Why I switched to FreshBooks and opened a business checking account.
There comes a time on any gig or working situation when someone hits you with a new policy or other formality. The difference between the guy who gets called back and the one who doesn’t, usually depends on their ability to adjust to this change quickly and with little resistance.
Usually, that means being prepared, proactive, and flexible. It also helps to operate at a higher level than what your current situation suggests.
Let me tell you a story:
So, I’m at the gig, ready to get paid when the manager tells me that their accountant requires an invoice from me before they’ll write a check. Also, they were going to cancel all gigs until they received recurring invoices.
I can tell he was nervous. He was expecting some sort of outcry from me. Something like,
“I’m a musician! How do you expect me to create an invoice on the spot?”
But, instead I whipped out my smartphone and pulled up my FreshBooks app then hit send. Presto!
“Here’s your invoice. And a copy has been sent to your accountant, as well.”
He was impressed and relieved. He had that look on his face that said, “This is why you get paid the big bucks.”
I then explained my process so the other acts that perform there could follow suit.
If, you want to stand out as a “professional” musician, you’re going to have to up your business/admin game.
Today, I’ll share my experiences of:
- creating a spreadsheet to track income and expenses
- switching to FreshBooks for my accounting needs
- and, setting up a business checking account
Last year, I created a spreadsheet to track the income I received from gigs and who I was paying as sidemen. Some friends of mine checked it out and suggested I make a template for them to use.
I called it the Musician’s Gig Keeper Pro. You can still download it for free in exchange for your email address.
The nice thing about the Musician’s Gig Keeper Pro is:
- It doubles as my scheduler for sidemen on my weekly gig
- Tracks mileage and other expenses
- And shows the gross and net earnings for each month.
The downside of using the spreadsheet was it took a fair degree of knowledge to manipulate all the cell data. Even after all my research and consulting with my accountant wife, I was still prone to operator error. And, if I entered in a wrong check item or date, it took time to find the discrepancies.
I knew I had to upgrade to a better system. I heard of QuickBooks and it’s been around for years but, it seemed bloated with a lot of things I didn’t need and not enough of what I wanted.
I first heard of FreshBooks from Pat Flynn’s Ask Pat podcast. He’s not a musician but, he is a small business owner that receives payments from clients and also pays sub-contractors to help complete his projects.
My business model is similar.
- I’m a musician (sole-proprietor/business owner)
- I get paid from gigs, private lessons, coaching (clients)
- I pay other musicians (sub-contractors)
- I hire editors, designers, and other outsourcers (vendors)
Per his recommendation, I started my free trial on FreshBooks. And, only after 3 weeks of using I must say…
Here are the benefits for using FreshBooks in my music business:
- Invoicing. This is huge! I created a recurring invoice for my weekly gig at Henry’s Majestic. After the gig, the manager brings me a check. Immediately, I pull out the app with the draft of the invoice auto-magically generated, hit “Paid In Full” and…. Bam! Instant accounting.
- Paying Sidemen (and Women). Every Saturday I log my expenses for the week. What’s cool is the musicians I hire can be logged as contractors in FreshBooks. Plus, the program will send an email to those people saying how much and which date I paid them.
This is especially useful come tax time. I can send 1099s to all the musicians I paid over $600 last year. And, I don’t have to remember who was on the gig from weeks ago. I can just pull up the name or the date and immediately know.
3. Tracking Expenses. Another valuable tool is the ability for FreshBooks to sync with my business bank account and automatically import the expenses I use. All I have to do is categorize them as it imports. This works best if you strictly use one checking account for all your music business dealings.
I have a personal checking account my wife and I share. The money I make on gigs deposits into the business account then I transfer a set amount into the personal account. I call this expense – Owner’s Draw and label it a personal expense. This allows me to operate my business separately from my personal finances and bills.
4. Reports. What I really like about FreshBooks are the many reports I can generate. How much money I’m earning from gigs versus how much I’m spending on my website or gear. I get a better picture of my work and compensation.
If, I’m gigging a lot and away from home all the time but I’m spending a lot of money on food, mileage, or equipment, maybe it’s time to reevaluate the gigs I’m saying yes to. Seeing reports can help you make better decisions of achieving your goals and may influence how you set goals within your music career. Super valuable.
5. Getting Paid! This one is very cool. I don’t only gig, but I do consulting, private lessons, marketing projects and many other ways to make money. With FreshBooks, I can send people an invoice and they can pay me any way the want.
You only have to set up a third-party payment system to accept online payments. There are several options that integrate with FreshBooks but I use BrainTree. They accept many different payment options like credit cards, bitcoin, paypal, and international currencies. And, the invoice allows them to pay online directly.
If, you want to know my exact process of setting this up, leave a comment. I’ll create another post if enough people are interested.
Overall, I think FreshBooks is the way to go for your accounting needs as professional musician. You can even invite your accountant to view certain aspects of your account come tax season.
Goodbye tedious spreadsheet. Hello FreshBooks.
Setting up a Business Checking Account
All of this accounting business above can be more challenging if you use one account for everything. My wife and I share our finances, doubling the confusion when budgeting for my music business activities.
As a professional musician you are, by default, a sole-proprietor. So, why not set up a business checking account and operate like a small business. Doing so does two things:
- Makes for easier finance tracking
- Creates freedom to try things and take bigger risks.
That second one is exciting. Before, I had to confer with my wife if I wanted to buy new equipment or try out a new software for my website. Because, we share a bank account and a budget, tension can arise if the value of what I wanted to buy wasn’t apparent.
It’s hard to justify buying the new web tool when the truck needs work.
By having a business checking account I can filter money through the business and leave some every week. I create a “Vegas” fund. Money I can use however I see fit to help grow my business, buy music equipment, attend clinics or workshops, etc…
There’s no more pressure to make sure I get a return on investment. Which means I can take bigger risks because it won’t affect our personal budget.
How to set up a business account
Talk to your bank about the specifics of setting up a business checking account like – opening amounts, fees, interest rates and such. What most banks require from you is a D.B.A (doing business as). More officially…
Assumed Name Certificate of Ownership for Unincorporated Business or Profession
Step 1 – Go to your county clerks office and tell them you need to register your business. The nice old lady will take you to computer and tell you to enter the name you want and, if no one else is operating with that name, you can claim it.
Fill out the paperwork and pay your $20 (in Collin County). Bam! You’re official.
Step 2 – Take that certificate to your bank with enough money to open your business account. My bank required $200 to open. They’ll sit with you and process all the correct stuff. A couple of days later you’ll have your very own business check card.
Now, start using your account for all your music business finances. If, you use FreshBooks or any other accounting software, you can sync them up for better tracking.
Remember to pay yourself through an owner’s draw to separate personal from business budgets and finances.
There are many other programs and methods out there for you to explore. This is just my experience and opinion on what I’m using. If, you go with FreshBooks, mention Rip’s Music in the how’d you hear about us section. The have some good incentives for referrals.
I want to know what you think.