Business Filing Rules

• The general tax filing rules apply to all types of businesses, including your DJ company. Regardless of the form you use, the IRS will impose an income tax on your net earnings. Your net earnings do not include every dollar you receive from your DJ gigs; rather, it is your total earnings minus all expenses you incur in the business. Typical expenses for a DJ business can include the transportation costs involved in hauling your musical equipment back and forth to jobs, the cost of purchasing music and the purchase price of your equipment.
  
  

Sole Proprietor DJ

• If you operate the DJ business as a sole proprietor, the IRS requires you to file a tax return in any year the business earns at least $400 in net income. The IRS also requires you, as a sole proprietor, to report this income and your DJ expenses on a Schedule C attachment to your personal tax return. Filling out the Schedule C is straightforward, as you essentially report your gross revenue and reduce it by each category of business deductions to arrive at your net income. This net income is the amount the IRS will tax, and you must transfer the figure to your 1040 and include it with all other non-DJ income you earn during the year.
  
  

Self-Employment Tax Filing

• As a sole proprietor, if you have an obligation to file a Schedule C, you also have an obligation to prepare Schedule SE to calculate your self-employment taxes. These self-employment taxes are separate from the federal income tax and are only raised to support the Social Security and Medicare programs. The Social Security portion comprises most of the self-employment tax. However, only a limited amount of your income is subject to this tax. If you have another job and your employer withholds this tax, make sure you haven't reached the maximum income to avoid overpaying payroll taxes.
  
  

Corporate DJ Business

• You can choose to operate your DJ business as a corporation just as easily as you can run it as a sole proprietorship. However, corporations are subject to different tax filing rules than sole proprietorships. The IRS will treat your DJ business as a separate taxpayer and, therefore, none of the income or deductions from the business show up on your personal tax return. Instead, you must file an IRS Form 1120 to report the corporation's income, deductions and taxable net income. Furthermore, an 1120 is due every year, regardless of whether the business earns nothing or earns $1 million.