Busking to Beat the Bank: The Myth of the Starving Artist

So You’re Busking Like A Boss Huh?

So, you’ve found your spot that’s got good foot traffic of people who enjoy good live music.  AND these same people are willing to contribute to your success financially (i.e. give you money at will).  What now?  How do you turn that into that sweet new gear you’ve been eyeing without taking two friggin’ years to save for it?  How does that equate to an apartment that doesn’t have more inhabitants of the four- and six-legged variety than the two?  I’m glad you asked.  Keeping reading and see.

Hustling With the Tax Man & the Bank

You report ANY and ALL of the money you make on your taxes.  What, what the what now?  Won’t that get eaten up by the various tax men, women and NBI’s?  Well that depends on a few things:  Thing Number 1 – your Net Income from your business of busking (and yes, it is a business) and Thing Number 2 – How effectively you manage Thing Number 1.  (Side Note:  Smart people make Dr. Seuss references because those books speak to us. – I’m looking at you Trisha, my fellow HS Classmate who was a Saxophonist AND Salutatorian.  I try not to hold the saxophone thing against her.  She’s an awesome HS math teacher now)

Certainties in Busking & Taxes

I’m certain of three things if you’re busking for income:  1) You had to get there to do it, 2) It probably involved equipment of some kind to perform, and 3) if you’re just getting started you most likely netted less than $12,000 from it.  Why does any of that matter?  It only matters if you’re running a business (busking is a business).

Driving for Dollars

The IRS offers a mileage deduction of 54.5 cents per mile for 2019 for mileage related to the production of income for a business.  That’s not just mileage to perform.  That’s mileage to rehearsal space, mileage to pick up supplies or equipment, or mileage to pick up your bandmate who doesn’t drive.

Free Stuff

Got ya, musical equipment and instruments are far from free.  However, placing equipment into service of a business (and yes, busking IS a business) is a potentially depreciable event.  What does that mean?  Any equipment you own or buy that you place into the service of business (don’t make me say it again) can potentially be depreciated based on the cost to you to purchase or your adjusted cost basis (what you paid for it) at the time placed into service.

Busker’s Dozen

$12,000 is the Standard Deduction as of 2019.  Any income you make less than this amount is generally not subject to Federal Income Taxes. It could still possibly be subject to Self-Employment Taxes if Thing Number 1 gets unruly.  If you live in Ohio as of 2019 and if no one changes the law, any income up to $250,000 is potentially tax-free if generated by certain types of businesses (busking is…. ehh you get the idea).

So What

But what does any of this have to do with a bank?  In order to qualify you for loans such as equipment purchase loans (new instruments or amps or soundboards).  Perhaps, credit cards to cover your travel expenses until you get paid.  Maybe some hardcore adulting and buying a car.  Or…, Handel preserve us, a house.  Most banks will look at your tax returns to document your income to approve the loan.  I’ve heard of people suggesting not reporting income you make as a performer/musician.  You want a paper trail to show the bank that “Hey, I’m a responsible adult” (or at least look like one on paper).  Tax returns are a piece of that.  How would the IRS know what you made unless they start stalking you; it’s possible though as me for a funny story.  Besides you weren’t silly enough to deposit the money in your bank account, were you?  That makes another good point, please for the love of Bach deposit it.

Busking for Bank

You want the bank to know you have money because they’ll just charge you more when they decide to make the loan because you’re “risky” and have “unstable” income.  Does that mean you have to know how to balance your checkbook?  Yes, it does, but that’s not something you aren’t capable of.  If you can play ‘til 3:00 am after the bar closes and make it to teach a new student at 9:00 am sharp, without the use of an alarm clock or calendar, you can handle banking.  Lots of ATM’s take cash nowadays anyway.  So just swing by on your way home (being safe of course and watching out for stalkers).  The bank is probably not going to flag your account just because you’re depositing cash at 4:00 am if they know you and that’s when you usually deposit cash from your business **cough** busking **cough**.  They might take offense at the change though so wait until the morning for that.  I’ve seen some banks with free change counters for customers.

The Point

Banks and people, in general, think artists don’t make any money.  While not making millions of dollars, artists are pretty good at hustling to keep the lights on, the car running, and the kids fed.  That money’s coming from somewhere and if no one knows how you got it, they’ll just assume it’s not sustainable enough to give you a loan which can make life a lot harder.  Or if they do give you the loan it could be towards the higher end of the rate spectrum.  There are opportunities to manage Thing Number 1 and sometimes to even get it back in the Box.  It just takes a little bit of time and some forethought to get it done well.  Take the time, you can do it and your buskness will thank you.  See what I did there?  Spell check even tried to fight me on it.

Other Thoughts

I may have used busking as an example here but this applies to freelance work and maintaining a private studio among other common side hustles.  Both of these are also things that can help improve your creditworthiness to banks and other lenders.  Having more than one source of income helps so that you aren’t dependant on any one source of income.

Disclaimer:  This article expresses the views of the author in his experience as a tax and financial planning professional and Manly Musician/Musicianly Man.  It is meant to provide general educational information for the purpose of making more informed financial decisions.  If you have questions about your specific situation, please give us a call at 937-368-PLAN (7526) or email us at before making any rash and, potentially, permanent decisions.  We’d love to help out and might even be willing to work for a song.  The job might be limited to six minutes and it has to be the in the right Spirit, but I’m O.pen to it.

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