Tour accounting can either be your best friend or mortal enemy.
Tour managers on mid-level club tours are often wearing multiple hats, and for whatever reason tour accounting is often pushed aside for later.
There is a misguided belief that you’ll be able to recall all of the financial transactions from memory.
Suddenly, you are multiple transactions away from that initial thought and you have no idea how you got there.
And thus is born the self-inflicted tour accounting suffer-fest on your off day.
The above scenario happens more frequently than you would imagine and it is 100% avoidable.
Tour accounting comes into play before, during, and after a tour and is arguably one of the most important components of a concert tour.
What is Tour Accounting?
Tour accounting, as its name implies, is the specialized financial management that caters to the needs of touring artists and their teams.
It encompasses a wide range of activities – from budgeting and payroll management to settling shows and liaising with business management.
Tour accountants work to ensure smooth financial operations while on the road, allowing artists to focus on their performances.
What Skills Does a Tour Accountant Need?
Tour accountants should possess strong financial management and analytical skills, with a thorough understanding of accounting principles.
They must also be detail-oriented, as the role involves managing large volumes of financial data and transactions.
In addition to these hard skills, soft skills such as communication, problem-solving, and adaptability are critical, given the dynamic and often fast-paced environment of a tour.
Does Tour Accounting Require a College Degree?
While not always a strict requirement, having a college degree in accounting, finance, or a related field can benefit a tour accountant.
Such education provides a strong foundation in financial management principles.
However, relevant experience in the music industry or event management, coupled with proven financial acumen, can also lead to success in this role.
You will see no mention of GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) in tour accounting.
Many successful tour accountants have learned along the way, out of necessity.
What is a Tour Budget?
A tour budget is a detailed financial plan that outlines all expected income and expenses associated with a tour.
It typically includes everything from band and crew salaries, production costs, travel and accommodation expenses, and other operational costs.
The tour budget serves as a roadmap for financial decision-making throughout the tour, helping to keep spending in check and profits optimized.
What is a Show Settlement?
Show settlement refers to the process of closing the financial books for each individual performance on a tour.
This involves reconciling all the revenues against all the expenses incurred for a specific show.
A proper show settlement ensures that all parties involved are paid correctly and that profit or loss from the event is accurately calculated.
How Much Does a Tour Accountant Make?
The salary of a tour accountant can vary widely depending on factors such as the size and popularity of the touring act, the complexity of the tour, and the accountant’s experience and reputation.
The tour manager usually handles tour accounting duties on smaller tours.
On larger-scale tours, dedicated tour accounting roles are more common.
Tour Accounting Responsibilities
Examples of tour accounting responsibilities include tour budgeting, road reports, settlement, documenting all taxes and withholding, auditing invoices, and payroll.
A tour accountant is responsible for ensuring that all employees on the tour – from artists to crew members – are paid correctly and on time.
This also involves documenting payroll taxes and making sure that all necessary deductions are accurately made and reported.
The accountant manages incoming payments (receivable) from various sources such as settlements and outgoing payments (payable) to vendors and service providers.
This requires meticulous tracking to maintain healthy cash flow and financial stability on the tour.
Much of the above work is done in collaboration with the artist’s business management team.
Expense Audits
Expense audits are a critical part of tour accounting.
These audits involve reviewing and verifying all tour-related expenses such as vendor invoices and hotel folios.
The tour accountant reviews invoices from vendors to ensure they’re accurate before approving payments.
Expenses incurred at hotels, such as room charges, meals, and other services, are scrutinized and reconciled against the budget.
Cash Management
Less and less cash money is being used on tours, but advancing cash needs and reconciling cash road reports are still required in certain instances.
A tour accountant must anticipate cash needs for different legs of the tour and make arrangements to ensure funds are available when needed.
Cash is often used when issuing per diems, reimbursements, gratuities, or when working with a production runner.
The accountant is responsible for tracking and reconciling cash used in day-to-day operations on the tour, ensuring that all cash transactions are accounted for and discrepancies are resolved promptly.
Credit Card Reconciliation
In addition to cash, credit cards are often used for transactions while on tour.
The tour accountant has to reconcile all credit card statements, matching them with receipts and expense reports to ensure accuracy and prevent fraud.
Automated reconciliation programs that match receipts to statements have helped to streamline this considerably in recent years.
Documentation
Staying organized is a key tenet of being a successful tour accountant.
This includes keeping track of all receipts and invoices.
These documents serve as proof of expenses and are necessary for accurate record-keeping, expense audits, tax filing, and in cases of financial audits.
Nightly Show Reports
Nightly show reports are summaries of the financial details of each performance.
These include income from ticket sales and merchandise, along with all show-related expenses.
These reports help in understanding the profitability of each show and inform financial decisions for future performances.
Taxes
Tour accountants are responsible for documenting different types of taxes associated with the tour.
These most commonly come in the form of local, state, federal, and international taxes.
State taxes are imposed by individual states in the U.S. where performances occur.
Each state has different tax laws that need to be complied with.
Federal taxes are levied by the national government.
The tour accountant must ensure accurate reporting to business management.
This allows for timely payment of federal taxes related to the tour income.
If the tour includes performances in other countries, the accountant has to navigate and comply with those countries’ tax laws.
These can vary widely and may involve tax treaties and withholding taxes.
Tax law is highly complex, and it is recommended to consult a tax specialist who can best advise on the tour’s unique considerations.
Business Management and Tour Accounting
Tour accountants and business managers work closely together, but there are important distinctions between the two.
Tour accountants offer specialized services that pertain to an artist’s road operation.
Business managers offer a full-service suite of services to help guide an artist’s career.
This can include but is not limited to tax planning, risk management, vetting opportunities, royalty audits, and strategic business planning.
Additionally, business management will offer services to help manage the day-to-day personal finances of an artist.
While a CPA or CFP certification is not a requirement for tour accountants, it could be a very useful skill for a business manager.
Conclusion
In conclusion, tour accounting is a multifaceted and critical aspect of successful touring.
It requires a unique set of skills and a deep understanding of financial management and the specific demands of the touring industry.
With a competent tour accountant on board, artists and their teams can focus on delivering great performances, knowing that their financial health on the road is in good hands.