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[Steve Garris]

As others have noted you should simply do the same federal tax write-offs you've already been doing. For me it's mileage, equipment & subscriptions. Like you, I do 98% by myself. I have some "volunteers" for the larger events.

A bigger concern I have is the new CA law regarding contracting as mentioned by Luke. I'm not sure how a freelance sound provider can continue to work there under the new laws (not sure if they're in effect there yet). This concerns me as I am moving there myself next year.

And BTW, you don't have the highest tax burden in Calif. There are a handful that are ahead of you:
https://www.cnbc.com/2018/04/10/us-states-with-the-highest-tax-burdens.html
https://www.usatoday.com/story/money/taxes/2018/04/06/states-highest-and-lowest-taxes-3-6/482944002/
http://worldpopulationreview.com/states/tax-burden-by-state/

[Jeff Lelko]

I’ll also toss in that liability insurance and equipment (theft/loss) insurance are two separate things.  Liability insurance is mandatory (usually no less than 1M/occurrence 2M/aggregate) whereas any additional policies are up to the business owner.  Given what all we deal with in this industry it’s smart to have your equipment insured as well.  And that’s all on top of the aforementioned vehicle insurance and worker’s comp.  It sure adds up quickly, hence why those of us running a professional business need to charge a professional price...

Otherwise, your financial and legal advisors will be able to make the best suggestions for your particular situation.  My business is an LLC, and both my CPA and attorney were heavily involved when doing the initial paperwork.  While not the cheapest way to start a business, it’s worth every penny to have professional oversight and get things right.  Good luck!   

[Mark Cadwallader]

Re:  AB 5, California's "new" independent contractor statues.  The explanation I've read is that AB 5 does not change the state of the law in California; instead it merely codifies what the California Supreme Court said that existing California law actually meant.  AB 5 spells out a bunch of the nitty-gritty details of how the law is to be applied, so that employers and workers can understand how things are supposed to work.

Please note that none of the above is intended to, or constitutes legal advice; consult your own attorney,  YMMV, etc.  I am not licensed to engage in the active practice of law in the state of California, and I don't live there.  But I am following what is going on with interest, even though it doesn't diectly apply to my state of residence.

[Luke Geis]

Another word of advice. I initially got the standard general liability 1X2 policy and have since had to go to a 2X2. I also didn't do a blanket policy ( basically everyone you work for is an additional insured even without being listed as such ) and am looking at doing that when my policy renews.

Many hotels and other venues are really trying to pass the buck on liability and in doing so they almost all want the hotel and their banquet service to be listed as an additional insured. To add even more pain, they are also wanting higher levels of coverage. Most in my area require a 2X2 policy at a minimum. Going with a 2x2 and a blanket policy does cost a bit more, but it makes things much easier later on. I originally was going to just add additional insureds as I went along, but found after having to add several names to the list, that I may as well have just gone with a blanket policy. The more work you do, the more liability you incur financially and physically.

[Tim McCulloch]

Another word of advice. I initially got the standard general liability 1X2 policy and have since had to go to a 2X2. I also didn't do a blanket policy ( basically everyone you work for is an additional insured even without being listed as such ) and am looking at doing that when my policy renews.

Many hotels and other venues are really trying to pass the buck on liability and in doing so they almost all want the hotel and their banquet service to be listed as an additional insured. To add even more pain, they are also wanting higher levels of coverage. Most in my area require a 2X2 policy at a minimum. Going with a 2x2 and a blanket policy does cost a bit more, but it makes things much easier later on. I originally was going to just add additional insureds as I went along, but found after having to add several names to the list, that I may as well have just gone with a blanket policy. The more work you do, the more liability you incur financially and physically.

Working in hotels is made as difficult as possible because the hotel gets a 40%-60% commission on the in house AV invoices.

One of our annual events was held in one of those bigger cities in Texas this year.  The hotel's "Production Guidelines" (read: requirements) for outside AV and event production, rigging regulations and insurance requirements comprised a 16 page package, most of it geared toward revenue enhancement for the in house company.  It was fun watching the client's production manager go over the in-house's bill; in the end there was an "adjustment" to some line items that was done by the in-house company before the invoice was sent down to post to the folio.  It was a smart move on the in-house AV people.  Why?  Because if it was admusted by the hotel sales office the in-house would get stiffed.  Read on... (NOT at all what happened in TX, just to be clear)

Here's a dirty little secret about 99% hotel AV... the "house" cannot lose.  {harp music transition to hypothetical, fictional, illustrative vision}  Say I'm an event planner/client that's booked a ballroom for a week, 400 guest rooms for 5 nights, break out rooms for a week, and a bunch of catering.  I used the in-house AV company and I'm not happy with the results.  On top of it they give me an invoice that is over the estimate, so I complain to the head of sales and marketing and maybe a hotel vice president.  Hotel admin discounts the AV 50% to regain some good will. {harp music transition to actual reality} Where did that discount come from, you may ask?  Yep, the hotel keeps the commission and the in-house gets nothing (or next to it).  YMMV and all that, but hotels are about "revenue per guest" these days.  When they were primarily in the biz of renting beds it was "revenue per guest night".  The difference is not subtle and makes *everything* billable.. or as was in the document for the TX hotel, '... is not a complimentary service of the hotel.'  If they give away something or discount it you can bet it's not their money.

[Scott Olewiler]

My biggest things is I'm Really looking for all the tax write offs is whats going to be worth it. I drive anywhere from 38,000-45,000 miles a year, that's a lot of gas/maintenance costs alone from, I also cover a huge amount of territory from San Diego to Eureka and everywhere in between, not too mention the thousands I spent on purchasing cabling, stands, speakers, microphones, lighting, truss, etc.. all could be huge write offs for me.

I'll repeat what others have said. You don't need a license to deduct these expense on your taxes.

Since write offs only benefit you if you're reporting your income to begin with I assume you've already been reporting this self employment income?

As a sole proprietor all you need to do to deduct your expenses are report them on Schedule E when you file your taxes.  If you've already been reporting and paying taxes on your income and but not your expenses you should contact a tax professional about going back and amending your previous returns.

If you've been operating at a loss and wish to use your business losses  to offset your personal tax liabilty, know that you're only allowed to lose money for 3 out of 5 years (I think) before the IRS can reclassify your business as a hobby and possibly retroactively remove the previous deductions you took.

If you've been operating at a profit and not reporting it, you're not only breaking the law by not reporting income but you're also reducing your social security benefits later. Something else to think about. 

[W. Mark Hellinger]

If I had it to do over again, I'd take seriously the advice I received but didn't take at the beginning, and that's to hire a good CPA to oversee/advise/manage setting-up your accounting system.  Some real thought and planning really needs put into this, and it's likely difficult to know what you should have done ahead of time unless you have that skill-set.  I'll suggest to first shop CPA's.  I'm of the experience CPA's come in one of two broad categories:

1)  Corporate and/or government oriented.
2)  Smaller owner/operated business oriented.

You'd likely want to seek #2 above (putting it mildly).  And realize that CPA's can rather live in their own world, in that:  I recently stumbled across a quote that I believe is good advice... it comes from a biography of an 85 year old company founder I've become acquainted with.  He founded his company on a shoestring budget initially as a mom & pop owner/operator, ran out of his garage, filling a need that he saw as an outdoor adventurer/enthusiast... doing something that's his passion... As it's said: "Make your avocation your vocation and you'll never work a day in your life."  The company became a success... I believe well beyond his wife and his expectations... and I believe he's still involved in daily operations.  He holds a PHD in Finance and Economics, and was a college professor teaching corporate finance when he started his company, and recalls attending a seminar to a group of business professionals sometime before he started his company.  After the presentation, one of the attendees remarked: "He may know his theory, but you can tell he's never met a payroll!"

Anyhoo:  I'd say make the accounting thing a serious priority... even if the need doesn't seemingly warrant it "now".  If you're like me, you'd just as soon take a beating as sit down to "the books"... but trust me:  "The books" can very likely be a make or break deal and will eat your lunch if not diligently attended to.  First, if you haven't already, gain an firm understanding of the difference between "book keeping" and "accounting".  QuickBooks is likely as good as any starter accounting system... there's many versions of QB to choose from and the set-up is utmost important... but regardless of how "correctly" you think you're starting out, plan on considering starting fresh with a new accounting set-up a year or 2 or 3 after you get up and going.  Keep a journal and document, document, document... what you did and when and why.  Your lifestyle may need some serious consideration... deductions can be (generally are) a major player, and do what you can to design a lifestyle where you're basically living a deduction... you don't take vacations, you take business trips.  Don't buy much of anything (except for personal living essentials) that isn't deductible.  Reconsider everything you might have previously held about "bragging rights".  You'll likely find yourself routinely "working" 60 - 80+ hour weeks... but it won't seem like it (clocks run a lot faster when you're on your own time, especially when time is costing you money).

Oh yea (I almost forgot):  Make it a priority to socialize with other business owners... successful or otherwise.  Business owners tend to like to talk about their business and business in general... listen and ask leading questions... and don't be quick to judge "advice"... mill it over and over.

[ProSoundWeb Community]