Originally Posted by Midnite Zephyr
I was reading over at drumtips.com and I came across this tip:
66. Deduct EVERYTHING! Us drummers are self-employed (most of the time). We operate as a small business and a small business has full legal right to deduct expenses. Hire a tax consultant. Negotiate a reasonable fee and make sure you have receipts for everything. As a consultant once advised, "Even if you deduct too much and are audited, you will still be better off by paying backtaxes or a small fine, as compared to losing an enormous amount of money through the years by not trying."
I was actually thinking of doing this but I was advised against it, but now that I think about it more, I think I should be deducting things. I mean, I pay $140 per month in rent at this studio. Plus all the gas to go to gigs, that should be deducted. Things need to be deducted if I'm in a band and this is my right to do so. What do you all think about it? Do you deduct band expenses? It sure would have helped me this year to deduct some of the cost of doing business. But the problem I have is that I chip in for the studio. Another guy pays the landlord and gets the cash receipt. So, without a receipt, I can't deduct this expense because there is no document to prove it.
A ledger is a form of a record. I spreadsheet all of my expenses and my tax accountant says that that is sufficient. However, any major equipment purchases should be recorded by receipt.