When Will Smith was still in high school he and DJ Jazzy Jeff released their first album. By the time they were 19, they had hit commercial pay dirt with “Parents Just Don’t Understand”. The money came pouring in and Will truly lived like a prince.
In a recent interview, Smith estimates that he made around 7 to 8 million dollars that year. He also admits that he probably spent 7 to 8 million dollars in the same year. One tiny problem, he didn’t pay the 2 to 3 million dollars owed to Uncle Sam. The U.S. Government doesn’t care who you are or what you do for a living, if you don’t report income, you are going to pay, and pay big.
Smith has since learned his lesson and undoubtedly has a team of lawyers and accountants handling his millions. For most of us, we cannot afford, nor do we need to keep lawyers and accountants on our payroll. However, by checking with professionals, not only will you be able to pay the right amount of money in taxes each year, you may be able to save or protect your assets from Uncle Sam’s reach.
One quick example brings us back to the LLC. Your everyday expenses that you incur while on the road, on tour, or on location, can be itemized on your tax return as a business expense if you run your music/entertainment business as a business. Learn from the Fresh Prince’s mistakes. If you don’t incorporate or organize your business you are not only exposing yourself to personal risk, but you are going to lose money. I’m pretty sure you are in the business to make money, not lose it.