Accounting Basics – Expenses

DJ Lazy Rich Accounting Leave a Comment

The various costs incurred when putting out a release can quickly amount up to a large amount of money, not to mention all those pesky Label Engine subscription fees! The expenses section allows you to keep track of all these costs and fees and also pass on some of the expense to your artists if your label policy requires it.

The expenses section acts as a record of each invoice you receive – for each invoice you add an expense, and then add the individual items that are on that invoice. To add an expense, head to the expenses page, enter in the client that charged you the expense, enter a reference for it, enter the accounting period the expense is from and also select the invoice file (typically a pdf) from your computer if you have one.

Next, you can go ahead and add each item that’s on the invoice. For each item, enter the amount the item is for (if the item is in a different currency it can easily be converted to you own currency using the ‘update’ button), and enter a description of the item (this description will be displayed on artist statements so put in something meaningful). If you wish to link the expense to a release, you can select the catalogue number.

By default the expense is assigned to the label you select, however you can if you wish assign the label to one or more artists, for example if you want the artist to be responsible for mastering or artwork expenses, or if they had agreed to pay a percentage towards the costs of video production, or if you’re just cheap. If you have set up pre-allocations, you can select from these to assign allocations for the expense in the same way as you have for the release – remixers will be automatically treated as artists.

Another useful feature of the expenses system is the ability to allocate an expense according to a royalty statement. This is useful if you have incurred banking expenses when receiving payment for a statement, or if you want to deal with the dreaded Beatport Promotional Expenses correctly. Simply enter in the expense, and then select the correct statement by clicking ‘Allocate according to Statement’. The expense will be split among all artists that are owed money from that statement in the correct proportion to the amount they are owed i.e. if an artist made 10% of the statement total, they will be responsible for 10% of the expense.

As mentioned in the Accounting Basics – Accounts article, the expenses section should be used for recording remix fees and the account drop-down can be used to ensure the expense is deducted from the original artist’s share of release sales.

Expenses will be added automatically for any subscription fees or promotional fees payable to Label Engine, so you can even count these as costs that your artists are responsible for if you wish -just don’t try to allocate any of those expenses back to me 😉

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