Independently producing music album

[venuto23]

I am producing my own music album that will be released before the end of 2022 (started it in March). Have purchased a new computer, software and hardware for it (though I will use those items for future albums as well) and have hired several other musicians to perform on the album, and engineers to mix and master it. Would it help me with deductions if I start my own company (Production company for example) or just file as an individual with a side gig (I have a full time job as well)? I expect to make some money for the album, but not to recover the costs I've put into it (not even just recovering the costs of the musicians/engineers). Any advice is welcome, I'm new to this!

[hchu · Accepted solution]

Congratulations!  I'm looking forward to hearing your album.  The most important thing to do first is getting all your documents together.  You will be able to claim all the expenses.  If your income is less than your expenses they will carryover to the next year. Therefore, when you make a lot of money when your album goes gold you will have carryover losses to offset the income in future years.  Make sure you have all the receipts. Seriously, this is the most important thing when running a business.   If you are paying other people you will need to prepare 1099's for them unless you paid a company.  If you do need to prepare 1099's you can do this  using Turbo Tax business.  If you have purchased equipment you will enter them as assets, there is a section for this.  At this point you do not need to create a new business.  Good luck and Rock on!