Right, about time I posted about how we’re managing this stuff. We’ve been terribly unorganised with this… really, really unorganised. However, we got our shit together and we’ve got stuff figured now.

I’m not sure if our method would work for other people - there are probably a billion ways of doing this - but it’s simple and it works for us. It involves a fair bit of trust on the part of the bands, but that’s how everything else is functioning so no biggie really.

NB: If you’re not being cheapo like we are it’s probably a lot better idea to get a registered accountant who knows what they’re doing and ask them to tell you what to do, it’d be worth it in the long run.

Now we were lucky enough to have a friend who works at an accountancy firm, and he’s helping us out. Realistically any money-minded person could do the account-keeping stuff (which I will get to later), and then you’d have your paid accountant guy doing all the stuff like tax returns and the confusing stuff. Some people lodge their own tax returns, but realistically a good accountant will be able to ‘work tha system’ enough so you can do some nice crafty creative accounting (I remember a friends’ dad saying he wrote off his dogs as a ’security’ expense for his home business).
I’m terrible with money so it’s fantastic to have our ‘accountant’ Rac on board, very cool guy.

So the setup. Basically, we have a bank account - with Bendigo by the way, the most vaguely ‘ethical’ of the bunch - so people can write cheques to ‘Pith Records’, and do direct bank transfers into it and stuff.

Oh, we also got an ABN, and registered the business name ‘Pith Records’. You can get your ABN at the ABR website and get a business name the consumer affairs site.
First, do a search to make sure your name isn’t taken, then register your name. It costs $70 or so per year, and with a credit card you can do it online.

NB. For non-aussie readers: There’s probably an entirely different method for registering business names in your country, but it’s not as complicated as it probably seems, and well worth the effort.

Okay, so we got the ABN + business name + bank account.

This is where a spreadsheet program like Excel or Lotus 1-2-3 comes into play.
Whenever you make money you keep a record of what band it relates to, how much it was, and what it was for. This is stored in columns in the spreadsheet, and at the end of the year you give it to an accountant and they make sense of it and help you use it to lodge a tax return.
Because I’m so nice I’ve made an example spreadsheet (Excel), you can see expenses go in one sheet, and money coming in goes in the other.

> Right click and ’save as’ to download the sample excel accounts sheet By the way, don’t complain to me if you can’t understand this, ask your accountant!

In our case, I simply send an email to Rac (our accounts guy) whenever we make / spend money telling him what it’s for and how much, and then deposit the money in the Pith account via netbanking. He keeps the records using whatever setup he does at his end. I believe he uses ‘MYOB’, which is like a scaled down home-business version of the accounting packages like Sage you see SMEs using.

This is a nice simple way of doing things actually: At the end of a gig, after making X amount off the door and selling X cds I just figure out how much we made and make a note of it, then the next day I do an internet bank transfer, and keep the cash myself.
That way I don’t have to worry about going down the bank and depositing coins and cash, and I don’t have to go to the hole in the wall to get money out to buy food and stuff!

To be perfectly honest I’m not sure if this is the way other record labels do this kind of thing, I know that generally they have ridiculously complex accounts with royalties and the like, where selling one CD means giving a whole bunch of different people X amount of cents and stuff.

The way I’m doing stuff means that a fair bit of money is going through my personal account, but that’s okay as long as the right amount ends up in the Pith bank account, everything’s written down and people know what’s happening. At least this way I can keep an eye on stuff.

When people buy CDs / merch from us at gigs simple cash works, however we’ve started selling CDs online at the bands’ websites, for which I coded up a simple form that takes their details and gives them information about how to pay via email (btw, if you’d like me to set one of these kind of things up for your band/label contact me, this web-design stuff is my day job!).
To accept credit card payments (so people can buy our CDs online) I use Paymate. They’re an aussie version of PayPal (sucks) and it’s all very easy to set up, money goes into your account and stuff, all good.

I guess that’s it really. I have a feeling the way we’re doing things isn’t exactly elegant, but it’s not like we’re turning over hundreds of thousands of dollars (yet! right?) so it will work for the moment.

As far as money stuff is concerned with all this record label stuff the only really good advice I can give is:

• Do it early as possible!
  It’s daunting and confusing but the sooner it’s sorted the better.
• Get a credit card.
  Doesn’t have to be a ‘business’ one, just a personal one - it’s immeasurably useful for paying for stuff on the net, paying the guys who make your CDs / stickers / etc
• Get netbanking sorted
  Again, makes things a lot quicker for paying people, getting money in etc.
• Keep reciepts for everything
  Get receipts whenever a band uses a rehearsal studio, hires a PA … whenever you buy (recycled!) paper for your printer, any audio gear, stamps, pretty much anything at all you could vaguely relate to running an office / record label. Put all of this stuff in your ‘expenses’ sheet, and you’ll thank yourself for being so dillingent when your tax return comes back!

  If you’re running the label from your home like me then a portion of your rent + phone bill and so on are tax deductible. Talk to your tax accountant about how much it is.

  In my case, keeping recipets involves throwing them all in the top left hand drawer of my desk in a nice chronologically disordered heap and then when I get my lazy arse around to it going through them and sticking them in the accounting system. Organised people do this on a monthly basis.

• Make sure everyone’s cool
  Meaning, make sure everyone who’s got anything to do with money stuff involved in the bands / label has at least a vague idea of what you’re doing with the money everyone’s making and feels comfortable with it. Money is nasty stuff, it can make people feel crap very easily if they feel like they’re being jibbed or in the dark about anything. Transparency is a very good thing.

Well there y’go, shoddy indie label accounts 101. If any of you who read this think I’ve forgotten anything drastic or have any questions about this let me know.

This entry was posted by Will Dayble on Wednesday, July 13th, 2005 at 9:33 pm and is filed under Start an Independent Record Label. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.