also think money that was owed to you was a liability.


Everything in early accounting was basically 2 sides of a chart with maybe a subchart.
Last edited by zomgguitarz1234 at Dec 20, 2013,
#12
Great post prof_fate! Enjoyed reading it.


Hmmm I asked my friend who is one of the owners of a wine store but she doesn't do the accounting part. She kind of said that assets are things that you buy that remain a value. As in a car, a fridge, tables. Liabilities are things that you bye that can go bad such as sandwich ingredients, cheese, meat, some wines.


Not sure if this is correct. the hardest part is dealing with business here in one language, then trying to translate it all to English (my main language), then only making a sense out of it
#13
credits are "IN" to an account, "DEBITS" are out. That's all they mean.

You have a business bank account and write yourself a paycheck. Then the biz bank account gets a 'debit', the payroll account gets a 'credit', then you write the check and make a 'debit' in the payroll account.
Money 'moved around' the business accounts have to balance - $500 from checking OUT and $500 IN to payroll for example.
Overall money (balance) changes when you take in money (a sale, book a gig, get a payment,etc) and when you pay bills (gas for the truck, pay for you, that luthier bill to fix the beer spilled on the guitar).

Accounting record keeping can be as simple or complex as you want. Simple is a notebook, better is a spreadsheet. Quickbooks or the like can be great - IF and ONLY IF you know how to set them up. To do that you need a CHART OF ACCOUNTS. And to do that right you NEED a knowledgeable small business CPA. Get it wrong and you have to start all over again from scratch.

Much of what you do depends on what the IRS demands (not a whole lot really) and what YOU want to know.
For example, with my photography biz I break down payments coming in by cash, check and credit card, plus online sales. Then break them down by wedding, hs senior, babies, families, etc. I break VARIABLE expenses down by the same categories.
This allows me to find out instantly how much margin/gross profit weddings vs schools have done for the year.

OVERHEAD expenses are those you have if you have 1 gig or 1000 gigs - your instruments, insurance, office, advertising for the most part (phones, website for sure).
Variable expenses are the ones you pay for each job - gas to a gig, gear rental for a gig, etc. No gigs, no variable expenses.

So if you add up all your overhead expenses you might get $5000. A gig requires you to pay the other band members $75 and rent a truck for $50. With 4 guys in the band a gig COSTS the 'business' $350in VARIABLE costs.
But you have to pay that $5k in overhead expenses, and perhaps you want paid as manager.

You can take a percentage off the top of every gig - say 15%. So you book a gig for $500, the business gets $75, the gig costs $350, so there is $75 left over as 'profit' - money after ALL expenses.

But you have to pay that $5k in overhead. Does it come out of the managers percentage? Out of the profit from a gig (that $75)? A flat fee per gig? A percentage? Maybe you want to take the 15% mgmt fee off the top and just split the rest among the band and then have each pay $20 toward the over head....it's up to you what you want to do.

But if get say, $75/gig toward that overhead you'll need to do 67 gigs to pay for that overhead.

You probably want to set money aside - to pay bills if you have no gigs for while, to invest in a new CD/Video, gear, etc - aka invest in the business and grow for the future.
#14
All so far sounds good. I have a good sense of how things are done but tracking it all and keeping it in books is kind of the news to me a bit.

With me recently planning to start a business and also taking my music business to the new actual real official business, it becomes a necessity and also a nice thing to learn.

Again guess the most frustrating part is some of the terms


But hey thanks again for another great post!
#15
I'm in the states, have a degree in management/finance, had a mother as an accountant, a grandfather CPA, 2 very good friends are accountants (one works for the IRS, the other has a biz on the side plus is a CFO of a foundry) and a girl that works part time for me is an HRBlock tax person. Plus I've owned my own business for 9 years - and my CPA (a former drummer) is a college friend and a third generation CPA in the family business.

Each state handles things differently and some things are up to you how you want to handle them. Food in a restaurant is INVENTORY. I don't do much inventory in my business, but retail businesses do. I am a photography studio - so service, retail to some extent and manufacturer too (as I print things). I also do payroll so have learned all about the fun things like workers comp insurance, paying taxes, labor posters, etc.

My son is very interested in starting a band (he's in jr high, so not quite there yet). My bass teacher has a band, has managed bands, been tour manager (for BX3 a few years back - sheehan, hamm and berlin). He's only ever played music for a living for 39 years so I have asked some questions and can ask 100 more if you or anyone needs me to.

A business can be a sole proprietor - check with your state but if its under your name there 's rarely any paperwork to get started. YOU are the business, legally and tax wise.
Next up is a partnership - here you legally need a partnership agreement that spells out how the money is split up, what happens if a partner leaves, you want to add a partner, etc. the money (profit or loss) is divided up among the partners accourding to the agreement and you are taxed on what you get. If the biz is sued you are each liable.

Next up is LLC - a corporation, a mix between a 'real' corp with share holders and a partnership. this was started by doctors to protect the OTHER doctors in a practice, so if one screws up and gets sued the others do not have to pay. There are costs with this to set it up and very specific accounting rules.

top end is a real corporation with stock. The business is it's own entity and you own stock whcih you can sell, buy, etc. again, lots of rules apply and to get paid you either get dividends on your stock or take a paycheck.
#16
That's a lot of accoutnants surrounding you!

My initial ideas are two:
To do my music which is a retail and service business(selling CDs and merch and services (studio time etc))
To start a club/cafe type of thing which is a retail business mainly

I've got my head around the Music biz, the other one still needs a business project written.

About the tax deduction, can you tell me more on why I'd want to write off things under BUSINESS expenses?
also when you said if you don't make any profit this year, what tax deduction do you get?
#17
Decide what kinds of expenses you'll have - advertising, bank fees, 'professional services' (your cpa), education (lessons, maybe magazine subscriptions), entertainment (taking people out to sell yourself to them), gear rental, office equipment (printer, desk, computer, etc), band equipment (guitar, amp, etc), studio equipment perhaps (recording gear, etc). things you'll use up - strings, cords, gaffer tape, etc, office supplies (stamps, envelopes, printer paper, staples, etc).
Put each in it's own column, total at the top I find is easiest. You can add colums and as the ryear goes on just add new expenses at the bottom. SAVE ALL RECEIPTS! If you add them to the spreadsheet weekly say, you can just toss them in a file in case the IRS ever want to audit you.
the far left colum is a description of what it is "9v batt from walmart for bass guitar', etc.

I put income on another sheet - same general layout. You may have colums for 'bar gigs' and 'outdoor gigs', 'session', etc. And a column where you describe the gig "Joes bar, 9-2 am" - you can add diary info (joe was a nice guy, all the beer we wanted. crowd hates punk songs), etc.

You'll need to track how you pay the bandmembers of course. It's much simpler if they are each 'independent contractors' - but legally you need to fill out a 1099 for each person you pay more than $600 to in a year. If the bar pays you cash you can just record what YOU got paid and split up the cash. Let them record what they made however they want.

If you ever want to go to a bank for a loan one day, have credit in the biz name, etc you need to have credit in the biz name- get a bank account, credit card, etc. Line of credit at a store, etc. It can come in handy! I get discounts from some suppliers because I"m a REAL business.

Car mileage is best tracked with a notebook kept in the car - "Date - where to/why, start milage / end mileage - trip miles". Add up trip miles at the end of the year and there's your records for that!
#18
I'd treat each business 'type' as a separate thing - so if you need to know what's making money (or not) you can identify it.

CD sales are up! Hamburgers sell well but hot dogs do not. etc. INFORMATION is POWER!

A business is a 'person', a 'thing'. If you have a studio with rent, utilities, insurance, window cleaning, cleaning inside, etc those are BUSINESS expenses. No business then these expenses do not exist.
So you have $5k a year in rent and $5k in elec and $3k in cleaning (to keep it simple) - $13k in expenses.
You spent $15,000 in setting it up - paint, sign, furniture, etc. This you'll write off over 3 years (to make it simple- it's not goig to be that simple in reality)

You charge $100/hour to rent to a band and over a year rent it out 1200 hours. That's sales of $120,000.
You have $18,000 in business deduction (13k plus 1/3 of the setup investment). You'll show a profit of $112,000.

If you are simple sole prop you'll add $112,000 to your 1040 as taxable income and owe the feds, the state FICA and your local town tax. As you can see this could be a very large check to write - so its best to set some aside from EVERY sale toward taxes (rule of thumb is 30% but there are variables that will affect that).

If you had higher expenses then you'd have less taxable income - say you had to replace a front window, or decided to buy a drum kit to keep in the studio, had a kitchen for the renters to use.

Imagine you work for a company and they send you out to buy toilet paper. That is a BUSINESS EXPENSE - your time, mileage, the TP itself as it's ALL for the benefit of the business.

If the studio and cafe share rent, elec, the bathroorm then you'll have to decide how much of these costs are assigned to each business, if you want to.

I have a studio which I never use for weddings. I just lump it into overhead so the profitability of my wedding 'division' is being hurt as it's paying for some of a studio it's never using. But that makes my baby biz look better as it's always using the stuido, some of which the wedding biz is paying for.

this is part of the gray area where YOU get to decide how to split things up.
#19
The planning part is fun - and NEEDS to be done.

A local coffees shop closed - lack of ENOUGH business to pay the bills. Rent was $1000 a month, elec I'm guessing at $500, heat, insurance, etc. Payroll costs (some things you pay no matter what, most depend on what payroll is). But if you're open 12-10 6 days a week, plus someone has to come in early to open up, stay late to close, and you may want 2 poeple there (many reasons) - that's 144 hours a week in payroll, at $12/hour (at least) that's $1730 a week in payroll.

Food costs often run 1/3 of retail. Labor ofen 1/3 (at least in fast food). SO ballpark you need $4500 a week in sales - 1800 in labor, 1500in food leaving $1200 to pay you, the rent, advertising, the original investment, money for a rainy day (around here you'll get snow storms and so business drop, food spoils, elec goes out, holidays, etc).

What do you plan to sell, what is the 'avg ticket' going to be? $8/person? then you need 563 people to come in every week. about 100 a day. Can 2 employees handle 100 people a day, half of whcih will be there at the same time (lunch hour, dinner 2 hours)? This is likely when YOU will work, the other times you do accounting, cleaning, planning, marketing, buying, etc

Owning a business is fun and challenging. Remember this ALWYAS - YOU get paid LAST. If you don't pay the bills there IS no business. So if you have a great week, great idea and get rich from it - THATS OK! You took the risk and this is your reward. More businesses fail than succeed and the loss of money and time is their punsihment for failure. LOL
#20
If you have a day job and get paid $40k, do your taxes and such you find you actually got cash of maybe $28k.

OK, your business ddin't make a profit - hey, if you put up $50k to get it going and opened the last month of the year you WONT make a profit this year. Look at some business - they spend 6 months building the building, 3 months trianing people - losing money happens.

So you do the sched C and it shows a loss of $4200. You can do two things with this - talk to your tax man for the best option - you can deduct that off your $28k taxable income and pay less taxes. OR the better idea is to carry over some of that loss to next year - where you are more likely to make a profit and owe more in taxes, be in a higher tax bracket.

I know in my business I have about $12k in deductions right off the bat - home office, insurance, phone, website, bank fees, cpa fees, I've driven 10,000 miles a year for business for 5 straight years, etc. I can decide if I'm going to invest big this year in something - last year I remodeled some of my studio, the year before bought a $3500 camera, etc.
I know (from experience) that my variable costs run 21% of sales, marketing 8%, etc. So I have a forumula in my spreadsheet to set aside a percentage of sales based on that info for taxes. So if I have a good year or a bad year that amount is automatially adjusted.

As my acc't says- if you don't need to pay it in taxes then you have an instant tax return!
#21


Gozd in gora poj,
silen ženimo hrup,
uboga gmajna, le vpup, le vkup,
le vkup, le vkup z menoj,
staro pravdo v mrak tulimo,
da se pretulimo skozi to zimo
#23
Quote by VillainousLatin
My uncle is an accountant and he's loaded!

Well, he started as an accountant, idk what exactly is his position right now but he lives in a very prestigious place and owns like 3 cars... so he must be doing well.


Why the hell would you own three cars?

Ok, ok, I get it, you like cars, but that's such a bad investment.

God, that pisses me off.

Sorry, rant over.
#24
Quote by Philip_pepper
Why the hell would you own three cars?

Ok, ok, I get it, you like cars, but that's such a bad investment.

God, that pisses me off.

Sorry, rant over.


One for his wife, one for himself and a big one for family road trips and stuff like that...

idk, it's kinda stupid but he can do w/e he wants since he has the money for it
#25
Quote by VillainousLatin
One for his wife, one for himself and a big one for family road trips and stuff like that...

idk, it's kinda stupid but he can do w/e he wants since he has the money for it






Extra one for road trips, jesus christ.
#26
I did A level accounting. It was really ****ing boring. I got a D and know that I definitely do not ever want to be an accountant.
Quote by Renka
OddOneOut is an Essex S&M mistress and not a pirate or a computer program.

#29
Quote by Vendetta V
unless you want the D again

I'm definitely getting the D this Christmas.
Still doesn't make accounting interesting though :P
Quote by Renka
OddOneOut is an Essex S&M mistress and not a pirate or a computer program.

#30
To the three car owner comment, is it personal or on business credit?

Often people use companies credit to finance personal assets. Doesn't happen often, most notably I have seen it with bankers, which is not that odd, since banks do not go out often, only in credit crisises.

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Last edited by xxdarrenxx at Dec 20, 2013,
#31
Quote by xxdarrenxx
To the three car owner comment, is it personal or on business credit?

Often people use companies credit to finance personal assets. Doesn't happen often, most notably I have seen it with bankers, which is not that odd, since banks do not go out often, only in credit crisises.


Actually yeah, I think his BMW is his company car or something like that. But he uses it always, so I think it's basically his, I think he said that he can pay it and it becomes his permanently or something like that. I'm not sure though, I just know he has 3 different cars in his garage.
#33
My dad was an accountant and he loved it, my gf is also seriously considering going into that line of work too, I might do it myself as well.
#34
Quote by Vendetta V
son, how many guitars do you have?


5.

An acoustic.

An electric standard tuned.

An electric half a step tuned.

One passed down from my grandma which is worth about 2 sandwiches.

And a bass guitar.
#35
Quote by Vendetta V
I still haven't fully gotten my head around what assets and liabilities are really.

mind giving me a hint/example?

on a purely technical note, assets being defined as "things you owned" and liabilities as "things owed" is not strictly true. The textbook definition of an asset (and liabilities) in substance is an item that provides for future economic benefits (outflows) as result of past transactions. A pile of shit, for example, might have been purchased by you for your business selling coffee mugs. However, since it does not assist in any way, monetarily or otherwise, it can't possibly be classed as an asset. Similar to a family debt that exists in name only.

Edit: Just read that this is for starting up a business. In that case you'd probably won't need to know this.

Although, you'd need to understand that debit/credit does not indicate an absolute in or out movement in balances. Remember that: Assets = Liabilities + Owner's Equity. Debiting an asset is an increase in its value and crediting decreases it. The opposite is true for items on the other side of the equation. You credit liabilities (and OE) to increase and debit to decrease it

| (• ◡•)| (❍ᴥ❍ʋ
Last edited by Cianyx at Dec 20, 2013,
#36
Suprised no one has made a jewish joke yet. tehe
Whats goes around must come down
#37
Quote by Cianyx
on a purely technical note, assets being defined as "things you owned" and liabilities as "things owed" is not strictly true. The textbook definition of an asset (and liabilities) in substance is an item that provides for future economic benefits (outflows) as result of past transactions. A pile of shit, for example, might have been purchased by you for your business selling coffee mugs. However, since it does not assist in any way, monetarily or otherwise, it can't possibly be classed as an asset. Similar to a family debt that exists in name only.

Edit: Just read that this is for starting up a business. In that case you'd probably won't need to know this.

Although, you'd need to understand that debit/credit does not indicate an absolute in or out movement in balances. Remember that: Assets = Liabilities + Owner's Equity. Debiting an asset is an increase in its value and crediting decreases it. The opposite is true for items on the other side of the equation. You credit liabilities (and OE) to increase and debit to decrease it


Hey now on m reports I have debit as decrease and credit as increase of money, using quickbooks. Also my report on the financial profit and loss it shows one number and the paypal accoutn with which I've payed for goods and got payed for selling the said goods I have 2 dollars more. What's up with that? I can't find what went wrong in there
#38
I'm part-qualified accountant and been working as one since 2004. In a company's, or individual's, accounts, debits are plus entries (they are classed as your costs) and credits are minus (that's either your asset or your liability).

However, for some reason, banks refer to debits and credits the other way round. On a bank statement, debit is money going out (so it shows as a minus) and a credit is money going in (a plus)

The golden rule of accounting; and pretty obvious really; for every debit entry there has to be a corresponding credit one.