Business Finance Tips with The Gild Group
Earlier this month, Paul Luczak and Mark Rice from The Gild Group came into our office as the Finance Experts in Residence and ran some great sessions around Business Management, Tax Compliance and Wealth Management. They covered many of the tricks and traps that all of us in the industry need to be aware of, so that our financial affairs are properly structured based on where we are at in our ‘Life Cycle’. Key topics covered included getting the most of the tax benefits, having the right types of business insurance in place as well as how to structure our personal financial affairs.
Some other takeaways from the sessions included:
As income in the business starts to grow, you need to think about certain things. For example, if your income is getting towards $75,000 you will need to register for GST and start doing Business Activity Statements (BAS). For businesses which are growing rapidly, artists earning more (e.g more than $100k p/a) and/or you're at the cross roads of signing any recording or publishing agreements, it’s a good time to speak to your accountant about whether you should consider upgrading from a sole trader or partnership into company or trust structure. The Gild Group recommends that any artists that have an international focus stay away from setting up straight trading PTY LTD companies as they can cause some unwanted double taxation issues on foreign withholding taxes. Better to set up trusts in this situation. Talk to your accountant.
Awesome concessional tax treatment of musicians. In essence it helps smooth out big income years (e.g big advances) from a tax perspective. Key takeaway is that to get access to this concessional tax treatment, the band members individual accountant would have needed to enter the individual into the income averaging system the first year that they make over $2,500 AUD from music activity. This often gets missed by non-music accountants.
In order to vary the 30% withholding tax on USA touring, you need to enter into a CWA. This is set up and handled by your business management team. Keep in mind that CWA's are simply a cash flow decision because if you cop the 30% and are breaking even or losing money on US touring, then we can generally get the withholding tax refunded at the end of the US financial year (which runs on a calendar year period).
As your business is growing, it is really important to get help with your book keeping. This is not only about ensuring you are on top of your taxes but just as importantly so that you can make smarter decisions in your business by knowing how profitable your business is, how your cashflow is going, is your pricing right and having a good understanding on where your business is at financially.
It is never too early nor too late to put in place a financial plan. Think about what your personal goals are, how that translates into your financial needs and how you can tie your personal goals back into your business goals. You can then work through how to achieve your goals and ensure that your wealth is protected as you grow it. Speak to a qualified Financial Planner/Adviser who provides holistic advice and can help you with your budgeting, super, insurance, cashflow, debts, assets and investment portfolio.
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