Back To Business: What Does It Mean To Be "Paid?"

The Back-To-Business Series: Index


Hey everyone. Me again! Before I get started on today's topic, I want to apologize for my spotty posting schedule of late. Simply put... things are getting busy here in Portland, and it's leaving me less time for sitting in the office and writing. In coming weeks I'll still strive to post a new Back-To-Business entry every Monday... but if I don't make it, you can bet I'm probably on set or prepping for my next project (there are OODLES coming up - I'm going to have a very busy August!) Be sure to put your email address in the box on the right-hand-side of this page, so changedetection.com emails you when a new post is added - or follow me on Twitter or Facebook. That's the best way to assure you're in-the-know when a new post pops up here.

So... as I've mentioned in previous posts, I'm going to be spending the next several entries talking about the resources we actors - and all businesses - need to manage so we can be successful and stay in business. Before we get into the specific areas represented in the "golden triangle," though, I want to speak to something that's important to all of us: getting paid.


Chances are if you're reading this, you consider yourself a professional. Professionals don't work for nothing; they expect compensation for what they do... that's one of the things that makes them "a professional."


Compensation, though, isn't "all about the money." Remember, as I've said so many times before, money is just a resource... and you've got other resources to manage in your acting career. A professional actor is no different than any other professional - s/he should never work for nothing... but that doesn't mean money is an actor's only concern when looking at the compensation offered for his or her work.



Now, I can already feel some of you starting to steam... bear with me. I'm not saying that actors shouldn't be paid money - hell, I like money! I like money a lot! I'm just saying that there are considerations beyond the money. Look, read all the way to the end before you pass judgement on what I'm saying - and then let me know what you think via email or twitter. I can take it (and besides, we have to put SOMETHING up on Wednesday :) )



Take another look at the "golden triangle" above... go ahead, scroll up. I'll wait.

No, really... I'll wait.

Still waiting...



Ok, you're back. The triangle represents the resources we actors use to conduct business, and as I said in my last post we need to find a way to balance those resources. There's more to "the business" than that, though - the real trick of any business is finding a way to build these resources while finding a way to balance them.


You probably understand this concept when it comes to your money... we all want to increase our money without spending too much in the process. That's called profit, right?

Well, the other resources in our triangle work the same way... we all need more time, right? Never enough hours in the day to get everything done... but we don't want to spend so much time trying to "get organized" that we end up late for that next appointment! We also don't want to gain the reputation that we don't have the time to devote to a project, or an important contact who might bring us money. We have to find a way to build more time into our lives, while still being open to those who want to pay us that money we're so worried about!


And speaking of "worrying about the money..." we also don't want to get the reputation that we're always after money... that the paycheck takes precedence over everything else! We want to spend our time working on things that mean something to us, right? That means being comfortable enough with our money that we can negotiate - but not come across as greedy or desperate about our rent!


So, what's all this got to do with the topic of today's article... gettin' paid? Like I said above, actors need a pool of all three resources in the "golden triangle" to do business... and they need to add to that pool with every project - the more you have of one resource, the easier it is to balance the others! How do you get more of these resources, though, to add to the pool?


You get them from being compensated for your work, of course. An actor should never work for nothing... but s/he should keep all three resources in mind when considering how he or she will be paid for that work.


Yes, money is important... will that project you're considering add to your reputation? Will you meet important contacts who will help you gain money down the line? Will and those industry contacts see you work in the finished product, and tell their contacts about you... thus saving you time down the road when you skip the audition and go straight to the producers?


How much time will the project take? Will it save you the time it takes to build solid material for a demo reel that can increase your reputation with those people I just mentioned who are looking to hire you? Is the money you'll be paid worth the time you're putting into the project? If you don't think your reputation will be increased by the project (because it's for a small audience, for instance... or because you're not allowed to use it on your reel) - is the money you're being offered worth it?


Above all else, caveat emptor folks... no one's going to look out for your business. No one's out to be sure you have all your resources covered. When considering what you're going to be paid for a project, remember that YOU'RE the one who runs your business... you're the one who's in charge of building it up to the next level. You're the one in charge of building - and balancing - those resources.


Let's get to work...


-Harold

Back-to-Business: A Taxing Situation III - Mailbox

The Back-To-Business Series: Index

Hey there folks

I actually got quite a bit of mail related to my last post in the Back-to-Business series. Some people were surprised when I suggested setting up a separate account for their acting income, and had a lot of questions about how to go about doing so, like...

... what you say makes sense, and I think I'll go ahead and set up a new account. I haven't made any money acting yet, though - won't my bank need me to put some money IN the account when I set it up? JL (Philadelphia, PA)

... what I want to know is what's the best bank to set up an acting account at? AS (Saint Paul, MN)

...When it comes to using money I have earned from my day job to pay for say a class or head shots, would it be best to take the money out of my personal account and deposit it into my business account in order to track the expenses and then note the deposit was not a payment for services or just pull from my personal account? LH (Portland, OR)

They probably will, JL. Depending on your Bank's policies, they might want as little as $5.00 or as much as $100.00 to start a new account. That doesn't mean that you have to make $5 or $100 as an actor before you set up your business account, though.

LH's question touches on this fact - businesses get venture capital all the time to help them start up; there's no reason why YOU can't invest in your business, just as a venture capital firm would, to help pay for your start-up costs. Just "loan" yourself the money you need to open the account - but record it in your records as a loan, not as income.

We're going to get a little more into basic accounting in a future post, but think of it like this - you as an individual are loaning your business a certain amount, with the understanding that your business will pay back you - the individual - in the future. Make a commitment to yourself (as a start-up business would commit to its investors) to pay that loan back within a year - heck, you can even commit to paying the loan back with some sort of interest. Setting things up with this in mind starts you down the path of thinking about your acting business as a business - It's makes your career about more than just going "finding a job." It focuses you on building a profit that you can return to your biggest investor - yourself.

As to the "best bank" to set your business account up at, AS... I can't really make that judgement for you. You have to look at the types of fees the banks in your area charge, whether they have a minimum balance requirement (more on that in a second), whether they offer checks and a Visa or Mastercard debit card (essential for paying your business expenses!), location, hours of operation... etc etc etc.

I myself prefer to keep the money I make in my community, instead of giving it to a large private bank... we've seen what some of the large private banks have done with our money in recent years. With that in mind, I've opted to keep my business account at a local credit union here in Portland. That's me, though... you'll need to figure out which bank is right for your needs.

...It sounds good in theory, but I don't make enough from acting to keep the money in a separate account. I have to pay my family's bills and that takes every dollar I get. BJ (Oakland, CA)

I see your point, BJ. Hell, more than that, I know exactly where you're coming from - there are some months where my business account has around $23.00 in it because I've taken "draws" out to pay my family's bills (again, "draw" is an accounting term... we'll get into that in a future post). We run into unplanned expenses from time-to-time, and the money has to come from somewhere. Luckily, the money's there - and it's ours to use.

Don't think of your business account as a "lock box" that you can't touch (remember Al Gore and the "Lock Box?" Still comedy gold...) If you're a Sole Proprietor, then you don't have to keep every dollar you make "locked up" for your business. You're not paying anyone's pension (unless you hire employees... but that's another subject entirely). As far as the IRS is concerned, your Schedule C income is yours to do with as you will.

This actually touches on another question I received:

... so if I put all the money I get from acting into a business account, how do I get it? Do I write myself a check for a salary? KD (Albuquerque, NM)

Yes and no. This is one of those accounting things we're going to get into later on... but as I said above, the IRS considers your 1099 income your money, to do with what you will. That means that you can write yourself a check (or transfer funds electronically through online banking) any time you like. It's not salary per-se, though... salary is an expense that businesses pay to employees. Since you're not an employee of your acting business - you're the OWNER of the business - you don't get a salary. You get paid as a "draw" on your business's "equity..." which isn't recorded as an expense for tax purposes.

As I keep saying, though, concepts like "draws" and "equity" are topics for a future post. For now, we're going to focus on tracking your income and expenses for tax purposes - and next week we'll focus on some tools for helping you do that throughout the year so tax season won't be so taxing. Keep your questions coming - email them to me, or feel free to shoot me a message on Twitter. Til then...

Let's get to work!

-Harold