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Once you’ve started directing effort and funds toward earning income as a musician, congratulations, you’re in the music business!

Many musicians put off organizing the business side of their career until they have to, only to realize how many opportunities they missed to save money along the way. So, no matter how overwhelmed you may feel about tax planning or the grant application process, meeting with a lawyer from our entertainment group as early as possible is a good idea for understanding the big picture and keeping more money in your bank account.

If you’re just starting out in the music business, here’s some of what we’ll discuss with you:

The success of a liquidity event involving a privately-held business requires considerable preparation.

Even in circumstances where a sale is not imminent, much can be done to improve the operational and financial performance of a business in order to ensure owners can capitalize on favourable market conditions and execute their liquidity option when the timing is optimal.

Even if a liquidity event not be expected to occur for many years into the future, business owners will end up benefitting from owning a company with reduced risk and better operating and financial performance.

The following outlines the main areas of focus for business owners contemplating a future liquidity event:

The Internet Age has revolutionized every industry and accounting is no exception. Introducing, cloud accounting; a faster and more efficient method of tracking your business’ expenses and financial reporting.

Cloud accounting is the process of migrating financial accounting systems into a cloud-based platform, away from a server. In terms of the accessibility and benefits to your business, this means having access to your accounting data-accounts payable and receivable, expense account, etc.- from anywhere and at any time. All you need is Internet access and you can simply log in to access all your financial reporting documents with the same ease of logging into Facebook.

The Canadian taxation system is structured so that investment income (such as interest income and rental income) earned in a corporation would be taxed at the same rate as investment income earned personally (at the highest tax rate).  The way in which the system works is that a corporation pays tax on its investment income and at the same time a portion of the taxes (30 2/3%) notionally goes into an account called the refundable dividend tax on hand (“RDTOH”).  The RDTOH is refundable to the corporation for each dollar of taxable dividend paid at a ratio of 38 1/3% of taxable dividends paid.  The result of this approach is that a corporation does not provide for a tax deferral on investment income.  Instead, there is corporate tax immediately on the investment income and a portion of that will be refunded once a taxable dividend has been paid out.