Many of us in the world of concert touring are working freelance. Some touring professionals have house gigs or local work when they are not touring and other’s income is solely from touring. Regardless of how your make your living, if you work as an independent contractor or freelance, there are some things you need to consider when it comes to your finances.
Even though we are in essence working freelance, unless we are incorporated or an LLC, we are paid as an employee for the duration of the tour. Most who work directly for the band or artist, (the sound engineer, lighting designer, backline technicians, PM, TM, PA, etc.), fall into this category.
Although we may be paid as employees we usually don’t enjoy the benefits that most employees enjoy such as health insurance, 401ks, bonuses, paid vacation and more. Most don’t even think about these matters until it’s too late.
After all when you are in your early 20s retirement is the furthest thing from your mind. You’ve got years before you need to worry about that. Well, those years somehow happen to just fly by and before you know it, you’re in your mid 40s and haven’t saved a penny for retirement and are quickly realizing you may have to spend many more years on the road than you would actually like to.
Open an IRA as early as you can and contribute to it yearly. The current annual limits to what you can contribute range from $6000- $7000 depending on your age. Even if you can only contribute a few hundred dollars/year until you get on your feet, do it. The earlier you start saving for retirement the longer the money has to work for you making your potential earnings even bigger.
Contributions made to a regular IRA reduce your adjusted gross income, which is a tax benefit to you. You will be taxed on this income when you withdraw it for retirement.
Contributions to a ROTH IRA do not count as a deduction but you will not be taxed on that retirement income when you do finally withdraw it.
An accountant or CPA can advise on which best suits your circumstances.
Having to pay for health insurance out of pocket sucks, we all know that. Unfortunately most of us in this business are responsible for purchasing our own insurance. The exception would be, those employed by a sound company, lighting company, or other vendor.
When you are young and healthy, the ridiculous cost of health insurance is hard to justify. Depending on your income assistance may be available when purchasing insurance through the health insurance marketplace. You may also opt for something like a catastrophic health plan which really only benefits you if you have a serious illness or hospitalization. Think worst-case scenario.
If you don’t typically have a lot of medical expenses you can opt for a high deductible to receive a lower monthly premium.
Shop around. Depending on where you live, a local insurance broker may be able to shop many different plans to find you the best fit for your budget. There are also many places online to obtain a free quote.
As you get older, health insurance is a necessary evil. You never know when you are going to need it and if you don’t have it, one hospitalization can wipe you out financially.
If you are a member of your local IATSE you may be eligible for health insurance through the union.
Some local small business associations allow discounts on insurance and other perks to members. If you are incorporated or an LLC you may be able to join and take advantage of these perks.
Consider disability and life insurance
Disability insurance is fairly inexpensive to obtain when you are young. A good rule of thumb is to buy enough coverage to cover your monthly expenses should something unfortunate happen and you can’t work.
If you are not the sole provider to your household and or still living at home with mom and dad, it’s not necessary. However as your financial and personal responsibilities increase- you buy a house, start a family, etc. It’s definitely worth looking into. Which brings me to life insurance, again, not necessary if there is no one relying on you for income or financial support. If however you find yourself sharing the mortgage with a partner and or family that rely on your future income, life insurance is something to consider.
There are different plans and terms available and it’s best to speak with an experienced insurance broker to find what’s right for you.
Taxes are complicated and the fact of the matter is unless you are incorporated or an LLC, you won’t likely be able to be paid as an independent contractor, even though that is in essence what you are. You’ll be paid as an employee. You may end up working for 4 or 5 different artists in one year and receive W2s from all of them.
A good accountant or CPA will be worth the cost if you have anything other than straightforward income and expenses.
Even if you aren’t incorporated or an LLC, it’s a good idea to enlist the services of a good CPA or accountant to go over your tax return at least once. Tax laws change all the time and you are likely missing many things that you could be claiming as deductions. If you can find one who is familiar with the entertainment industry, even better.
Depending on your situation it may be worth it for you to incorporate or form an LLC.
As a freelance/independent contractor you are also your own agent and responsible for finding your own work. You should always be thinking about your next gig. Don’t wait for your current tour to come to an end before you start looking for your next one. Get the word out as soon as you know your availability.
It’s also a good idea to put some money aside for an emergency fund. If you make a living solely by touring, be prepared for dry spells. Touring seasons vary from year to year and you never know when you might find yourself out of work for a month or longer between tours. Having an emergency fund to cover your expenses will help get you through the lean times. Try and set aside enough money to get you through a minimum of 3 months.
Finally – Network, Network, Network
The touring industry is unlike other industries where you submit your resume or application and hope for an interview. It’s built on referrals and word of mouth. It’s as much as who you know as it is what you know. You could be the best, unknown sound engineer on the planet but if those hiring have never heard of you or heard you mix, they are more likely to go with the somewhat average sound engineer who did a good job for them in the past. Build up your contact list and make a good impression. You never know who your next job is going to come from.
In closing, some of what I have mentioned here may be old news to you and some of it may have never even entered your mind. Planning for the future and being responsible with your finances is an essential part of life and the sooner your start thinking about it, the better off you’ll be.