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MUC 109 LEC 3 Employment Arrangements & Unions
1.
Music Business Essentials Employment Arrangements in
the Music Business © 2006 musicbizclasses.com
2.
Financial Literacy in
the Music Industry • Two Certainties: Death and Taxes • It is not what you make, but what you keep • Your number one expense in life: TAXES • Long-Lasting, wealth is determined by both revenue generation and tax management strategies • Business Ownership offers the most tax advantaged income and tax position © 2006 musicbizclasses.com
3.
In the Music
Industry, Industry there are different employment arrangements: –E l Employee-- F ll or P t Ti Full Part-Time or Contract – Independent contractor – Small Business Owner © 2006 musicbizclasses.com
4.
Full or Part-Time
Employees • Long-term, continual work; paid wages or salary • At Will; employer or employee may terminate at any time • Conditions set by employer • Tax withholding by employer • Unemployment benefits Worker’s Comp benefits, Worker s & Disability Examples- Examples Regular jobs at a recording studio, record label, etc. © 2006 musicbizclasses.com
5.
Contract Employees: • Mid
to Long term continual work; Mid-to Long-term, paid wages or salary • Contract period pre determined and pre-determined mutually agreed upon by employer and employee • C diti Conditions set b signed contract t by i d t t • Employment may end when contract p y y period is expired • Tax withholding by employer g y p y • Unemployment benefits; Worker’s Comp Examples: Regular jobs on Broadway, in TV shows; employee band member © 2006 musicbizclasses.com
6.
Independent Contractor • Sh
t t Short-term, sporadic work; paid f di k id fees • Self-Employed; freelance • At Will • Conditions set by mutual agreement; may or may not have a formal contract • Taxes managed by employee • N unemployment b No l t benefits, W k ’ fit Worker’s Comp or State disability Examples: Session gigs, short-term projects as engineers, arrangers, music instructors, etc. © 2006 musicbizclasses.com
7.
(Small) Business Owner: •
Not hired for employment; rather hired to provide services via own business; paid fees and/or sales income • Conditions set by mutual agreement; may or may not have a formal contract • Tax withholding & benefits handled by business entity • Examples: Owners of recording studios, record labels, labels record/music stores artist management stores, companies. © 2006 musicbizclasses.com
8.
Business vs. Hobby •
The IRS differentiates between Businesses and H bbi B i d Hobbies • Tax status is different for both • Both require income tax reporting • Business= Profit Motive • Hobby= For Fun • 3 out of 5 tax years profitable? Business. • Not profitable? Hobby. • Tax advantaged status for Businesses – Deduction of expenses against business income – This REDUCES your income tax bill © 2006 musicbizclasses.com
9.
A Band/Group as
a business: • Separate business entity: Typically a Limited Partnership yp y p (Band Partnership) or LLC • Paid fees, royalties and fees sales percentages • Band/Group Members own equal shares in profits and losses of the business • LLC and Limited Partnerships offer p greater protection against personal liability © 2006 musicbizclasses.com
10.
Paying Your Taxes: •
IRS- Internal Revenue Service 1040.Com 1040 Com • Federal, State, Local taxes may be due • Annual Income taxes on Earned Income- Due April 15th each year • Self-Employment Taxes on self-employed Self Employment self employed income- Estimated payments due throughout the year © 2006 musicbizclasses.com
11.
General Tax Filing
Info: • All eligible U S citizens pay annual U.S. earned income taxes • Regardless of age • Filing amount is determined by several factors: filing status income amount status, amount. • Example: Single, Under 65, Earned income of $8950 (2208) or more must pay annual earned income taxes • Example: Dependent children under 19 children- (up to 24, if full-time student); earned annual income $5450 (2008) or more ( ) must pay annual earned income taxes © 2006 musicbizclasses.com
12.
General Tax Filing
Info: • All eligible U.S. citizens who earn income from any self-employment activities pay additional self-employment taxes dditi l lf l tt • Regardless of age • Earned income from self-employment of $400 or more must pay annual self- p y employment taxes. • Talk to your CPA- Certified Public Accountant for more information © 2006 musicbizclasses.com
13.
Unions and Guilds for
the Musical Arts and Trades © 2006 musicbizclasses.com
14.
Brief History of
Labor Unions • G ild d t b k t th Middl A Guilds date back to the Middle Ages- a confraternity of tradesmen • Historical Guilds are predecessors to many of today’s Unions and Guilds y • Modern unions in America first emerged during the industrial revolution of the mid-to-late 1800’s • Their primary mission was to protect workers against the abuses of the powerful industrialists © 2006 musicbizclasses.com
15.
Musician’s Unions: Overview O
i • Today there are several unions and guilds that serve the interests of professional performing artists f f i l f i ti t and supporting trades-people. • They are membership organizations and charge j i i and annual f d h joining d l fees • Operating on a Federal and Local Level © 2006 musicbizclasses.com
16.
Unions for Musical
Artists: • AFM= the American Federation of Musicians of The United States and Canada • AFM is the oldest and largest professional musicians union • AFM f focuses on supporting ti practicing musicians in live performances venues touring and venues, recording sessions and TV taping © 2006 musicbizclasses.com
17.
Unions for Musical
Artists: AFTRA= American Federation of Television and Radio Artists • Primarily concerned with vocal talent- Background singers, announcers, etc. © 2006 musicbizclasses.com
18.
Guilds for Musical
Artists: SGA= Songwriter s Songwriter’s Guild of America • Primarily concerned with Songwriters, published and unpublished • Offers multiple benefits- provides a standardized contract template for songwriters © 2006 musicbizclasses.com
19.
Musician’s Unions: Benefits • The
primary mission of a union is to protect musicians, performers, artists in terms of fair wages and appropriate working conditions i t ki diti • Their primary services are: collective bargaining g g employment benefits © 2006 musicbizclasses.com
20.
Musician’s Unions: Benefits • Collective
Bargaining uses g g the power of many members to gain workers benefits for individual workers. • Unions use Collective Bargaining with: – Record companies – Broadcasting companies – Large Live Music Venues – Symphonies © 2006 musicbizclasses.com
21.
Union Contracts • Companies
that sign contracts with unions become union “signatories” • They agree to honor union rules • Contracts govern: – Wages – Royalties – Working Hours & Breaks – Cartage – Travel Arrangements & Accommodations – Pension funding © 2006 musicbizclasses.com
22.
Musician’s Unions: Benefits • Unions
allow members “employee”-type benefits “ l ”t b fit • Including: – Health benefits – Insurance – Retirement – Other-- job referrals, mediation services, discounts , – Assistance with tax filing © 2006 musicbizclasses.com
23.
Musician’s Unions: Requirements • Requirements:
– One time joining fee- g generally $100-$1000 y – Annual dues- generally $100 $200 $100-$200 – Work dues- a percentage of every gig you play play- generally 1%-2% –M b Members must only work t l k union gigs © 2006 musicbizclasses.com
24.
Musician’s Unions: Pros and
Cons PROS- – Off Protection and benefits Offer P t ti db fit – Larger venues and Record Labels require union contracts, contracts CONS CONS- – Can be expensive for younger, unestablished artists – smaller, local venues are not union affiliated- will not pay union scale wages i l © 2006 musicbizclasses.com
25.
Key Take-Aways: • Unions
and Guilds are meant to protect workers from poor working conditions and abuse by employers • There are MANY organizations that provide protection for musicians performing musicians, artists, and tradespeople, etc. AFM, AFTRA, SAG, SGA, AGMA, AGVA, AEA, IATSE • Th most well-known unions f The t ll k i for performing artists in the Musical field are: • AFM • AFTRA © 2006 musicbizclasses.com
26.
Key Take-Aways: • Unions
are membership organizations and require members to pay joining fees, annual membership fees and dues • Musical artists should consider the Pros and Cons before joining a union • Unions can offer professional, self-employed or contract musical artists and t d ti t d tradespeople many of the l f th same benefits enjoyed by a full-time employee in a traditional setting- p y g i.e. health, retirement, insurance benefits, etc. © 2006 musicbizclasses.com
27.
For Educational Use
Only This slide presentation is part of the Music Business Essentials series. Contact info@musicbizclasses.com for f more information f © 2006 musicbizclasses.com