Handshake agreements

[the finger genius]

By the way, I'm not trying to dodge your question of whether you legally have a foot to stand on. It's just that there are way too many variables (e.g. State Law, witnesses to your verbal agreement, your lawyer vs. theirs, etc...) to give you a real answer.

[premiumdan]

LandSpeedFinger (and everyone else, too):

This is ONLY in the hypothetical-realm.
I continue to sleep well...

Thanks for the responses thusfar!

-Dan

[cgarges]

I think it might be hard to prove your case in court if there isn't any paperwork, which is why the classic "deposit-->work-->balance paid-->hand over work" method works so well. Invoices every step of the way, spelling out the details would be helpful, too.

Chris Garges
Charlotte, NC

[Jeff White]

DealingwithpeopleOp:
I have a recording space/studio for personal-use. The space/studio
isn't a "business", but I charge "clients"/friends/acquaint's
to record demos/ideas. Since there's no "business", there are
no "receipts"or "invoices", only "handshakes".

Draw up a contract and have all parties involved sign it and receive copies if money is involved. The contract details are the rules of the game. If anything changes int he game, the contract reflects this, and all parties get a new contract. Cover your ass and your friends' asses. If they are true friends they will understand.

Do zero work unless you have it in writing. You will get f'ed if you don't have it in writing.

Jeff

[Derrick]

Again, read as hypothetical, because I own NO studio NOR space.

Wanted to get my situation situated BEFORE I start doing anything.
Better to have a handle on plans and legal things BEFOREHAND...

Good information + educated-decision =
Just diving in without researching =

Don't fault me for asking.

-Dan

Look, Dan's questions are totally legit and what Dan is asking doesn't have to be looked at so black and white. Income pretty much = should pay taxes... yes. However, there are people like me who built and use a studio for one's own benefit, but occasionally a friend is interested in recording with me cause of the gear and experience. Naturally, I would charge for my time. So, if I do this sporadicly maybe once or twice a year and charge a small bit for my time, this becomes a totally legit question. I mean, am I expected to start up a business and file each year and go through the hassle and expense to do so on the chance that on any specific calendar year, someone might approach me with the odd request to record a demo or something? I hope the answer's no because that would be a stupid bureaucratic heap of shite.

[the finger genius]

Uh-oh, I see a storm coming...

[Derrick]

Why. I'm not arguing if you should or shouldn't pay taxes (like many are doing here)... just that it's a legit question from someone who is a small time hobbyist with the odd position to do it for a friend and how to look at being compensated. I read this and it made me think about my own position, that's all. Let it rain.

[chris harris]

So, if I do this sporadicly maybe once or twice a year and charge a small bit for my time, this becomes a totally legit question. I mean, am I expected to start up a business and file each year and go through the hassle and expense to do so on the chance that on any specific calendar year, someone might approach me with the odd request to record a demo or something? I hope the answer's no because that would be a stupid bureaucratic heap of shite.

You don't have to "start up a business"... You just (legally) have to report (all of) your income on your income taxes. And, there's no "hassle" or "expense" involved in reporting your income. You don't have to get a business license or a federal tax ID in order to report income.

The people who piss me off are the people who think that they get to pick and choose which income that will pay taxes on. If you know that you SHOULD BE paying taxes on that income, and are just worried about a potential hassle, I'd say don't be. You may not be able to put that income on a 1040EZ, I'm not sure... But, I'm sure that even the fine folks at H&R Block can help you with this, if you don't have an accountant.

[Derrick]

Only slightly good news... I have always used 1040EZ. Still, having to factor in the costs of an accountant to figure out something I have always been able to do on my own, use a new/more complex form, and the bit about what I can factor in for studio deductions/costs makes claiming ~$500 under the table seem stupid. I actually haven't taken any $$$ myself for studio jobs so I'm only playing devil's advocate. I see both sides here. Whatever.

Slight drizzle.

[chris harris]

I'm saying that if you're in a position where claiming (any) income for recording is too convoluted or too difficult for you, then you SHOULD NOT BE CHARGING FOR THE WORK. It's not a gray area. I'd love to be there when an auditor is told, "well, I would have paid, but it was just too much hassle."

You can't legally choose which income is worth the hassle of paying taxes on. You CAN choose to evade taxes that you actually owe. But, you shouldn't be surprised if people who are honest and pay their taxes think that it's a dick move.

Whether you're actually doing it, or just playing dick's advocate, it's still a pretty lame argument to advance.

Up to what dollar amount of income do you think people should be able to choose whether or not to report on their income taxes? Where's your ethical line? The law is pretty clear about it. But, what does devil's advocate say?

[chris harris]

If you made $500 from recording, you could afford to pay an accountant and your taxes on that income and still have enough left to buy an sm57 or something. Not bad for doing a hobby that you enjoy.

[Derrick]

If you made $500 from recording, you could afford to pay an accountant and your taxes on that income and still have enough left to buy an sm57 or something. Not bad for doing a hobby that you enjoy.

Maybe. Dunno... Like I said, I'm not arguing either side... just making a point based on observation that the decision hobbyist make when dealing with the odd peanut level recording job here or there isn't as black and white.

Hey, my officemate just asked if you ever claimed the money you made shoveling snow around the neighbourhood?

[the finger genius]

And did you collect sales tax as well?

[chris harris]

You don't have to collect sales tax on a service.

And, not much snow around here. I mowed a lawn or two, here and there, though. I didn't pay taxes on that because I was a child. Maybe I owed them? I don't know. But, I was a child, so I'm sure I wouldn't be held responsible for taxes. And, I was too young to understand that evading taxes just screws the other people who are honest.

[the finger genius]

I'm not sure what state you're in, but you do have to collect sales tax on most services, including property maintenance in New Jersey, where I happen to reside.

From: http://www.state.nj.us/treasury/taxation/su_over.shtml

Sales and Use Tax applies to receipts from retail sale, rental, or use of tangible personal property or digital property; retail sale of producing, fabricating, processing, installing, maintaining, repairing, and servicing tangible personal property or digital property; maintaining, servicing, or repairing real property; certain direct-mail services; tattooing, tanning, and massage services; investigation and security services; information services; limousine services; sales of restaurant meals and prepared food; rental of hotel and motel rooms; certain admission charges; certain membership fees; parking charges; storage services; sales of magazines and periodicals; delivery charges; and telecommunications services, except as otherwise provided in the Sales and Use Tax Act.