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"The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There's also a negative side." Dr. Hunter S. Thompson  "It's a tough job, but somebody has to do it." David Stanowski To find older articles; use Search or Site Map |
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Thursday 07 April 2005 Selling Your Cover CDs! The first thing to do BEFORE you start selling CDs is to get a Texas state sales tax license. If your band operates as a Sole Proprietorship, click on the following link and fill out the form. There is no charge. For Sole Proprietors If the band operates as a Partnership, Corporation or LLC, click on the following link and fill out the form. For Partnerships, Corporations & LLCs Currently you have to collect a tax of 8.25% for CDs sold in the City of Galveston; the rates are different in other places. At the end of the year, the state sends you a form which must be completed, and sent in along with the tax due. 1. Selling at Gigs. The obvious place to sell your CDs is at your gigs. Most sales will be transacted in cash, and they are usually sold for a convenient round number like $10 or $12, to make it easier to make change. In such cases, the sales tax is included in the sales price. For example if the sales price is $10, you calculate $10/1.0825 = $9.24, which is the net to you, with sales tax of $0.76, which equals a total of $10. It is also easy to accept credit cards at live gigs by using a portable credit card swiping machine. These can be obtained at no cost, if you put up a small refundable security deposit! 2. Selling on your Web Site. If you have a web site, you can sell your CDs on it by incorporating a shopping cart into it, or more simply, by setting up a PayPal account and installing one of their simple buttons. If you don't have a web site, or don't want to do order fulfillment (packing and shipping), then CD sales sites are the way to go. 3. Selling on CD Sales Sites. One of the best is CD Baby. You can set up an account for $35, and they will sell, package and ship your CDs for you! However, if you produce your CDs through Disc Makers, they will wave the set up fee, and you can start for absolutely no cost!! You set the selling price wherever you want, and CD Baby gets $4 for every disc they sell. CD Baby CD Sales CD Baby will also let you use a portable credit card swiping machine for free, if you give them a $30 refundable security deposit. When you use their machine to sell a CD, they keep 9%, you get 91% of the sales price! You do NOT pay the $4 fee they charge when they sell a CD for you on their web site! CD Baby Portable Card Swiper You can also sell music downloads on CD Baby. With downloads, they keep 9%, you get the rest! CD Baby Downloads If you don't want to sell directly on your own web site, put a link on it to your CD Baby page! There are other CD sales sites; check them out. P.S. Look at Jam Indiana. 4. Selling at Record Stores. Record stores like Hastings are open to selling CDs of local bands, usually on consignment, and they will often work with you to promote the CD by doing such things as staging a live performance of the band with a CD signing afterwards. There are many ways to promote your CD on the Internet through services like Soundclick, which allows you to post sample MP3s at no cost! Sales of CDs are considered sales of inventory for federal income tax purposes. The Cost-of-Goods-Sold section is filed out on the appropriate tax return, for the type of business entity involved, which will compute the taxable profit by subtracting the total cost of the CDs (production costs + royalties) from the gross dollars of sales. Once again, I am NOT a record producer, I just play one on TV, so do your own due diligence on all these matters before proceeding! |
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