Financial Management for Music Professionals

Managing money can be challenging for any freelancer but especially for composers and musicians, where earnings can be very uncertain.

It is likely you have a portfolio of work, some of which you receive payment for immediately (e.g. live work and creative projects), and some that pay in the longer term (e.g. royalties you earn as a songwriter or composer).

In this resource, we provide some general tips on managing your money, as well as administering music-specific revenues. 

Budget and planning 

• Most of us spend more than we think, once we list all the things we buy, like that odd coffee (or two!) and take-aways! 
• Get an overview of what you’ve got coming in – income sources – and what’s going out – expenses – as well as an outline of your financial goals; this can be vital for planning ahead.
• You might find it easier to list your creative projects and work out how much they are likely to bring in over the next few months, and to what extent they are more focused on developing new work for the future. This will help you plan your time to ensure you are putting effort into both. 
• Aim to ensure you can pay bills and make time for creative work. 
• A regular source of income – whether from creative earnings, part-time work and/or benefits – will be important as part of your overall portfolio.
• Many PRS members supplement their creative work with part time earnings from elsewhere (see section on Diversify Revenue Streams below). This provides a basic level of security, knowing bills can be paid without too much stress.
• If you are interested in exploring what other type of work you can do, contact PRSMF to discuss coaching.
• For a quick easy read guide on budget tools and a template, see moneysavingexpert.com/banking/budget-planning
• Check out Stepchange as well stepchange.org/debt-info/your-financial-situation/making-a-budget for more information

Align with your career goals 

• Think about your career and life goals and ensure your budget fits with your roadmap. Creating a budget can be very focusing and will help you work out the activities which will bring in most value creatively and financially, and which are in line with your goals.

Track income and expenses  

• Keep accurate records of all your income and expenses. Use online accounting tools (e.g. Xero, QuickBooks) to track royalties, licensing fees, merchandise sales, touring expenses, and other financial transactions. 
• Regularly review and reconcile your financial statements to identify any discrepancies or areas for improvement.

Separate personal and business finances 

• From the point you write a song/music, pick up a guitar and sing in public (alone or with others) and get paid, you are in a business!
• It’s essential to keep your personal and business finances separate. Set up a dedicated bank account and credit card for your music-related income and expenses. 
• This separation makes tracking your financial performance easier and ensures you’re not mixing personal and professional funds (which can have tax implications). 
• In the UK, your choices are between self-employment as a sole trader or registering as a limited company. 
• Self-employment status is simpler, requires less administration, and is often suitable for small, low-risk businesses or freelancers. 
• You need to register with HMRC and complete a self-assessment form for tax.  
• Limited Company status offers more tax planning opportunities, reduces personal financial risk, and is ideal for businesses aiming to grow and scale. You would need to register with Companies House. You can begin running your business as a sole trader and register as a limited company as you grow. 
• You can also work as a freelancer or run a business alongside employed contracts. 

Familiarising yourself with basic book-keeping principles is time well spent. 

• HMRC also have several You-Tube videos on allowable business expenses and self-assessment tax returns.
• Free advice and information on Tax can also be found at taxaid.org.uk
• Whichever way you go, you’ll need to ensure you pay tax and comply with legal requirements and some professional advice might be helpful.
• The Musicians Union website also has information here musiciansunion.org.uk/legal-money/finance-and-tax/tax-advice-and-guidance-for-musicians 

Monitor cash flow 

• Cash flow management is vital in the music industry, where income can fluctuate.
• Track your cash inflows and outflows regularly to identify any potential cash flow gaps. This will help you plan for lean periods and ensure you have sufficient funds to cover expenses.
• Be aware that royalties after a play or live gig may take a while to come through – check too that your bank details are uptodate on your PRS account.
• If you do need to borrow, or have challenges with cashflow, you might want to investigate getting a 0% credit card. Moneysavingexpert.com contains useful advice and tips, including for those with a low credit score www.moneysavingexpert.com

Negotiate contracts and royalty agreements 

• Register your music for all rights (composer, performance and broadcast) and report usage and performance of your works for royalties at the earliest opportunity.
• You can send in your set list via the PRS online tool 
• When signing contracts or royalty agreements with record labels, publishers, distributors or event organisers, carefully review and negotiate favourable terms
• Understand the revenue share, royalty rates, advance payments, and other financial provisions. Consider consulting with a legal professional or financial advisor experienced in the music industry to ensure you get a fair deal. 
• There are various sources of advice from organisations such as the Musicians’ Union (Freelance Musician Contract Agreements | Musicians’ Union | The MU) 

Diversify revenue streams 

• As you know, income from music sales or live performances can be unreliable. Explore other revenue streams such as merchandise, licensing, sync placements, streaming royalties, brand partnerships and crowdfunding.
• Spreading your income sources can provide stability and help generate revenue even when traditional avenues are slow. 
• Depending on your career stage, your income is likely to need supplementing with music-related work including teaching, recording and producing, or other work unrelated to music in other sectors. Having another bankable skillset can help see you through any difficult times.
• If you are interested in exploring what other kind of work you can do, contact PRSMF to discuss coaching.

Control expenses 

• Keep a close eye on your expenses and identify areas where you can reduce costs without compromising quality.
• Look for opportunities to streamline operations, negotiate better deals with suppliers, and optimise your touring and production expenses, perhaps by networking and forming collaborations with your contacts. 
• Cutting unnecessary costs can significantly impact your bottom line.