Separating your business money from your personal money is central to a money
management strategy. You should have both a business checking account for your act or
band and personal checking account. Although artists working as sole proprietors techni-
cally take a draw from the business instead of an actual salary, consider drawing a set
amount each week or every other week, if possible. It helps to make things much more
predicable and makes it easier to manage your personal money.
When a gig deposit comes in, set it aside in a kind of escrow account and hold it until
the show is completed. Sure, it can be a tough thing to do, but if you adequately capital-
ized your musical business at its startup, you won’t need to completely rely on sporadic
revenue to pay your personal and business bills. That usually means having at least three
to four months worth of working capital when you launch your full-time music career.
Keeping these funds out of your daily finances also ensures that you’ll have the money if
something goes awry and you need to make a refund. It happens. A show gets cancelled
for some reason. A music director suddenly turns into a nightmare and you’d rather not
work with them. Of course, you could make your deposits non-refundable, but that can
turn clients away.
Taxes are another thing that will take a chunk of your check. Put aside roughly 30
percent to cover them and pay income taxes on a quarterly basis. You’ll also need to put
money aside to cover your overhead expenses, equipment, repairs, marketing, insurances,
and such. These can be separate bank accounts or just accounts within your accounting
software. The trick is using this money as it was intended and not on other things. It re-
quires some self-discipline, but it’s a habit that can be learned.