The frameworks for sound operation are laid in the budget process. A budget is a summary of the way you believe the economic situation will develop, so it is a presentation of the expected revenues and costs during a given period, for example the coming year. The aim is to reflect expectations about economic operations and serve as a control and governance tool.

Preparation of the Operating Budget should be done in the preceding autumn so that from January on there is a suitable yardstick in place for planning operations. The budget should be examined and revised mid-year once results for the first half year are known.

There are a number of forms of budget that can be useful to gain an overview of how your business is doing:

The Operating Budget (also known as the Annual Budget) shows the expected revenues and costs during a fiscal year. The idea is to help you plan operations and it should be consistent with adopted action plans and focus areas. The budget is adopted by the company directors and becomes the administration's key tool for day-to-day operation.

When the Operating Budget is drawn up you must ensure that all particulars are obtained and taken into account. Here are some relevant factors in this process:

-    Fixed costs (overheads)

-    Variable costs

-    Investments

-    Currency

-    Revenues

-    Sponsor revenues

A key undertaking for most Event Organisers and Concert Promoters will be creating Event Budgets. An Event Budget gives an overview of the finances for an event. Here you set out the specific revenues and expenses involved, calculate how many tickets need to be sold, and at what ticket price. An Event Budget of this kind will be a great help when determining the ticket price for the concert and estimating the size of the audience. It is easy to make the mistake of believing that an event has made a profit, when in fact it made a loss when you add up all the transactions involved.

The Liquidity Budget is an overview of planned monies coming in (receipts) and monies going out (payments) during a period of time. Also known as the Cashflow Budget, it reveals whether there are sufficient funds to pay the bills as they fall due. The Liquidity Budget tells you something about your ability to pay.

When preparing the Liquidity Budget, receipts and payments are accrued over the relevant periods, for example for each month. It is a tool that helps keep track of how much money is available in each month and how much is needed for commitments. It is a budget showing how much cash is available during any given period.

Crew and salaries

Many people are likely to be involved in planning and organising an event. As a Concert Promoter you are responsible for safeguarding and taking care of these individuals and promoting a sound working environment.

Employee, free-lance or self-employed

An employee performs work in someone else's service. By contrast, a free-lancer gets a fee or other consideration for delivering a service. The major difference between the two is who bears the risk and cost. If it is the employer, then the individual is an employee. If it is an external or hired person, then the individual is working free-lance.

A self-employed person undertaking an assignment for a Concert Promoter does so for his own account and risk, and the Promoter only pays the agreed fee, without withholding taxes or paying National Insurance. On the other hand, employees and free-lancers are paid a salary less withheld taxes, and the Promoter must pay the NI contribution.

A Promoter who employs others has certain "employer responsibilities" he must attend to. One of these responsibilities is to obtain satisfactory insurance cover, and details need to be checked with the national legislation in the country in question.

Salaries include all compensation paid by the Promoter to employees (salaries) and free-lancers (fees) for the work done. It is important to note that salaries are more than the pure cash payment, and there are strict rules regarding other benefits (like meals, hotels, airfares) that are also defined as salary.

When you have launched a business, drawn up a budget and planned a concert or two, it is important to establish accounting procedures to be adhered to before, during and after the event. These procedures ensure consistent handling of commercial aspects by everyone in the organisation. It is also very important to identify exactly who has the "authorisation for expenditure" and identify other powers and authorities.

Drawing up sound economic procedures at the start of the year will save time and frustration later on. The most important rule is to always keep written documentation of every transaction. This includes all vouchers, receipts, payments and bank statements.

Important points in the accounts that deserve committed focus are:

-    Office routines, clerking and accounts

-    Cash routines

-    Authorisation for expenditure, signature powers

-    Refunds

-    Accounts receivable (outgoing bills) and accounts payable (incoming bills)

-    Processing and filing of commercial receipts, vouchers and ticket stubs

-    Bank accounts and cash management

-    Petty cash reconciliation

The rules regarding keeping the accounts are extensive and may be difficult to understand. It is not a simple matter to stay on top of complex subjects like taxes, VAT and other charges.

Yet during the start-up phase you should consider keeping the accounts yourself, if that is where your interest, desire and knowhow lies. Keeping the accounts gives you an intimate link to the "inner workings" of the organisation, and you will develop a firm grip on your company's financial situation. Still, as a rule of thumb, you should devote your time to what you do best, and hire other services from reliable professionals. This is also true for the accounts.

The Concert Promoter is often responsible for withholding and paying taxes when paying fees to international Artists. The local tax codes need to be checked for the country in question.

It is vital to count merchandise when it arrives. Stock-taking lists may be required, perhaps requiring signature and date, just like the Cash Ledger. When the Artist is paid, the count is re-run and unsold items are returned with the list indicating how much was sold and at what price. This is reconciled with the Cash Settlement to guard against spillage/ spoilage/ wastage/ theft. This tells the Artist how much to bill you for later. If you are selling merchandise for several Artists at the same Event, it is good practice to keep the sales venue well organised to avoid mixing merchandise.

For Promoters who claim a cut of the merchandise sold, this is calculated from the net sales. If the merchandise attracts VAT, then first you deduct VAT from the sum, before calculating the cut.

The Accounts provide a factual presentation of the Promoter's economy. The information can be used to steer the organisation in the right direction, and make prudent decisions. The audit process involves an external auditor who runs a quality check of the accounts, ensuring that they comply with legislation, regulations and generally acceptable accounting practices.

The Accounts are a summary of revenues, costs, assets and liabilities for a given period of time, showing the status of the company's economy, for example at the end of the fiscal year.

There are essentially two types of accounts. External accounts are an official document intended for external scrutiny that is open to the public (also called the Annual Accounts, or Financial Statements). The internal accounts provide details of revenues and costs throughout the past year (also called the Operating Accounts).

In order to prepare the accounts, all transactions in the organisation must be recorded. The process is known as book-keeping, and means that all transactions are supported by documentation (vouchers). In sum these provide a correct view of the economic standing. It is vital to register all vouchers as they arise, to prevent later tampering.

Financial statements

For each year the organisation is required to draw up financial statements comprising:

-    Profit and loss account (also called the income statement) for the year

-    Balance sheet at year's end

The shareholders' capital is the difference between assets held and debts owed. The operating result for the year will increase the capital if the result is positive (a profit), and capital will be depleted if the result is negative (a loss). If debts are larger than assets, the capital is negative.

If you invest in equipment of lasting value, then normally the value is reported on the balance sheet and depreciated over a set number of years, the estimated lifetime. As a rule, equipment with an estimated lifetime of at least three years, or costing NOK 15,000 or more, is depreciated each year for the estimated number of years. Depreciation is a means of spreading the cost over the asset's useful life, and represents the fair value of the steadily aging asset. For example, audio equipment that you buy for NOK 200,000, that has an estimated useful life of five years, would be depreciated by NOK 40,000 each year.

Each country has its own VAT rules that need to be consulted.

 
Registration, conditions and obligations

Each country has rules concerning registration, conditions, obligations and VAT reports.