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You can’t make money if you can’t take money: How to take payments as a musician

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Having things to sell requires you to find a way to take your customers’ money, whether by credit card, online payment, check, or cash.

One question we usually ask musicians during our talks and workshops is: “If we wanted to buy something from you right now, could you take our credit card?” To our surprise, sometimes less than half the room raises their hands. It should go without saying that if you want to make money with your music, you need to be able to collect money from all your customers, no matter how they want to pay you.

Even before the pandemic, there’s been a shift from paying in cash to paying electronically through digital and online providers. This trend will likely continue even after we return to something more normal, which means you should always be able to take credit cards and all other payment methods, including via app or electronic payments. This is true even when you’re busking on the street.

As an individual, you may have personal accounts with services like Venmo, Paypal, or Zelle. While the functions will largely be the same, you might need to set up a separate business account. If you’ve set up your business as a separate legal entity, such as an LLC, you’ll need to use the Employer Identification Number (EIN) you created for it to receive the payments. If you don’t have a separate legal entity and handle your music business taxes through your personal taxes (as a D/B/A or “doing business as”), then you need to carefully track and account for all money paid and collected by the business separate from your personal expenses and income. For more on this, see our previous article, “Six legal pitfalls to avoid in your music career.”

Here are things you need to do to be able to take payments as a musician

1. Take credit card payments (online and everywhere else). Credit cards are everywhere, and you need to be able to take them on the go whether you’re selling to fans at a merch table or through your online merch store. You can do this by using services such as Square, Stripe, Paypal Here, or Quickbooks Go Payment. Each of these services provides methods to use your phone to take credit card payments, so you can complete transactions wherever you are. Once you have this ability, always carry the credit card readers with you since you never know when you might need to take a credit card payment.

2. Take digital and online payments. In addition to credit cards, make sure your business can accept electronic payment methods, too. Some popular ones are Venmo, Zelle, Stripe, Paypal Me, and Apple Pay Cash. Most of these services are free to start an account since they make their money on transaction fees. Because of this, you should set up accounts with as many as possible so you can take money from whichever method your customers prefer.

3. Use electronic tipping apps. If you want to be able to take tips and donations for your street performances, you have to assume your fans aren’t carrying cash but could pay using other means, so make sure you can accept electronic payments. You can do this by using services like DipJar or Paypal Me. If you have a Patreon account, you can also add a link or QR code so people can sign up and support you there. Plus, apps like Busk.co not only allow you to take tip payments, they also allow you to give your tippers a download of one of your songs as a reward.

Making Money With Music4. For cash sales, make sure you can make change — and track your sales. There will always be those who will carry cash, and a good business person makes sure there is always change available. This means having plenty of $5s and $1s on hand (and coins if needed). But you also need a way to track real-world sales. This is necessary, not only so you can monitor what’s sold and how well you’ve done, but also for tax purposes. That $20 you earned shouldn’t go into your pocket unless you have a way to track that as business income. Fortunately, apps like Square handle more than credit cards and allow you to track cash sales. You can also use free, cloud-based accounting solutions like Wave, SlickPie, and many others.

5. Accept checks. Yes, paper checks are still a thing, especially when it comes to business-to-business payments. This becomes important when you license a song for a movie or trailer, for instance. To take checks for your business, you usually want a business bank account and you’ll want a way to track it, just like cash. Even better, you should choose a bank that will let you deposit checks through your phone, especially if you tour, since you don’t know when you’ll be able to go to your bank to make deposits. All that said, checks can be costly, because it’s up to you to make sure each check you deposit won’t bounce. If it does, you lose the income plus the bank charges for NSF (non-sufficient funds) fees, which often costs more than the check itself.

6. Make sure you can invoice for business transactions. From the first time you conduct a business-to-business transaction, you’ll need to generate an invoice to get paid. You also need to track whether they pay it, and then mark it “paid” in your books. Fortunately, most bookkeeping software provides the ability to create and track invoices. But if you lack this ability, try using free options like a spreadsheet through Google Docs or a template document. You can find many of them by searching “free invoices” online.

Note: Each of these payment options carry associated costs. They usually charge a percentage of the transaction, a flat fee, or both. You’ll want to read the payment terms carefully and make the best choices for your business. A fee of 2.9% plus 30¢ might not sound like a lot, but it adds up over time (especially if there are cheaper options) and can take a noticeable cut out of your merchandise sales.

All of this fits with the basic tenet that you should be easy to do business with. Make it simple for your customers, no matter who they are or how they want to pay you, to give you their money. After all, if you can’t take their money, you won’t be making money with music.

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