Money Management 101

Now that you have set yourself up to generate streaming revenue and correctly split your records, you’re ready to take the next steps in your career. There’s a small amount of money coming in, but you’re not sure how to make it work for you. Before you buy a new car, consider some of these steps that help artists plan for their future and manage their money during that process.

Devise a Plan

Determine the long and short term goals for your career. Are you planning to record a new album or EP? Are you planning to go on a small tour? The answers to these questions will inform the way you prepare for your future.

If you’re planning to work on a new album, for example, you need to consider every cost associated with the recording and promotion of that project. Are you going to shoot a music video? Are you doing photoshoots for promotional images? Are you going to promote a single or singles through social media?

How much will it cost to get enough studio time? You can pick and choose from these options. Once a plan is in place, you can start to calculate the total cost of following through on your goal.


Create a budget for all of the smaller pieces that make up your larger goal. Using the above example, you might choose to shoot one video, do one photoshoot, promote one single on Instagram and record ten songs, so that you can ultimately pick eight to get mixed and mastered for your album.  

Your budget might look like this:

  • Recording $25/hour for 40 hours $1000

  • Mixing & Mastering $100/song for 8 songs $800

  • Music Video $1500 for 1 video $1,500

  • Photoshoot $200 for 2 photoshoots $200

  • Social Media Promotion $50/promo for 10 promos $500

  Total: $4,000


Once the plan and budget are finalized, it’s time to execute. Figure out how long it will take to save $4,000. If you save $500/month it will take eights months. If you save $1,000/month it will take four months. Use this time as an opportunity to perfect your craft, connect with more producers and engineers, focus your vision for the project and revise your ideas.

Tips for Planning and Saving

This may seem obvious to some, but it’s new to others: separate personal and professional bank accounts are an important thing for musicians. Bank accounts allow people to track expenses, save and budget. They can also protect the account owner against loss in the event that a card in lost or stolen. And perhaps most importantly, they can establish credit. Credit Unions are alternatives to banks, with the main difference being that Credit Unions are nonprofit and banks are for-profit. There are a host of local credit unions in the Milwaukee area. Educators Credit Union, UW Credit Union and Landmark Credit Union are three of the largest.

Reasons to Incorporate

Incorporating as a business is a necessary step for musicians to take fairly early during their career. Most artists incorporate as an LLC (limited liability company). There are other entity types but the LLC is typically the most simple and least expensive.

There are several reasons why incorporating is important:

  • Doing so clearly establishes the artist or band as a legal entity, and therefore absolves them of personal responsibility to the business’ debts.

    • For example, let’s say a band doesn’t pay their tour bus company $10,000. The bus company can sue the band (aka their LLC) for the unpaid amount, but cannot go after the members personal assets (cars, homes, etc).

  • Tax benefits. You can write-off a huge list of items as a musician. The exact phrasing from the IRS is: “To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.”

An important note here is that these items have to be purchased through your LLC’s business account to be eligible for income tax deduction. So make sure you are making all purchases and payments through your LLC.

Some common examples of items you can deduct are:

    • Clothes that you wear on stage

    • Netflix/Hulu/etc. (You can say this is research - you might work on a soundtrack one day)

    • Day of show food

    • Movies

    • Booking fees for recording studios

    • Rent for classroom or teaching space

    • Utility costs for your workspace

    • Costs associated with building a home studio

    • The costs associated with registering for a business license

    • Maintaining insurance

    • Fees associated with maintaining your website, like domain registration and monthly hosting

    • Membership fees to professional associations

    • Professional services necessary for your business, such as lawyers' fees and tax preparation costs

    • Instruments or equipment used in making, recording or performing music

    • Promoting via social media, tv, print, etc.

You CAN’T write off:

    • Trips to the grocery store

    • Pet expenses

    • Other personal expenses like personal clothing and entertainment unrelated to the business

For all the expenses you plan to deduct, you’ll need documentation in the form of bills or receipts. Save all of your receipts.

To set up an LLC, you can use the “Click here to start filing.” button at the bottom of this page.

Financial decisions can be intimidating and confusing. Please consult with a financial advisor before making any important financial decisions. Many credit unions, banks and other financial institutions offer free coaching.

Sign up for office hours if you’d like help with the steps outlined above (planning, budgeting, executing).

For a chance to win a pair of free Koss Porta Pro headphones, please email the phrase “Plan Budget Execute” to by noon on Thursday, February 21st.