Invoices should make it as easy as possible for other businesses to pay your act. You’ll also want to keep your accounting as simple as possible, while ensuring you’re compliant with your tax obligations. Cutting corners will waste your time in the long run, impact relationships with venues, event and booking agents (the “Payers”), and make it tricky for you when it’s time to lodge your annual income tax return.
Read on to get a quick run down on band finances, without having to trawl through pages of legal jargon and financial information. Of course, this guide is only a starting point so we've included some other resources below.
If you collect performance fees you need to register as a business and report that income.
If you're a solo performer:
Register under the “Sole Trader” business structure with the Australian Tax Office, and invoice the payer (e.g. venue) under your Sole Trader details.
If you’re in a act (band/group), you should either:
1. Register the act as it’s own business ‘partnership’ jointly operated by all members, and invoice the Payer from that partnership
or
2. Have each member register as a sole trader, have one of you invoice the payer, and then have the sole trader who was received all the money to pay other band members their share.
A business partnership is the most formal way as it creates a distinct legal entity for your act and shares obligations between all band members that are registered as partners. But partnership business can be tricky if band members regularly change as you’ll have to remove/add new partners with the tax office. Also at tax time someone in the partnership or an accountant will have to submit an annual tax return on behalf of the partnership. Each individual will still have to declare their earnings from the partnership on their personal income tax return.
Splitting income as Sole Traders: To simplify matters when first starting out you may want to consider having each band member register as sole traders. One of you then invoices the venue/booker (“Payer”) under your one sole trader’s details (Let’s call them ‘Sole Trader A’). When Sole Trader A gets the money, all other band members invoice that sole trader as ‘sub-contractors’ to get their share. At tax time each band member takes care of their sole trader income and expenses through their personal income tax return (which they’d have to do anyway if under a partnership). Sole Trader A declares all the income they received from Payers but also declares as an expense the money they paid to their bandmates, so Sole Trader A will be taxed on what they individually earned.
See this guide for details on registering a suitable business structure.
Get paid by getting it right!
You should invoice the Payer (ie the venue, booking agent, event organiser etc) with your sole trader or business details to keep a record of the income you receive. Also keep receipts for all your expenses related to performing so you can claim those expense losses against the income you receive.
Find out before the performance date who you will charge your invoice to (ie who is the ‘Payer? The Venue or the booking agent?).
Provide the invoice to the ‘Payer’ on the day of, or soon after the performance date. Your invoice needs the following:
Your business details:
Your Business Name (as registered with your ABN)
Your ABN
Band/Act name (if different from your business name)
Date you created invoice
Your contact name, email address and phone number
The Payers Details:
Invoiced to: Put their Business and/or Trading Name
Performance Details:
Date of performance
Performance description: It’s OK to simply put ‘Performance’ or be more specific eg “Performance 3x 45 minute sets."
Price: You’re performance fee
Your bank details:
BSB
Account number
Account Name
Tips:
Your invoice should be a document (not just in the body of an email). PDF is the standard format. The email should have '[Band Name, Gig Date, Invoice] written in the subject line. Venues get heaps of emails so make yours identifiable and easy to find.
Check all information previously sent to you (worksheets, booking agreements etc) to find out the correct payer name for your invoice. If this is not correct you'll most likely have to amend it and resend it.
Also check the payment terms for example, you might have to send on an invoice within a fortnight of the event.
What is GST and do I need to charge it?
First, you only need to register for GST if your business earns over $75,000 per year.
Why?
Many Australian businesses need to charge and collect 10% Goods and Services Tax (GST) for the government, however you do not if your business earns less than $75,000 per year. If you are reading this, chances are your not earning $75,000 from your music, so do not charge GST on your invoice. Instead, include the following statement to make your status clear to the payer "Not registered for GST".
Remember, your business is separate from your personal income from other work, even if you earn $75k+ in your ‘day job’, you won’t need to register for GST unless your music/arts business also earns over this.
Even if you don’t collect GST, your business will still get taxed.
Remember, the money you earn from your music business is separate from any income you may earn doing other work. You don’t have to have separate bank accounts (although that’s recommended if you are in a band), but you must keep separate records of the income you earn, and the expenses (costs of doing business) to meet your tax obligations and to claim tax deductions.