Accounting for Actors
As performers, perhaps the idea of mathematics, finance and economics isn't always at the top of our list.
However, we must remember - as I mentioned in my Getting Started as an Actor post - "it's called show BUSINESS. Extra emphasis on business."
Therefore, in an industry as difficult and competitive as the entertainment industry is, it's important to have at least a basic understanding in your finances to make the most out of every bit of income and business expense.
Over the years, with the help of my friend and some books (see book recommendation at the end of this post), I have created a routine for keeping track of my finances.
I will outline some below to help fellow performers to the best of my ability.
Some of what I do may seem quite redundant, but it's what works for me. I hope it'll work for you too!
*Disclaimer. I am not a tax accountant, financial advisor, attorney or anything of that matter. With that said, tax codes are constantly changing and I of course could be wrong in some of the ways I manage my finances. Please do not take anything in this post as any sort of legal financial advise and always consult with your accountant.
There are two main tools I use for my finances.
I used to only use one tool, and that was a handy-dandy spreadsheet.
However, I was looking to store a lot more data in regards to my auditions, so I invested in a software called Performer Track.
This is where, in addition to inputting my auditions, I input all of my business expenses.
These business expenses can be input to a particular project - for example: if I booked a voice over gig, under that project I'll input the mileage I drove to get to the recording studio both for the audition if it was in person, and for the actual gig. If I felt a little tingle in my throat the morning of and went to the store to buy Ricola or something of that matter, boom, project business expense.
It's important to know that due to the new Tax Cuts and Jobs Act (HR1, TCJA), actors working as employees and not independent contractors can no longer deduct a project business expense.
Therefore, if you're in the union and of course only do union work, unfortunately you can no longer deduct expenses like mileage, parking, etc for a union specific project.
Then there's "additional business expenses"...
Home studio - for this, I divide the square footage of my apartment by the monthly cost of rent, that gives me how much I pay per square foot. Then I calculate the square footage of the area I use exclusively for my home-recording-studio and multiply that by the per-square-foot amount. I input that amount every month as an "additional business expense".
Nails - nowadays, a lot of auditions require you to show your hands to the camera. Therefore, every time I get my nails done, it's an "additional business expense".
The list goes on and on and on as to what you can deduce as a business expense. A quick google search on "Actor Deductions" will give you the full list.
If you don't want to invest in Performer Track, start how I did with a simple spreadsheet.
Make the following columns: DATE, CATEGORY (aka WHAT FOR), AMOUNT, NOTES.
Example from my 2018 spreadsheet:
Note on mileage expense: Every year you have to check what the business mileage rate is for that year. In 2018 it was 58 cents per mile, in 2020 it's 57.5 cents per mile.
I color-coded my entries to sum up each category at the end of the year. This isn't necessary since an accountant can add these up for you, but they will definitely love you if you add them up yourself.
While keeping track of your business expenses is important, I believe keeping track of your finances as a whole is very important as well. Stay posted for a blog post coming soon on the Mastermind Squad blog about overall personal financing.
One of the main issues I ran into as a working actor was that - unless it's a union gig - one just never knows when the paycheck will be coming in.
If we're lucky, it's the good'ol 2 weeks. But it can be 30 days, 60 days, some even 90 days!
Prior to my record-keeping days, any time I got a check in the mail it'd be a great surprise.
But that surprise should really be left to residual checks.
One day, I got a check and thought, "Yeay! I totally forgot about this gig!"
But then it dawned on me...
How many gigs was I forgetting?
I knew my agents wouldn't forget; but it's important to check in here and there and have a good idea as to what my accounts receivable looked like.
So I created a new spreadsheet! A new tab within my business expense spreadsheet to consolidate all my finance record-keeping in one place.
This spreadsheet is also quite simple.
Anytime I work on a new project, I add a new line.
Below is a breakdown of the columns on this Accounts Receivable Spreadsheet:
The first column is the kind of gig, or field. ie ACTING, VOICE OVER, SINGING, etc... This isn't really necessary but I personally like gathering data.
The next column is name of gig. Self explanatory.
The next column is date of gig. This can be a single day or a date of range.
The next column is pay period. This is the month I expect to get paid. If it's a union gig, I know it'll be 2 weeks from the date of the gig, otherwise I'll assume it's 30 days out.
The next column is agent. Who got me the gig. If it's not through an agent, I'll leave this blank.
The next column is base rate. What's my gross income for this gig.
The next column is commission. A simple formula which calculates the gross income times 10%. If no agent got me the gig, this is left blank.
The next 6 columns are tax columns: FICA/Medicare, Fed Tax, SS, CA Withhold, CA DSI, (and if you're in the union, SAG pension). I haven't gotten a full grasp of the percentage for each of these, so these columns usually get filled in once I get my actual payment and see the amounts on my paystubs.
The next column is net rate. Simple formula: gross rate minus everything else, commission & taxes.
The last column is received? A yes or no question.
This question is also color coded.
Any row for which I have yet to receive payment is red. Once payment is received, row turns to green.
At the bottom I add up the NET RATE from all the red rows marked as "NO", and that tells me my Accounts Receivable amount - that which I have already done the work for and the money is out in the air with my name on it making its way to me.
Here's an EXAMPLE of an accounts receivable spreadsheet:
One year, all my 1099s and W2s started rolling in and I pulled out my handy-dandy spreadsheets.
However, adding up my income per payroll company to confirm the amount on these forms was still complicated.
I also wanted to know how I did on a month-by-month basis.
Cue my Income Received Spreadsheet!
Another fairly simple spreadsheet with more glorious data.
Similar to the Accounts Receivable spreadsheet, only this shows me when I actually received the money.
Below are the columns of this spreadsheet:
First I start with naming the MONTH.
Then the first column is post date. This is the date that the money physically - well, digitally actually - posted on my bank account.
The next column is project name. Self explanatory.
The next columns are just like Accounts Receivable: Gross, Commission, FICA/Medicare, Fed Tax, SS, CA Withhold, & CA DSI.
The next column is also like Accounts Receivable, net income. Gross minus everything else. This should equal exactly what's on your check/transfer.
The next column is estimated taxes. If it's a contractor gig, meaning taxes weren't already withheld, I like to multiply gross times 15% to have an idea as to how much taxes I have to pay at the end of the year. If taxes were already withheld, this is left blank.
The next column is payroll company. Who's sending me a W2 or 1099 at the end of the year for this payment.
The last column is gross YTD. This is the total gross year-to-date for that payroll company. I basically sum up the gross from that row, plus the year-to-date total in the last row for that same payroll company. When I get my W2 or 1099 at the end of the year from that payroll company, the amount on the form should equal the gross YTD on the last row for that payroll company. If not, something is off.
It has happened to me before that when I check my W2/1099, the payroll company put an amount that was more than I actually made & received. That's NOT okay because you will be charged taxes on an amount you never received, so it is important to keep track and do your due diligence to make sure the numbers add up. It happens, and it's the reason there's a box on every W2 and 1099 marked as "corrected".
Also, I like to set yearly monetary goals. I have found the best way to achieve long term goals is to break them down into smaller goals. So if I say I want to make $120,000.00 next year, I gotta be making around $10,000.00. This sheet helps keep track of those monthly numbers.
This is what my Income Received sheet looks like (empty):
With all these sheets under one document and with the help of my finance-savvy friend, I created a new sheet to combine all this data into a Cash Flow spreadsheet.
This sheet is much more complex and I will break it down on my soon to be written blog post on Mastermind Squad.
A few words to end this post...
If you've gotten this far, GOOD FOR YOU!
Really. You clearly care about your finances and your future.
As I mentioned at the top of this post, there's a book I read back in 2017 that helped me get a better understanding of the tax world for performers:
A lot has changed since 2017, especially the tax code, but it's still a great and informative read for any performer to begin their financial journey. You can even use some of his handy deduction sheets, or make your own using my outlines above.
Data analysis has propelled humanity forward, and you can and should by all means use it to your advantage to propel yourself to reach your goals and aspirations!
If you have any questions, don't hesitate to reach out.