Jonas Goldstein is a certified public accountant (CPA) and a business manager with over 20 years of experience in the music industry. A lifelong music fan, he got his start in the music business when he was a student at Syracuse University and ran the school?s entertainment organization. When he graduated, he accepted a position with the entertainment-focused accounting firm Prager and Fenton as an assistant, eventually working his way up to tour accountant, then band and artist business manager. After 13 years with the company, he branched out on his own and launched JLG Business Management. During his career as a business manager, he has handled tours for bands and artists in all different genres, including The Bee Gees, Clint Black, Ben Folds, KISS and ACDC in North America, Japan, Australia and all over the world.
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I had the opportunity to talk to Jonas about his experience in the music industry and the many important roles of a business manager. He also shared some tips on how bands just starting out can handle the fine points of their own business management prior to having the budget to hire a professional. ????
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Musician Coaching:
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Thanks so much for taking some time to talk to me, Jonas. How did you get into the music business?
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JG:
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I?m a CPA and a business manager in the music industry, and I have over 20 years of experience. I got the music bug when I was in college at Syracuse University. I was in charge of the entertainment organization there.
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When I graduated, I was pretty much looking for firms that specialized in entertainment. This company Prager and Fenton originally hired me, and I ended up being there for 13 years. I started out with them as an assistant, then worked my way up as a tour accountant and then a business manager with them. While I was there, I did five tours for ACDC and worked with KISS, Clint Black and The Bee Gees. As a business manager, I worked with Ben Folds and Kid Rock for a while. I managed people in rock, jazz and all different genres.
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I?m very diverse in my musical taste, and I enjoy it when my clientele is all across the board. It makes everything more fun.
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Musician Coaching:
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I remember meeting you probably 15 or 16 years ago. And you were introduced to me as a business manager, but I really didn?t know the difference between a regular manager and a business manager. I would imagine that?s a pretty common mistake. What exactly us the role of a business manager?
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JG:
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The business manager is an accountant and then some. I?m a CPA. There are a lot of business managers out there who are not licensed, but I really feel that a business manager should be. I started out with ACDC. In addition to filing tax returns and all the other basic things an accountant might do for a band, they also set up things related to tours. We evaluate the tours, make up budgets for them, set up insurance programs, cut deals with buses, trucks and sound and light companies. We also often do projections on touring budgets for record companies.??
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Musician Coaching:
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And these are all the nuts and bolts elements that are so important, without which the whole machine would break down. Yet a lot of bands wouldn?t even think about all this.
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JG:
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Yes. It?s a very all-encompassing job. It?s not just being an accountant; we?re the liaison for almost everything. We also have to manage costs between management and the business management, because the business manager actually works for the band exclusively. And, of course, the different tasks for which I am responsible can also vary significantly band to band.
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Musician Coaching:
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And, you told me that you usually work for percentages or a monthly retainer, meaning you?re not likely to work with artists just starting out that have a very small budget, because they?re not bringing in a lot of income yet. What is your criteria for working with a band?
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JG:
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From my perspective, a lot of it is about passion. There are some bands I just love personally and want to see them succeed, even if they are baby bands. Sometimes they?ll experience restructuring or will be in political turmoil, and they will find themselves structuring. I need to feel passionate and really gung ho about all the bands I work with, so I?ll have the energy and will be able to fight for them as long as I can. I don?t cut deals with record companies personally, but I will often look at the contracts and give advice as they grow.
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Musician Coaching:
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Obviously, your ideal client is someone you are passionate about. But what advice would you give these types of bands about how to make sure their books are in order and everything is in place from a business perspective before they are able to hire someone like you?
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JG:
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The start of it is to set up an LLC or a Sub S Corporation, depending on the situation of the band. Say the band lives in Atlantic. Then, we can set up the LLC in Georgia. If everyone lives there, all the income can flow through that point, and taxes can be filed in the same state. If you have a band that is scattered all over the place with someone in Nashville or Austin and another person in Seattle, they might want to look at other options. But the first thing they need to look at is where they are all located.
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However, with bands that are located overseas, there?s another option for setting up an LLC or a Sub S Corporation:? Delaware. Younger bands outside the U.S. can set up a U.S. entity as a Delaware Corporation. In general, however, as a business manager I always examine which type of company would best suit the band right from the get-go. ?
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Musician Coaching:
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And why is Delaware such a go-to state for LLCs, etc.?
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JG:
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With Delaware on the East Coast and also with Nevada in the West, there are no personal taxes. What you do is pay a monthly fee rather than setting up a very complicated tax system. It comes out to about $250 per year as opposed to dealing with another state, where it could cost you much more. However, for U.S. citizens it?s hard to set up in Delaware.
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And I?ve had some disagreements about this next point. But if you?re a multi-state band, you have a band that tours all over. Some states are more aggressive than others about getting your taxes. When you tour around, a lot of the places you play have very strict regulations. So, you need to closely follow budgets and file them to reduce your taxes. For example, in Wisconsin, they?re going to take six percent out of your wage. In Massachusetts, they take $450-$600. In California, they take seven percent. In Minnesota, they take two percent. Of course, the list of tax laws goes on and on.
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I?ve definitely had discussions with other business managers who don?t believe you necessarily have to file in every state. For example, states like New York and New Jersey don?t take any money out for taxes on tours at all. Connecticut does. But you can file a budget to these people, and your rates will come down. I usually take the stance that as an artist or band, you should file whenever you appear in a certain state, just for your own protection.
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Musician Coaching:
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Based on what you know about accounting, what kind of bookkeeping practices do you suggest bands just starting out follow to ensure they stay organized?
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JG:
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For example, I advise young bands to avoid filing an LLC in New York, because that state has very strict policies. It costs $2,000 ? $2,500 up front to set up the LLC, and and then you have to advertise your LLC formation in a law journal for six weeks.
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For New York-based young bands, what I usually do is file a Sub S election, which is a lot cheaper. When you?re running your own band and just starting out, $2,000 is a lot of money.
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In terms of bookkeeping, I like to keep things really simple. You get a bank account, and then you manage everything on QuickBooks. It?s effective, user friendly and gives you a lot of tools like balance and budget sheets and ways to manage your daily transactions ? which are all things you should be doing. You also need to bank reconcile every month to make sure your cash is where it should be.
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There?s another package that other business managers use that is very intricate and shall remain nameless. They say the statements look better, but I think it?s too much work and aggravation without training. You can do pretty much anything you need to do as a young band on QuickBooks.
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Musician Coaching:
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Given that most bands and startups are operating at a loss, is there advice you could give about tax write offs to minimize the impact?
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JG:
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If there?s a loss from your tour, you record a loss, and you don?t pay taxes. For example, let?s say you had a $2,000 loss on your tour that you did in 2011. In 2012, you might have a profit of $5,000. You can take your $2,000 loss and carry it forward, and you?ll end up with $3,000 and won?t have to pay money out the year after either.
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Musician Coaching:
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Let?s say you have a day job. Can your career as an aspiring musician be a way to pay less taxes overall?
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JG:
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Recording the day job is just a quick W-2. Just be aware of what?s going on and make sure you?re using your business sense. In my experience, in most bands, there?s typically one guy who is a lot savvier when it comes to the business end of things and taxes. That?s the guy you want to put in charge of recording and managing finances. But, musicians beware:? the IRS requires you to take a competency test to handle all this on your own if you?re not a CPA or an attorney.
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But, some general advice:? In the beginning, you want to save as much money as you can. And you want to consult with a business manager as a lawyer. Then, start to build your support team as you start to make more money and see what you can do. But as a musician, you don?t want to get into a situation where you suddenly realize you owe $2,000 in taxes and everything is a disaster.
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I?m sure that you agree with me on this next point, Rick. The way to get your band signed and to flourish is to get out there, tour extensively, get a mailing list and then write a record. If you sell 50,000 or 60,000 units, the labels will find you. It?s like when I was working with both moe and Umprhey?s McGee. They were bands that didn?t sell a lot of records, but they toured and played all over. Both had started while they were in college and just expanded.
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Of course, every band is different. A commercial success like Katy Perry or someone of that level is going to present a completely different business situation. You don?t really need to tour out, but you have to have somebody to stand by you and help market yourself.
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Musician Coaching:
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I?m actually really surprised that labels aren?t literally opening up bands? financial books and deciding whether to sign them or not based on the amount of income coming in and how solvent their company is. It?s definitely a changing eco system in terms of how people are getting acquired by labels, management and publishers.
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JG:
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Out of curiosity, in the work you do with marketing, in the last five years, have you seen a greater understanding by the labels of how technology has changed the music landscape?
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Musician Coaching:
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Some get it more than others. It?s a different game. And this really goes back to what I was just saying about being surprised that more people at the top aren?t looking at bands? financial records. In the past, people often complained about the lack of artist development at labels. And it seems like that same challenge still exists today, possibly to an even greater degree. Labels seem to still be looking at the number of albums a band is selling and whether or not the band has a manager, then project the risk they are willing to take, then sign the band. I can?t think of the last time I heard of someone just getting picked based purely on the music alone.
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I think labels definitely have a lot more analytics for artists at their disposal now and are starting to actually analyze them. They don?t necessarily move quickly, but that?s typically because they are working within the machine of a much larger company.?
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JG:
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And I?ve noticed that what they?re trying to do now ? and I think all types of management want to get away from this ? is do a 360 deal. They want to take a greater percentage of an artist?s record contract, touring, publishing, merchandising, etc.; they want everything.
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Musician Coaching:
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And I?ve heard of them going back and trying to put 360 deals in place on existing contracts too.
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I know labels are taking initiatives to transition, but I?m unsure as to how effective their efforts have been thus far. And I think ultimately in this technological climate, management is in many cases becoming a lot more powerful and beneficial to artists than labels.
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JG:
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My feeling is that what you should do as an artist if you want to attach yourself to a label is pretty simple:? go out there and build a fan base. If it takes you two years, fine. They?ll find you if you start selling a lot of units of your music and sell out at bigger venues either regionally or across the company. It?s a lot of work, commitment and focus, but if bands keep showing they can build a lucrative business for themselves, they can hopefully stop labels from trying to push some of these deals that will ultimately be detrimental to the artist.
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To learn more about Jonas Goldstein and the work he does within the music industry, you can visit JLG Business Management on Linkedin. You can also reach out to him directly at jgoldstein311(at)gmail.com.
Tags: band manager, JLG Business Management, Jonas Goldstein, music business manager, Music Business Plan
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