| Most businesses, with strong customer demand, no. They can thrive on cash inflow.
Recording is not one of these types of business. At least the current environment. If you're leading the high life from the profits of this industry, you are part of a very few. Otherwise, you're doing it as a tax write off to offset some other concern. Not long term either, but in the short run, for a start up, it's a viable model.
I was being rather flippant but I look across the terrain of the music business and the vast cash source for most studios has been aspiring talent willing to spend money on demos. That cash source is drying up and today most aspiring talents are using their dollars on their own home studios.
If your building a home studio, as a start up business, you can lose profit 3 out 5 years (last time I checked, this may have changed) and the IRS looks the other way. After that time you either need to make a go of it or get out. So, if you're starting a new studio, tax deductions are viable to get over the equipment hurdle.
So long term no, it's not a viable option but at the start of things, you bet. As to the high life, well there is no high life in my opinion and I would retract that tax write offs will get you there. They can be a tool for trying to get there however. |