dj paying taxes

pad180

iv been djing for about 5 years now as a mobile dj ,iv done numerous partys in hotels, bars were ever , always money in hand
anyways iv been playing this local bar every 2nd weekend or so for about 2 years now with no hassle of payment .but the owner pulled me aside the other night and said he would have to start putting me on the books :eek:
and would like to know my tax bracket for my own personal job that i do mon-fri so his accountant can work out the cheapest way to get around this .
i just want to know should i go down this road or just cut my losses or has anybody any experience with this any help would be great .

Is mise le key

pad180 wrote: »

iv been djing for about 5 years now as a mobile dj ,iv done numerous partys in hotels, bars were ever , always money in hand
anyways iv been playing this local bar every 2nd weekend or so for about 2 years now with no hassle of payment .but the owner pulled me aside the other night and said he would have to start putting me on the books :eek:
and would like to know my tax bracket for my own personal job that i do mon-fri so his accountant can work out the cheapest way to get around this .
i just want to know should i go down this road or just cut my losses or has anybody any experience with this any help would be great .

Dont have any experiences with it but i would be thinking its gonna become the norm for all as the revenue begin to tighten the screws on venues as to how their books are managed, but given the state the country is in i say stick with them & let the accountant work out the best legal way for you to pay your way.

Musicman2000

Yeah the Revenue are clamping down on djs and bands, you might be better off, but you wont be paying that much anyway unless you are doing 5 nights a week

ianuss

I don't see why he wants to know any of your details to be honest. If he wants to go legit and disclose the fact that he's paying you, that's one thing. But it should be up to you to look after your own tax affairs beyond that.

As a dj you would likely be classed as a contractor and not an employee. Legally, and in terms of taxation they are totally different. He won't be paying employee PRSI os anything. It would be up to you then to disclose your income to the RC. Seems strange to me.

Is mise le key

ianuss wrote: »

I don't see why he wants to know any of your details to be honest. If he wants to go legit and disclose the fact that he's paying you, that's one thing. But it should be up to you to look after your own tax affairs beyond that.

As a dj you would likely be classed as a sub-contractor and not an employee. Legally, and in terms of taxation they are totally different. He won't be paying employee PRSI os anything. It would be up to you then to disclose your income to the RC. Seems strange to me.

Im not that clued in with taxation from company to sub contractor but im thinking the fact he's paying cash in hand leaves him open in some way, would there not be something VAT related between the venue & DJ if its being considered sun contracted as it would fall underneath a services bracket im thinking that would be subject to VAT?????

(note the question marks as i am kinda shooting in the dark here)

Android 666

Is mise le key wrote: »

Im not that clued in with taxation from company to sub contractor but im thinking the fact he's paying cash in hand leaves him open in some way, would there not be something VAT related between the venue & DJ if its being considered sun contracted as it would fall underneath a services bracket im thinking that would be subject to VAT?????

(note the question marks as i am kinda shooting in the dark here)

I don't think this would fall under VAT, you would just pay income tax on the amount. It sounds like the guy is trying to pay you less and is going about it by blaming it on having to pay tax for you. I'd tell him you'll sort it out yourself and then ring Revenue and ask them about what you have to do to pay tax on your djing.

ianuss

VAT has nothing to do with having somebody 'on the books'.

In terms of sales/services etc., sales between two VAT registered people, VAT can be claimed back on purchases and offset against sales, thus reducing your VAT liabilty. In order to claim VAT back you would need the other persons VAT number AFAIK.

What the guy is saying doesn't make sense to me. I wouldn't give any of my details over to his 'accountant'. And if he pushes you further I would recommend you get professional advice.

edit; you could also post your query in the accountancy forum http://www.boards.ie/vbulletin/forumdisplay.php?f=872

ianuss

Android 666 wrote: »

I'd tell him you'll sort it out yourself and then ring Revenue and ask them about what you have to do to pay tax on your djing.

From what the OP says, I don't think he wants to pay any tax on his nixer. If you want to pay tax, ring the RC. If you don't, get professional advice.

electrogrimey

Generally, to be completely above board about DJing, I think what you're supposed to do is invoice for everytime you get paid, and then you pay your own VAT yourself. The general rule around Dublin is that venues do this under the 'understanding' that you'll sort out your own tax, even though you clearly won't, so the venue doesn't look bad.

So start giving him invoices with you PPS etc, and tell him you'll sort out your own tax. (whether you do or not is up to you). He shouldn't be looking for anymore than that.

ianuss

electrogrimey wrote: »

Generally, to be completely above board about DJing, I think what you're supposed to do is invoice for everytime you get paid, and then you pay your own VAT yourself. The general rule around Dublin is that venues do this under the 'understanding' that you'll sort out your own tax, even though you clearly won't, so the venue doesn't look bad.

So start giving him invoices with you PPS etc, and tell him you'll sort out your own tax. (whether you do or not is up to you). He shouldn't be looking for anymore than that.

VAT has nothing to do with your PPS number. I can't see why you would give him your PPS number????

Seriously, I wouldn't be handing over any of my details.

Musicman2000

Vat has nothing do with it unless your a company and taking in over 70 k a year so forget about that one. On the invoice you give in you will be asked to put your pps number on it.
The reason why, if the revenue come in and audit the club which they are doing a lot of at the moment, they can trace the invoice back to you to make sure you are paying tax

Pandoras Twist

It depends if he is putting you on the books as an employee or not. He may very well be.

Ringing revenue wont really make much of a difference. All you have to say is that you've been offered a few nights gigging and you want to know whether to take it or not. They only spend 6months in any one position and its usually people that have been there less than a year on the phone, so its highly unlikely to bring a revenue audit upon you. Professional advice may be quite expensive

How much tax you will pay depends on what you're on now and whether you're married or not.

Single - 32,800@20% and the remainder at 41%
Married - depends if wife is working or not but if they are it can be up to 65,600@20%

This is before PRSI/USC etc.

ianuss

Pandoras Twist wrote: »

It depends if he is putting you on the books as an employee or not. He may very well be.

Happy days if he is. I can't imagine there are too many dj's out there who get holiday pay.

Pandoras Twist

Actually come to think of it, I dont think he can legally put you down as an employee. There's a mass of case law which dictates whether a person is acting as an independent tradesperson/professional and I'm pretty sure being a DJ would satisfy most of them.

Things like:

- the terms of the contract
- the degree of integration into the company (you're only there for a few hours, so not very integrated)
- degree of financial risk (if the financial risk is low you're considered to be more likely to be an employee)
- who owns the equipment/assets used (are you bringing your own decks/lighting gear)
- the degree of control exercised over the individual
- whether the individual is involved in business with other clients, or works solely for one person (this would be a main one I think. Chances are you're not tied to this one place)
- who bears the cost of rework (if you **** it up, is it on your head or your employers)

So I think it will technically it will be Schedule D Case I/II income (trade or profession).

But ianuss is right, if you go on the books as an employee your boss will be paying PRSI and you're entitled to holiday pay

ianuss

Pandoras Twist wrote: »

Actually come to think of it, I dont think he can legally put you down as an employee. There's a mass of case law which dictates whether a person is acting as an independent tradesperson/professional and I'm pretty sure being a DJ would satisfy most of them.

Things like:

- the terms of the contract
- the degree of integration into the company (you're only there for a few hours, so not very integrated)
- degree of financial risk (if the financial risk is low you're considered to be more likely to be an employee)
- who owns the equipment/assets used (are you bringing your own decks/lighting gear)
- the degree of control exercised over the individual
- whether the individual is involved in business with other clients, or works solely for one person (this would be a main one I think. Chances are you're not tied to this one place)
- who bears the cost of rework (if you **** it up, is it on your head or your employers)

So I think it will technically it will be Schedule D Case I/II income (trade or profession).

But ianuss is right, if you go on the books as an employee your boss will be paying PRSI and you're entitled to holiday pay

He could be hired as an employee but if the courts looked into it they would most likely find him to be 'contract for service' (contractor) rather than 'contract of service' (employee). The courts apply various tests to ascertain which - Integration test, Entrepreneurial test etc.

Android 666

Ah the sexy world of accounting...

milltown

I would take "putting him on the books" to mean no more cash in hand and he'll need invoices in order to get paid. It makes no sense whatsoever for the bar to take on the overheads of another staff member for the sake of a Friday night jock.

My advice would be to find an accountant. He may or may not charge you for the initial consultation, but even a half hour's wages could be a good investment. Find out whether it would be worth your while setting up a company for your DJ gigs. Sure, it will cost you a few bob for the accountant and fees etc. but depending on your circumstances there might be a lot of stuff you can claim as tax deductable to make the venture practically tax neutral. Gear depreciation, mileage, mobile phone etc..

I think the other option is for the venue to hold back 35% of your fee on the pretence of paying the VAT on your behalf.

Is mise le key

Im no expert on this at all but again i think it really does come down to some VAT issue,

DJ is the subcontractor providing the service to the venue.
Venue then has just become the DJ's customer.
DJ must issue an invoice to venue in order to get paid.
VAT @ 13.5% must be charged for service/labour on invoice to customer.
Venue gets to claim back the VAT.

I would be surprised if its not this that the venue needs to be happening in order to keep everything above board for financial audits.

ianuss

Is mise le key wrote: »

Im no expert on this at all but again i think it really does come down to some VAT issue,

DJ is the subcontractor providing the service to the venue.
Venue then has just become the DJ's customer.
DJ must issue an invoice to venue in order to get paid.
VAT @ 13.5% must be charged for service/labour on invoice to customer.
Venue gets to claim back the VAT.

I would be surprised if its not this that the venue needs to be happening in order to keep everything above board for financial audits.

The dj is under no obligation to register for VAT. His turnover is less than €37,500. I can't see how any VAT issue is the dj's problem. You can elect to register for VAT, but the filing would be a right pain in the ar5e. Unless you have to, or have an accountant, I wouldn't bother.

The problem with Irish tax, and tax law is that it's up to each individual to familiarise himself with it. There's no state body to provide help. Even if you rang the RC there's no guarantee you'd get the correct information as the people there to answer your calls are unqualified to offer such help.

IMO, the OP isn't going to get a difinitive answer in a music & djing thread.

See their website for some info http://www.revenue.ie/en/tax/vat/full-intro.html

djdeclan

I'm a DJ and an accountant so I am an expert in this:D

What is likely to have happened in this instance is the bar owner has told his accountant that he is paying the DJ (and possibly a few other expenses) from cash in the till, the accountant has told him that this is bad for numerous reasons and asked him to get invoices where possible.

What has happened over the last 4-5 years is that Revenue have contacted a number of venues and asked them to supply PPS numbers for their DJs/bands so that they can cross check whether the individuals are declaring that income. When you are getting paid cash in hand the venue will be unable to provide your details and thus risks sanctions and an audit from Revenue for making under the table cash payments.

What the venue now needs from you is an invoice each time you get paid. Assuming you are a sole trader and not a limited company the invoice should state your name, address, PPS number, details of the service provided and the amount. You are not required to register for VAT unless you are providing services to a value in excess of €70k annually (not many mobile DJs are!).

The only tax you pay is income tax (also a bit of PRSI and USC). Once registered you need to complete a Form 11 each year in which you declare all your income and taxes paid (from your day job & DJing and any other source such as rental income etc). You then pay whatever tax is due. You should find that you have substantial deductible expenses to set off against your income which will reduce the tax payable.

The procedure to set yourself up as an above board 'legit' DJ is fairly easy and straightforward and basically involves filling out one form.

To be honest i dont see the tax payable as being penal given that you can deduct expenses etc, the benefits of being registered are that you can take gigs in certain hotels and venues that demand invoices, you also have no need to worry about advertising (Revenue have caught some lads out from their golden pages ads) or ever being "caught" by the tax man.

The above is a synopsis of the situation. If anyone wants any further info send me a pm. I've helped a few DJs get set up before (some were boardsies) and i've no problem helping anyone out.

mambo

Is mise le key wrote: »

Im no expert on this at all but again i think it really does come down to some VAT issue,

DJ is the subcontractor providing the service to the venue.
Venue then has just become the DJ's customer.
DJ must issue an invoice to venue in order to get paid.
VAT @ 13.5% must be charged for service/labour on invoice to customer.
Venue gets to claim back the VAT.

I would be surprised if its not this that the venue needs to be happening in order to keep everything above board for financial audits.

Is the VAT rate for DJing 13.5% or 21% (I had assumed the latter)?
Or 9% under the new Jobs Initiate rate? http://www.revenue.ie/en/tax/vat/rates/rate-changes-jobs-initiative.html

BaZmO*

mambo wrote: »

Is the VAT rate for DJing 13.5% or 21% (I had assumed the latter)?
Or 9% under the new Jobs Initiate rate? http://www.revenue.ie/en/tax/vat/rates/rate-changes-jobs-initiative.html

See the post above yours for clarification

mambo

BaZmO* wrote: »

See the post above yours for clarification

The post doesn't mention VAT rates, just that some DJs would not need to pay VAT. But if they do, what is the rate?

Some sites advertising wedding DJs and the like mention 21% VAT being charged, but 13.5% is mentioned above. So I'm wondering which is it?

ianuss

mambo wrote: »

The post doesn't mention VAT rates, just that some DJs would not need to pay VAT. But if they do, what is the rate?

Some sites advertising wedding DJs and the like mention 21% VAT being charged, but 13.5% is mentioned above. So I'm wondering which is it?

It's 13.5%, I don't think you could agrue that djing would qualify for the new rate.

http://www.revenue.ie/en/tax/vat/rates/rate-changes-jobs-initiative.html

BaZmO*

djdeclan wrote: »

You are not required to register for VAT unless you are providing services to a value in excess of €70k annually (not many mobile DJs are!).

mambo wrote: »

The post doesn't mention VAT rates, just that some DJs would not need to pay VAT. But if they do, what is the rate?

Some sites advertising wedding DJs and the like mention 21% VAT being charged, but 13.5% is mentioned above. So I'm wondering which is it?

How many DJs do you know that earn more than €70K a year (apart from John Gibbons of course, but he'd pay most of his taxes in all the far flung places that he seems to play).

Sites advertising DJ services should only be charging VAT at 13.5%

djdeclan

Lads as far as I am aware DJing does not qualify for the reduced 13.5% VAT rate and therefore all DJ services that are subject to VAT should have VAT charged at the 21% rate.

ianuss

That answers that one I guess. I had thought that dji'ng was at the reduced rate, not sure where I got that from though.

For a definitve answer why not ring the Revenue Commisioners?

gbee

Do get advise on this. If you fall into the self employed class for this work, that's half it got straight away.

Daroxtar

@ Djdeclan: If i register as a DJ can i claim back much from the price of a new set of decks, a mixer, monitors, headphones,a Kaos Pad and about 200 new vinyls? They'd be classed as essential equipment, tools of the trade, right? Seriously, what kind of percentage of the outlay could i recoup?

gbee

The problem with annual tax is the revenue think you have it all in your bank account and have no bother in paying them.

If you earn 10K in DJ work that's just short of 200 a week into the hand and it's spent of petrol, fags, sweets and a few drinks, the odd visit to the dentist etc.

The viewpoint from revenue is you have earned 10K, whereas in fact you have earned only 200 over 52 weeks so if they apply the 51% on this you'll need to find 5K in a lump-sum.

IMO, the bar might as well 'employ' you and stop taxes weekly, so you can spend your earnings in peace.

ianuss

Daroxtar wrote: »

@ Djdeclan: If i register as a DJ can i claim back much from the price of a new set of decks, a mixer, monitors, headphones,a Kaos Pad and about 200 new vinyls? They'd be classed as essential equipment, tools of the trade, right? Seriously, what kind of percentage of the outlay could i recoup?

You could claim back the VAT paid on purchases. All those expenses you mentioned are used for the purpose of the taxable business.

mambo

Daroxtar wrote: »

@ Djdeclan: If i register as a DJ can i claim back much from the price of a new set of decks, a mixer, monitors, headphones,a Kaos Pad and about 200 new vinyls? They'd be classed as essential equipment, tools of the trade, right? Seriously, what kind of percentage of the outlay could i recoup?

You should be able to depreciate decks, mixer, etc. over N years, and the amount you depreciate them each year could be offset against your tax bill for that year.

ianuss

Is that true? I thought you couldn't use depreciation to reduce your tax liabilty. I'm fairly certain you can't do that. Depreciation is just an accountancy concept, no?

You can use depreciation/wear and tear to calculate any tax payable/owed on a disposal of an asset, but that's a capital gains tax issue afaik.

DUBACC

BaZmO* wrote: »

How many DJs do you know that earn more than €70K a year (apart from John Gibbons of course, but he'd pay most of his taxes in all the far flung places that he seems to play).

Sites advertising DJ services should only be charging VAT at 13.5%

Actually, sorry to butt in - but the threshold for registering for vat is €37,500 in this case as the DJ is offering services as opposed to goods.

DUBACC

ianuss wrote: »

Is that true? I thought you couldn't use depreciation to reduce your tax liabilty. I'm fairly certain you can't do that. Depreciation is just an accountancy concept, no?

You can use depreciation/wear and tear to calculate any tax payable/owed on a disposal of an asset, but that's a capital gains tax issue afaik.

You can use it yes - but it is known as capital allowances. In most areas, you get a deduction of 12.5% of the cost of the assets as an allowance against your taxable profilts.

Depreciation is specifically disallowed as a deduction in all cases.

BaZmO*

DUBACC wrote: »

Actually, sorry to butt in - but the threshold for registering for vat is €37,500 in this case as the DJ is offering services as opposed to goods.

Whoah whoah whoah!!! I was only quoting the accountant!

DUBACC

BaZmO* wrote: »

Whoah whoah whoah!!! I was only quoting the accountant!

Ah i know - just offering a helping hand as i go along my merry way....

Depreciation is an accounting reporting policy for writing off the cost of an asset against profit as an expense over its useful life, Capital Allowances is more or less the same thing but its the term and the method used for Revenue purposes, under Capital allowances the cost of equipment is written off against taxable profits in most cases at 12.5% or 8 years (its deemed useful life).. To arrive at taxable profit depreciation along with some other items is added back to actual profit (increasing the taxable profit), then the Capital Allowance is taken back off to arrive at the taxable figure.

Capital Gains tax generally does not apply to wasting assets/assets used in a trade like equipment, it applies to sales of assets like property

djdeclan

Firstly, DUBACC is correct, it is €37,500, although i think there is a way around that if you don't want to register (most mobile DJs won't as they will be working for non VAT registered clients most of the time).

Secondly, icky_ocky & DUBACC have hit the nail on the head with regard to capital allowances. As a general rule of thumb you can write off the purchase price of your equipment over 8 years (12.5% per annum).

Where you might run into a bit of trouble is if you register as a sole trader with the Revenue Commissioners as of (say) 1 January 2011 and the receipts for the purchase of your equipment are dated in 2008. Try explaining that during an audit!

In terms of VAT registration if you are solely working in venues which are VAT registered themselves you would be better off registering for VAT as it will allow you claim back VAT on certain expenses such as equipment, diesel (you cant claim VAT on petrol) advertising, cds etc. If you are doing 21sts for john and mary they wont be able to claim back the VAT and you are immediately adding 21% onto your price by charging them VAT thus you should only register if your income exceeds the threshold.

To gbee if you only earn €10k then you'll have no tax to pay as you will be below the threshold. If, on the other hand, you are earning €10k on top of a decent wage and indeed you are liable to tax at the marginal rate along with prsi and all that good stuff then you have no excuse for not having it in the bank to pay them (even though after deducting expenses you'll have little to pay) - you're not exactly living on the breadline now are ya!

gbee

djdeclan wrote: »

To gbee if you only earn €10k then you'll have no tax to pay as you will be below the threshold. If, on the other hand, you are earning €10k on top of a decent wage and indeed you are liable to tax at the marginal rate along with prsi and all that good stuff then you have no excuse for not having it in the bank to pay them (even though after deducting expenses you'll have little to pay) - you're not exactly living on the breadline now are ya!

My understanding is the OP is already in full time employment.

djdeclan

djdeclan wrote: »

Where you might run into a bit of trouble is if you register as a sole trader with the Revenue Commissioners as of (say) 1 January 2011 and the receipts for the purchase of your equipment are dated in 2008. Try explaining that during an audit!

I thought equipment on hand at the start of a trading period could be valued and capital allowances then claimed upon.. its just that if the Sole Trader was VAT registered from say Jan 1st 2011 then obviously VAT could not be claimed back as the equipment was purchased back in 2008 (pre registration date)?

Regarding VAT registration; people should also note that if they register for VAT and claim the VAT back on the cost of purchasing equipment then if they decide to sell the equipment on at any point down the line then they are liable to pay VAT to the Revenue on the sale price of the equipment, similarly if business is not going well and they decide to pack it in and de-register, then if they just keep the equipment for personal use they may also be liable for VAT on taking the equipment out of the business for personal use (self supply)

mambo

djdeclan wrote: »

Lads as far as I am aware DJing does not qualify for the reduced 13.5% VAT rate and therefore all DJ services that are subject to VAT should have VAT charged at the 21% rate.

I checked with Revenue and they say the rate for DJing is 21%.