Tax Time
The two things sure to happen at some time in your life are death and taxes. We can discuss the former at 
another time, but taxes are around the corner. I’ve finished mine this morning, and it was a headache as usual.
I have noticed a lot of artists just operate under the table, selling things here and there, buying supplies out of their regular checking account, or on credit cards. But it can be to your great advantage to go get yourself a DBA (doing business as), and get a state tax ID#. You can claim your losses as a deduction on your taxes; you can even claim your studio space within your home. You can use your tax ID# to buy any supplies tax-free that you plan to use as a part of your artwork to be sold. It also forces you to see your money spent vs. money earned.
A business that is not making money is a hobby, so it helps to keep track of what you’re doing. Sometimes people are overwhelmed at the prospect of keeping track of income and expenses, and doing the resulting business taxes. It isn’t that difficult actually. Keep three folders- one marked “money in”, one marked “money out”, and one for bank statements. Which, by the way, you don’t have to have a separate account for business transactions, it’s just a lot easier in the end if you do. You might have a fourth folder to hold receipts and the like for things you haven’t notated yet.
A simple spreadsheet in Excel can tally up a few columns, keep track of sales tax collected, and let you quickly add up your profits and losses for the year. We do our taxes online using free software, (we’ve used TaxAct for four years now, they are great) but it wouldn’t cost much to have an accountant figure things out for you at the end of the year.
I used to be much more confused until my husband got me this great book for Christmas titled “Minding Her Own Business
Small businesses actually make up the majority of business in this country; it’s one thing we can be grateful for as citizens. Take advantage of the benefits allowed to small business owners, and make your art a viable career!
March 22nd, 2007 at 2:30 am
[…] for you do it yourselfers - my wife found a great book we’ve used the last couple of years for her art & framing business and my IM titled “Minding Her Own Business” by Jan Zobel. she briefly talks about it in a recent blog post: Tax Time i believe she is going to do a followup post at some point and break it down in the future for more detailed tax explanations. although the book is marketed towards women (HER OWN), it’s really applicable to anyone. […]