Math, accounting, record keeping, and taxes. I know. Yuck. Most artists hate all of this, but it’s important that you understand at least some of the issues so that you’re not paying too much - or (maybe) worse, not paying enough - which could result in an audit, fines, and penalties.
A few years ago, when I set a goal to make a living as an artist, I decided that I would keep track of my expenses and income. Partly as a psychological boost – to show that I was serious about being an artist.
Recently my local art group, VAST
invited an accountant to talk to the group about tax issues for artists. I wanted to let you know what he said and give you some basic ideas to get started on your record keeping. I want to stress that he was talking specifically about issues related to artists in Texas, and he was just answering general questions. So if you need to know something specific to your situation, please contact an accountant in your area.
So here are some of the things he suggested:
Get a separate bank account for your art business
This helps simplify record keeping. Pay for your supplies out of this account and deposit your income from art sales, teaching, commissions, etc. into this account.
Avoid using a debit or credit card
People tend to spend more when using plastic as opposed to cash or checks.
Keep good records with financial software (like Quicken)
It’s easy to use and you can set up categories like art supplies, meals and entertainment, travel, education, etc.
Tax exempt status
Use tax exempt status to buy consumable items such as paint, paper, canvas, wood (anything that becomes part of your artwork). You have to pay tax on things you use but keep, such as brushes, tools, easels, tables, etc.
Forming a corporation doesn’t usually benefit you
Until you’re making $30K or $40K per year.
You can claim mileage but you must keep accurate records. The going rate right now is 44.5 cents/mile. You can keep a notebook in your car and jot down your odometer readings every time you drive to your studio, to meet a client, visit a gallery, etc. It has to be business-related.