I am reading a cool book, What the IRS Doesn't Want You to Know, and they mentioned that sole proprietors get audited about 5 times as much - and musicians probably more than that - than people who are in what's called an S-Corporation. You know, incorporating and making yourself an employee.

I am very honest about my taxes, declaring a lot of income that I don't have to, but I don't keep as meticulous records as I should. Being audited would be very time consuming for me.

Has anyone here ever started an S-Corporation out of their business?

Beakybird

I have Limited Liability Corporation (LLC) for my production company. I bill my musical clients and deposit the checks along with my other reciepts. All music related expenses (instruments, travel, entertainment of clints. etc. are treated as normal business expenses. The corporation owns the equipment and I own the corporation.

This works out well for me, sinc music is part of what we offer in our film and broadcast production division.


Russ

I claim every penny I make, and every penny I spend. You don't have to cheat to make money in this business, and the only time I was ever audited was by the state. They asked for detailed information on my expenses. I printed out all of my expense reports, placed them in a large, padded shipping envelope and mailed them via registered mail with a return reciept requested. Three months later, I recieved a post card saying thank you for your cooperation and no farther documentation is required. The document I mailed was 40 pages long and printed in 10-point font. I'm sure they looked carefully at every entry!

Since I have been self employed, which began in 1975, I have had but one goal in mind--to pay at least $1-million in income tax for a single year's income--that's will be one hell of a year!

As for the sub-chapter S corporation, in this state the filing fee is now $300 and will go up again this year. I'm not going to pay the state and feds any more than I have to in order to do business.

Cheers,

Gary

[This message has been edited by travlin'easy (edited 01-19-2004).]

I actually have a sub-chapter S corporation that I used when I owned a night club.
I now use a LLC that is treated tax-wise as a sole proprietorship.
The LLC is a little simpler to deal with.
DonM

I'm a sole proprietor,and I WAS audited a few years back. That was because of shabby records and a client that turned in income that was not properly recorded on my part after he was audited.

Keep acurate expense records guys - it cost me a bunch for that lesson.