Mobile DJ & Karaoke

mad4x4

SO question is:

We started helping out doing the Odd karaoke and disco about 6 months ago, This has now grown to 1 -2 gigs a week and each gig we (myself and G/F) get paid about £150 total.
We both currently work with full time jobs.

When does this casual hobby become deemed as a business. And do I have to register as a business and do accounts /vat etc.

we are also starting to advertise with /work with and for another DJ that put his own work through his Taxi company

All advice Welcome

motorguy

mad4x4 wrote: »

SO question is:

We started helping out doing the Odd karaoke and disco about 6 months ago, This has now grown to 1 -2 gigs a week and each gig we (myself and G/F) get paid about £150 total.
We both currently work with full time jobs.

When does this casual hobby become deemed as a business. And do I have to register as a business and do accounts /vat etc.

we are also starting to advertise with /work with and for another DJ that put his own work through his Taxi company

All advice Welcome

Its already a business - you're taking a fee for providing a service.

You need to register with the HMRC immediately - in fact you should have done so 6 months ago.

Also, as you'll be taxed on your earnings, of your £150 you'll lose approx £50 in tax. From that you'll need to subtract your fuel costs, depreciation on equipment, etc. So lets allow £20 a time for that.

That leaves £80. Divide that by two = £40.

Is it worth it to you?

Mr_Taxtastic

Yes it is a business and you should tell HMRC that you are trading/self employed and you should have done this within 3 months of starting. You will also need to decide if it is a partnership (a partnership Return will also be needed), two sole traders or if you are paying your girlfriend a salary (payroll required).

HMRC will issue you with Tax Returns so that you can pay the tax on your income. You will also be sent the National Insurance forms, however your income may be below the exemption limit for class 2 and class 4.

Accounts are not required for your level of income as all you need to do is put your income less expenses on the Tax Return.

VAT registration is only required if your turnover is over £68k ish.

I assume you are both basic rate tax payers and excluding National Insurance, tax will be due on income-expenses X 20%.

paulwf

pgilc1 wrote: »

Also, as you'll be taxed on your earnings, of your £150 you'll lose approx £50 in tax. From that you'll need to subtract your fuel costs, depreciation on equipment, etc. So lets allow £20 a time for that.

To be precise you would take allowable expenses off your income before tax is calculated. You pay tax on your profit not on turnover.

To keep things simple I understand why pgilc1 presented it that way though

mad4x4

Ok so does that mean that I can offset the cost of all our gear etc against the tax etc. About 90% of our gear was purchased new and I have all the reciepts. Then running cost for my Car at 2x 20 Miles per gig.......

Surely I should be able to get the tax man to pay me....

Or does this get into the VAT realms.

If we opened a company and We both directors and invested about a good chunck back into the business could that help.

Problem I have is I already have a good job and just scrape into the bottom of Hi-tax bracket each year, so if I do just "declare" earning straight off I will get hammered and be as well not doing it.:mad:

G/F is the same she has company car from her real job so will probably get hammered.

:eek:JEEES this is getting out of hand quick we both started this as a bit of fun to help out a mate who did disco's and it is mushrooming.

shiningdove

Is all your stuff PAT tested.. do you have public liability insurance and licencing?

If your helping out a mate.. i'm not sure if this could work.. but surley that could be like your working for him?

Savvy_Sue

shiningdove wrote: »

If your helping out a mate.. i'm not sure if this could work.. but surley that could be like your working for him?

So you're suggesting that rather than the OP and his g/f declaring themselves as self-employed, the mate they're helping out should register as a new employer and put them on the payroll? I can just see that happening ... :rotfl:

OP, short-term you might be able to reduce your tax liabilities, if your 'business' is running at a loss, BUT long-term I believe HMRC tend to look with suspicion on businesses which keep making a loss year after year.

I think you could claim mileage at 40p a mile.

Your equipment would, I think, have to have been bought solely for the business to be chargeable to it (but I'm no expert!), so if you use it at home then it might not be allowable.

Given your tax situation finding a good accountant would probably be cost-effective!

Horace

You dont have to register for VAT either as you are below the threshold, however, you can register voluntarily.

Setting up as a limited company has other considerations - corporation tax, submitting accounts to companies house, paying wages etc. etc.

Register with the HMRC as a self employed business (you're earning from it) and stay self employed as you can do this whilst being in full time employment. Contact businesslink for free business help and advice.

You will need to have public liability insurance even though the venue that you are performing in may have it, you need it in case someone trips over your equipment or whatever. You also need to make sure that your equipment is PAT tested regularly.

NADJ

Public Liability Insurance (PLI)

This is NOT a legal requirement but is a very good idea.

Portable Appliance Testing (PAT)

Correctly defined as "In-service Inspection & Testing of Electrical Equipment", this is NOT a legal requirement.

Most venues insurers have it written into their polices that any third party working on the premises must have their own PAT and PLI certificates, failing to check this with the DJ would probably invalidate their own policy. It’s a buck passing thing and if the DJ had any tangible assets and there was a mishap then you can rest assured he would take a financial pounding.

I am the current secretary for the National Association of DJs and PAT and PLI is a prerequisite of membership. We will probably also be introducing the ProDub licence as a mandatory requirement, this is needed if you format shift media such as ripping your CD’s to MP3.

The majority of our membership, circa 400, also have second jobs and rarely generate enough income to warrant VAT registration and many are selective about the gigs they take on to avoid this.

Here are some basic costs that most professional DJs have:

• NADJ Membership £50.00 (Includes many benefits including technical support and free website hosting)
• 10 million NADJ PLI £87.00 pa (Includes dry hire)
• ProDub Licence, from £250.00 (This would only cover you for 5000 tracks)
• Insurance upgrade to legally carry you equipment in your vehicle, from £150.00 pa

We often survey our membership about overheads and if you were a basic disco with all the relevant insurances, weekly music updates, related licenses, phones, website, equipment upgrades and van to name but a few the average cost to the DJ before he is actually turning a profit is just under £150.00 per gig.

I note that was the initial price quoted at the start of this thread so it seems that you are just about breaking even. The current average price charged by our members is £450.00 with most DJs managing about 1.5 gigs a week giving them a gross weekly income of £675.00. Once you subtract the overheads and tax liabilities then you can see we do not earn a fortune.

If you need any help we have a website and we have our national AGM and Tradeshow in Gloucestershire 25/04/2010.

I trust this has been of some help.


Mark Davies
Secretary
The National Association of DJs

paulwf

NADJ wrote: »

• NADJ Membership £50.00 (Includes many benefits including technical support and free website hosting)
• 10 million NADJ PLI £87.00 pa (Includes dry hire)
• ProDub Licence, from £250.00 (This would only cover you for 5000 tracks)
• Insurance upgrade to legally carry you equipment in your vehicle, from £150.00 pa

We often survey our membership about overheads and if you were a basic disco with all the relevant insurances, weekly music updates, related licenses, phones, website, equipment upgrades and van to name but a few the average cost to the DJ before he is actually turning a profit is just under £150.00 per gig.

I note that was the initial price quoted at the start of this thread so it seems that you are just about breaking even. The current average price charged by our members is £450.00 with most DJs managing about 1.5 gigs a week giving them a gross weekly income of £675.00. Once you subtract the overheads and tax liabilities then you can see we do not earn a fortune.

The expenses you list work out at £10 a week. A phone can cost £2.50 a week (e.g Virgin Liberty SIM £10 a month). Hopefully the van can be used as a part of the second job or at least be used for private transport as well.

I appreciate there are lots of hidden costs plus you mention a few I didn't cover, but lets face it if you can do 2 gigs in a weekend and take £900 you should be able to make a more than comfortable living.

NADJ

I probably don’t need to lay this out for you guys as you seem business savvy but here is a snippet from a popular DJ forum:

Just to start you off on a per annum basis per rig:

Maintained vehicle with satellite navigation, fuel and recovery: £6000.00
Mobile phone per head: £360.00 (Business contract)
Replacement equipment budget per rig: £1500.00
Admin per rig: £5000.00

You must appreciate the costs in my previous posts were just the basics a DJ needs to get started. They didn’t account for actually running vehicles, administration and the like.

Another post on the same forum, from somebody I know personally, states it costs him £700.00 a month just to run his business. I would guess that a chunk of that is tied up in commercial premises but it is a realistic figure for a small business.

I take onboard your comments regarding the likes of mobile phones but I have personally learnt that the level of service you receive with a business contract far outweighs the cost.

Mobile phones are essential in my business as we primarily service the wedding market and you do not get a second chance to get that right. The cost of the contract is simply offset as an expense. The mobile phone also acts as a backup to the satellite navigation maximising our redundancy, that is the nature of the wedding market, zero mistakes.

I will admit I could slash my overheads by “cutting corners”. As an example I could stop paying my standby DJ £50.00 on a Friday and Saturday simply not to drink but what happens if there was an unforeseen accident and he needs to be pulled in last minute using the backup vehicle with the spare rig.

This is horses for courses and in reality costs will be driven by the level of professionalism the DJ/Company aspires too. I could give you a list as long as your arm about industry shortcuts but we as an association strive to educate DJs and because of my roll I cannot be seen to compromise on service.

I have helped more DJs than I care to remember to put together a working professional business model and most have upped their game and now work as full time professionals. There will always be the cost efficient “Pub DJ” but we embrace them and help them as they are the grass roots of our industry, many simply do not understand what needs to be in place.

I apologies if I have rambled on but I have tried to summarise some basics within the industry and the gentleman that initiated this thread obviously cares about what he is doing as he has taken the time to ask questions hence my initial reply.

The NADJ is a non profit making enterprise run by volunteers and I personally put in more hours than I should to assist in its running. If my contribution ensures that we have taken another step forward to shake the “Peter Kay” image then my term of office will have been a success.

In answer to the post prior to this you should note that according to our figures it will cost the average DJ £130.00 (Please note mine is £150.00) just to get a rig out of the door with an average of 1.5 gigs a week which would give a gross of £675.00 a week less tax and NI.

Your average gig takes 15 hours to execute and if you are full time you will probably spend hours on the phone/Internet marketing. Our records show that the average professional DJ works around 50 hours a week, mostly unsocial hours and phone calls from clients at silly times of the day and night.

Divide the hours £675.00 by 50 and you get £13.50 an hour gross. Burn that down to the average working week during “social hours” of 38 hours and we have a £513.00 gross but we work unsocial hours.

The average premium for unsocial hours is circa 20% so if we deduct 20 % off 30 of the 50 hours worked we have:

30 x Hours @ 10.80
20 x Hours @ 13.50

Giving us a gross of £594.00 but over 38 hours equates to about £451.44 gross.

This gives us a grand gross total of a professional DJ working 38 hours during social hours using thousands of pounds worth of equipment of £451.44 a week which equates to £11.88 an hour so far. Minus the overheads of £195.00 an hour for 1.5 gigs and we are now down to £256.44/38=6.74 less tax and NI, would any other professional service work for that?

I hope this clarifies the situation and I hope I got the math’s right as I didn’t get in until 4.00am and I have only just staggered out of bed.


Mark Davies
Secretary
The National Association of DJs