Cash Flow

This seems to be the biggest challenge in the music industry and also the most under utilized area of money and finance. For musicians there are many possibilities to ensure that some sort of inflows of cash exists, namely through grants, tax returns, loans, lines of credit and credit cards. It just takes some pre-planning in determining how much is needed and when.

The first area that I advise to start with is creating a budget and timeline. Be it for recording the actual album, taking photos for your press kit or selling your CD, you should quickly write down a listed description of the items you will need to pay for, how much it will cost, the date of purchase and when it can be paid.

Next step is to look around and see how much money you actually have. If you are a saver this should be easy. However, if you are like most of us, you will find that after your bills are paid there is very little left to work with. Well that’s where some creative accounting comes in. The easiest place to look can be at your tax return – if you do work and are able to save some of the receipts you have accumulated “starting up” your business, then you can use these and apply them to your T4’d income for that year. In addition, you may also be eligible for personal GST refund, tax credits – like in Ontario is you pay rent or property tax you receive a credit for living there. Another way of even forcing your tax return into a refund is telling the payroll officer at your job to take off more income tax. You may have to fill out a form to request – but believe me an extra $50 per paycheque can easily turn into $1,200 after 1 year of bi-monthly paycheques.

Another great way of creating cash flow is to register a GST number for your personal business. This can be done for free via the phone or even internet. And depending on what option you choice to file: quarterly or annually, you can get a cheque every 3 months.

Basically you add up the GST business expenses from the receipts that you keep against GST business income you charged out. Usually at the beginning of an artist’s career there isn’t any income – just a lot of recording, travel, phone, Internet and photos expenses. All of which contain the 5% GST! Let’s look at an example: If you spent the following amounts within 3 you would have a total of $7003.50 in receipts that have GST charged. If you paid cash or pay an individual who is not a GST registrant than the fee will not contain that 5%.  So just by having a registered GST # you are now able to file for a refund of $333.50. See? You just created cash flow!

Another way is through our wonderful Canadian grant system, both provincially and federally, via specific funds like FACTOR, StarMaker, Canada Arts Council (CAC), etc. These programs are designed to assist musicians/artists from the beginning of their career and throughout. There are many pre-requites as well as business systems and structures that need to be in place. But I won’t go into that lengthy conversation here.

The creation of cash flowing throughout your artistic career is a definite possibility – it just takes some more creative thinking to harness and apply your needs to the very system that exists all around us.

About the author

Andrea Morris( - AM to FM Promotions

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