Conversation between host Chris Collins and DJ Ree (an Atlanta-based full-time DJ and promoter). DJ Ree explains she books talent for a high-end hotel and faces a requirement for a certificate of insurance; the hotel suggested she obtain the certificate and route payments through her (they would pay her and she would pay the DJs). They discuss DJ Ree currently filing W-9s and paying taxes, the potential benefits of incorporating (liability protection and the ability to deduct expenses so taxes are on profit), and a negotiation strategy to increase the fee paid by the venue slightly (to cover insurance and accounting) so the arrangement is roughly revenue-neutral while providing margin. The speaker references the book Rich Dad, Poor Dad as an analogy for corporate tax treatment.
Chapters
Foreign.
In Atlanta. Hotlanta.
Hi. Yes, Hotlanta.
Home of the super bowl this year.
Yes, I'm ready to make that super bowl money.
All right, well, how are you gonna make super bowl money? Tell me.
I am a DJ.
I love it. What's your DJ's name? Do you have like a cool DJ name?
Yeah, just DJ. Re Reed. Re R, E, E. What does that mean? Re it's my middle name.
Nice.
So my question. So I'm a full time DJ.
And I do strictly like W9 work. And recently I have been booking talent for a venue and like as a promoter.
Well, I'm a promoter, I do promotions, but it's like one of the high end hotels that has DJs and, you know, bands and things like that on the weekends. So they want certificate of insurance, but they said the way around it is if I have certificate of insurance and I pay them myself, like they pay me and I pay them. So my question is, like, how would that affect me? Affect me tax wise? And like, should I, like what should I do?
Are you incorporated now?
I'm not incorporated now.
Okay, so right now, how do you file taxes or do you claim? Like, man, I don't want to get you in trouble. Maybe we should. I shouldn't be asking these questions, but are you, are you paying taxes on what you get paid on now?
Yeah.
Okay, so what if you get incorporated, you're going to have a level of protection.
That a corporation provides, but you can pay those DJs and it's a tax write up. So it's kind of almost like a wash through in a way, for the most part. There's a analogy that comes from the book Rich Dad, Poor dad, which is a great analogy. And I read that book very young where, you know, normal people pay taxes off of the top line. So if you, if you have a job or you work, you pay taxes off of, you know, let's say you make $5,000 a month, you're gonna pay taxes and then you spend what's left over. If you're a corporation, you sell things, you pay your bills, you pay everybody. Then you pay taxes on the profit or what's left over after that. So you could go back to the Hilton or whatever the hotel is and you could say, okay, yeah, no, I'll do that, but you got to pay me, you know, whatever they're paying you now. Let's say they're, they're paying these DJs $500 a set or whatever it is. I want 600 because I'm going to cover the insurance. And I have now the, the accounting part of this. I have to facilitate all this. So I want a little bit more. And I bet you they'd pay you.
Okay.
So it's a chance for you to make a little. A little more of a margin. That's the big difference between an employee and an independent contractor. And entrepreneur is you. You pay taxes after expenses and deductions. When you're an employee, you pay taxes first, then you have what's left over to spend. If you're an independent contractor, you could provide that for other hotels and venues and could be another stream. So I wouldn't be afraid of that. That could be. I know promoters that make a lot of money. I'm sure you do, too. But it's, it's almost more lucrative than being the dj.
