Category Archives: Finance

Save $10 on your next Woodwind and Brasswind order!

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“Music is an expensive business.” If I had a dollar for every time I’ve heard this, I probably wouldn’t need to teach any more lessons. So, when it comes to supplies and maintenance for my own personal performing, I’m always looking for a deal. Coupon codes, flash sales, email lists, you name it.

Music Studio Teacher is now happy to announce $10 off you next order at Woodwind and Brasswind thanks to Ebates. The process is quite simple. First sign up for a free ebates account through our link below.

 

Click here to use our link!

 

Next, log onto your ebates account and search Woodwind and Brasswind. Follow the ebates link over to WWBW and simply shop as normal. Within a few weeks you will receive at check for $10 in the mail.

Its free, Its simple, and its more likely to work out than asking a middle schooler for a check from their parents!

 

*Note-you must use our link to receive this offer.

Income and Impact – Dr David Cutler Guest post

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Music studio teacher is excited to kickoff 2016 with a guest post from Dr. David Cutler. His new book,  The Savvy Music Teacher is available here.

The Direct Link Between Income and Impact: Savvy Music Teachers
By David Cutler

On the surface, the suggestion that the best independent music teachers are those who earn the most money seems ludicrous. No obvious, mathematical correlation can be drawn between fiscal and pedagogical success. We have all encountered incredible educators who struggle to make ends meet, or financially comfortable ones who are mediocre instructors at best.

Yet I argue that there is indeed a parallel. When done right, impact and income are closely related bedfellows. Savvy Music Teachers (SMTs) find ways to make them both go up, in harmony.

How is this claim supported? It is difficult to devote 100% of attention to teaching excellence when tormented by problematic personal finance. Economic woes trigger a host of problems, inducing stress, strained relationships, and zapped enthusiasm. Individuals forced to take supplementary “day jobs” they despise just to get by, or those with unmanageable schedules and an unbalanced life, are unlikely to have time or energy to go the extra mile for students.

On the flip side, a sound financial model increases likelihood that teachers find the psychological space to offer their best. It provides a foundation for maintaining a studio, organizing meaningful activities, pursuing professional development, and tackling passion projects, in addition to fulfilling personal desires such as buying a house or raising a family.

Is there a more direct correlation? There is if you do things right. In order to increase impact, SMTs are known for employing teaching tools and strategies that expand beyond the average studio. As a result, their offerings are differentiated in innovative and meaningful ways, which translates to more students and higher fees. In addition, they offer a variety of products and services beyond lessons that enhance learning and revenue. Independent music teachers looking for a raise have an opportunity: imagine new, valuable musical experiences. Connect those initiatives to a sound economic model and, voila, both earnings and value rise.

When writing The Savvy Music Teacher, I had the good opportunity to interview more than 150 independent teachers from across the globe (many are profiled in the book). Typically, I would contact them with a particular angle in mind: curriculum, policies, tuition model, studio management, etc. During these talks, however, the conversation often strayed in wonderful ways, exploring peripheral issues that were also parts of the model. We discussed challenge, opportunities, frustrations, and solutions.

As a rule, instructors with inventive business models matched them with creative teaching approaches, and vice versa. For example, music teachers who generated substantial incomes were more likely to integrate improvisation, technology, and multiple musical genres than those who didn’t. That was a fascinating lesson. It seems that creativity is a transferrable skill. Those who master it benefit in a host of ways, creating simultaneous wins for themselves, students, and communities.

Income and impact; money and meaning. These terms may not be synonymous, but for SMTs, they are closely related.

DAVID CUTLER balances a varied profile as a jazz and classical composer, pianist, educator, arranger, author, speaker, and director of the world’s premier experiential arts entrepreneurship workshop The SAVVY Musician in Action. His books The Savvy Musician and The Savvy Music Teacher help musicians build a career, earn a living, and make a difference. Cutler serves as the University of South Carolina’s Director of Music Entrepreneurship.

 

 

 

Tracking down end of the year payments

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The end of the school year is upon us.  If you are like me, you have a few students who don’t pay on time.  They always do pay you eventually, but frequently it occurs one or two weeks into the next month, rather than in the month lessons actually occurred.  My normal motto for this type of situation is to kill them with kindness, and persistence.  Each Friday I send a Bcc email to all my students still owing for the current month, asking kindly if they could please bring a check the following week.  Most of the time I am fine with this strategy and my number of outstanding accounts drops each month until everyone is current.

 

However, at the end of the year if you are not paid by the last day of school, it becomes much harder to track down payments.  You are no longer seeing the student each week, school is out of session, and you are unable to roll the money over in to the next month’s bill.  In this case I try several strategies until I am able to collect the check.

 

First, I use a direct email, rather than my Bcc technique above, explaining school is over and everyone needs to get their accounts current.   I then ask for a response in the message verifying funds will be brought the coming week.  If I do not hear back this way, I try a phone call.  This is a bit more direct, but sometimes works better.  If no one answers the phone I try a text.  If this doesn’t work I speak directly to the student about it, and will even text the student a reminder the day before to bring payment.

 

Your last card to play is band director intervention.  Frequently band directors wield larger influence than the private lesson teacher.  So, you can try telling your student if they cannot bring funds you will be forced to tell band director.  This may scare them into paying you, or you may actually ask if the band director will contact student’s parent/guardian.  If all else fails school band budgets will sometimes compensate you for one month of unpaid lessons on a school by school basis.

Persistence will pay off in this matter.  There have been times where I wasn’t able to collect a check by then end of school and could not get in touch with parent suddenly.  I just kept emailing weekly, daily, until suddenly a check appeared in my mailbox.

Estimating Income for Musicians

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Now that tax day has finally come and gone, many private lesson teachers are experiencing a sense of relief. Now that the next tax year has begun, it is important to consider your earnings for the coming year now, in order to avoid a big tax bill in the future.

Estimating income is difficult. This is especially true if your work is variable, and such os the case with private lesson teaching. Luckily, at this juncture in the year you most likely have enough information to get a realistic idea of your earnings for the coming year. Doing this now will save you the headache of substantial taxes owed next April.

If you are teaching summer lessons you most likely know your studio size for this season. Calculate your earnings for the summer based on weeks teaching and set it aside.

Next, determine your studio size for the school year. Will you be taking on more new students, than students graduating lessons or quitting band? Will you be adding any new schools or dropping schools from your schedule? Will there be any changes in the lesson rate? Now you can use this to determine income for your fall teaching. I assume a student will never miss a lesson for this excercise. I would rather overestimate now than underestimate and have to pay later. Combine this with your summer earnings, as well as money you have already made from January first to now,

Once you have arrived at this number it is important to also take into consideration any other income streams you may have, such as gigs or clinics, and include these if possible.

Lastly, take a look at your deductions from previous year. Are any of these no longer applicable for the coming year? This includes educational credits, or the witting off of one time purchases such as computers, tablets, or instruments. If you are losing a few of these big deductions you should be prepared to pay more taxes.

On the flip side if you see any expenses rising, this will increase your deductions. For example, your health insurance cost could be going up, or you may anticipate driving more work based miles.

You can now use your previous tax return as a model, by plugging in your new estimated income and making the same or revised deductions. You can also use this to determine self employment tax. Be sure to consult tax tables of thee has been a drastic change in income either way, as your tax bracket may now be altered. At the end of this exercise you will have an estimate on what you will owe next year, and can send in your quarterly vouchers accordingly.

This is an important procedure, and will keep you from a surprise bill next April.

Maximizing Musician Tax Deductions

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Because of the self-employment tax faced by many musicians, it is critical to deduct as large of a portion of your income as possible. This way you are paying taxes only on the portion of your income that cannot be written off. If you are new to self-employed taxation, please see my earlier post on the basics.

My primary piece of advice on beginning this process is to get a good certified public accountant. Your degrees are in music, not tax law. Your CPA can help ensure all your forms are filled correctly and you are paying the correct amount in taxes. A tax return signed by a CPA looks better to tax officers than one filled out by an individual trying to take numerous deductions.

 

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Your role as a musician is to communicate all the items you would like to deduct to your CPA. Propose as many as you can, and your CPA will tell you what will fly and what will not. Keep in mind he or she is not a musician and is most likely unaware of the numerous expenses you have.

So, what can the musician deduct? Things you have purchased in the last year to do your job can be deducted. Some of the common ones are:

Standard deduction- Everyone gets this! It was $6,200 in 2014. This is a nice start to lowering your taxable income.

Self-employment tax- Using the  Schedule SE form you can determine your grand total of self-employment tax and then use the formula to determine the large portion of self-employment tax that can be deducted, about half.

Health insurance-If you are over 26 and self-employed, there is a good chance you are buying your own health insurance. The grand total of your monthly premium payments can be written off.

Retirement- Regardless of your age, it is important to set up a retirement account. If you open a traditional IRA, you can deduct these contributions, up to the maximum allowed, for the year.

Educational credits-If you are still in school, either enrolled undergraduate or a graduate degree program, you can write off the tuition paid. Your university can provide you with the needed form.

Student loan interest-Speaking of school, you may have completed your degree but are still paying loans. You may be eligible to deduct all the interest you have paid for the year on this loan, which can add up, especially in the beginning of your repayment period. Note, you cannot do this if you are married and file separate tax returns.

Insurance- this can be insurance on your instruments, your car you drive to work, liability insurance, or renters/home insurance if you have a home office.

Depreciation- You can depreciate the value of your instruments needed for your job over time. You can choose to either write off the entire value if you buy it in the current tax year, or depreciate it partially over a period of years. Either way, you must get an appraisal to verify the declared value.

Repairs-any repairs or maintenance on your instruments can be deducted.

Legal and professional services-you can use this column to deduct anything you paid for you tax return preparation for the previous year.

Car-If you use your car for your job, the government offers a standard rate for each mile driven for work. For 2015 it will be 57.5 cents per mile. If you drive a lot this really adds up. You must keep track of exact miles driven. Additionally, tolls and car maintenance can be written off too.

Supplies- You can use line 22 of your Schedule C to account for all necessary musician supplies. This includes sheet music, mouthpieces, ligatures, reeds, necks, strings, bows, instrument/music stands, and any other gadgets like iPads, computers, recorders etc. This category has a lot of potential so look back through your purchases to make sure you are not missing anything.

Travel-if you traveled for a conference, audition, or performance you were playing you can write this off, along with the cost of food for these trips.

“Other expenses” -Line 48 of your Schedule C allows for any other expenses that are not covered earlier in the tax return. This is a key area for musicians, because we frequently have unique expenses. Some to consider here are:
Facility use fees paid to lesson teaching locations
Fees to collaborative artists such as piano accompanists
Any lessons you take from others as professional development
Domain names for personal websites
Postage
PayPal fees if you use this for your students to pay you
Conference registration fees

Home office-People are sometimes scared to take this deduction, but if you have a room in your house or apartment dedicated to your profession you should go for it. This cannot be your living room with a computer in the corner, but rather a single room, with a door, used for work only. Not sleeping, eating, or partying. For this deduction you must know the square footage of the room and house and you can deduct a portion of your rent/mortgage. Also, add up all your utility bills and a portion of this can also be deducted with the home office.

All these things add up and help reduce your income to a more manageable, level for taxation. You must keep receipts for these items in case the value needs to be verified for up to 5 years after the return. I use a filing cabinet to keep receipts during the year. Then on Jan 1 I total everything up in a document and send it to my CPA. Good luck and happy deducting.

*Disclaimer-Please seek professional assistance in filing your taxes. Musicstudioteacher.com  takes no legal responsibility for results from this post.