The importance of understanding the music & entertainment industry

The importance of understanding the music & entertainment industry

2 min read
By : Mike Werbowy

In these challenging times it is more important than ever to have the right day to day support. No more so than having an accountant who fully appreciates your industry.

Below we detail 5 of the important reasons of having an accountant who understands the music & entertainment business.

1. Understanding your business

The music and entertainment industry is specialist and niche. It is therefore imperative your accountant has the knowledge and experience within the industry to advise you accordingly to allow your business to grow. This can be by creating appropriate business structures and incorporating the best working practices which will provide efficiency and means the administration can be handled in a straightforward manner, whilst you continue in pursuit of your creative and business goals. Obtaining the appropriate types of business insurance will give you the comfort that you are safeguarded, in the event of negative unforeseen circumstances.

2. Understanding your income

From performances, appearances, royalties, endorsements and any many more, it is important that your accountant understands the correct accounting treatment of your income sources. Not only keeping track of overall income levels but analysing by income streams, so you understand which areas of your business are adding most value. Having knowledge of the industry means your accountant can make sure you are registered with the main royalty societies, so you are confident that your copyrighted material is earning the full income it deserves.

3. Understanding your expenditure

Knowing what expenditure can be claimed as tax deductible is crucial in ensuring that your business maintains a strong bottom line. From general trading costs, such as travel and marketing, to capital expenditure on assets like guitars and computers. Your accountant should be able to identify the deductible expenses so you can make strategic decisions for your business, ensuring the correct types of expenditure are claimed can help prevent adverse rulings should HMRC ever make an enquiry on your accounts.

4. Understanding your taxes

Having your business registered correctly with tax authorities and declaring the correct amount of tax by the required deadlines will give you peace of mind. Falling behind on this will cause backlogs and may mean the overall cost of rectifying it will be more than if it had been done correctly at the outset. Creating budgets to ringfence your sufficient funds for tax will help with preventing a shortfall when payment is required.

If you earn income from overseas, it is common that tax is withheld from your fee at source. For the varying income streams, your accountant can liaise with the overseas client and respective tax office to reduce this by as much as possible. Ensuring the correct documentation and forms are supplied will mean you will receive more of that income. Each territory will have different withholding tax rates and requirements, so it important your accountant has world-wide experience so they can effectively deal with your unique situation.

5. Understanding your business relationships

Whether it is your management, agent, lawyer, label, or any other member of your team, it is important for your accountant to fit into this unit. Working cohesively with the other core stakeholders of the business will maintain productively and efficiency. As your business manager, your accountant with experience in the music and entertainment industry can confidently work with the remainder of your team, having an understanding of the intricacies involved within the industry. Your accountant should not just be a number cruncher, but also a vital cog involved in the ongoing strategy and planning of the business.

We hope you found these reasons interesting and relevant and are confident that Hentons have the experts on hand to understand your needs.

So, if you would like to speak to one of our experts regarding your business management and accounting needs, please contact us today.

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