I imagine a visual artist at tax time in a paint-splattered smock, standing before a desk (easel to one side), paint brushes in one hand and a crucifix in the other. The crucifix of course is pointed in the direction of tax forms on said desk.
Since my under graduate degree was in Accounting this should be a snap. However, that was a degree of convenience and although I graduated Magna Cum Laude it was not the course of study I would have chosen under different circumstances. That’s one thing that helps me where some artists might falter.
I also get some aid from my personality type as defined by the Myers and Briggs tests. According to those tests I’m an ISFJ with the ‘I’ being almost off the scale and the ‘J’ just as extreme. But that ‘J’ allows me to, nay demands that I, plan. So I organize and plan all year hoping I’ll be able to just print out the figures the accountant needs. However, no matter how much planning I do I still end up with last-minute add-ons to the records I’ve kept during the year. And I’m torn between the absolute soul-wrenching need to work and the horror of not getting those damn taxes done on time.
The tax work is currently winning out in my struggle and I thought I’d share some approaches that might make life a little easier for other artists, at least for tax year 2013.
A critical act to getting organized for your taxes is categorizing all those pieces that have to be reported. While I am fairly technologically savvy I still use hard files in addition to anything stored on my PC (and back up on either CD or USB device stored). So folders labeled with the appropriate categories are created and can be used for future years as previous years’ paperwork is bundled and put away in a large envelope and labeled Taxes Year XXXX when the process is completed, right?
Here are some categories to consider: Sales, Sales Taxes, Insurance, Vendor Fees (framers, printers, etc.), Membership Fees/Dues, Exhibit/Submission Costs, Legal, Postage, Supplies (both office and work), Equipment Purchases, Advertising/Marketing, Travel – Lodging, Travel – Meals, etc.
If you work from home then apply the percentage of space used to utilities and, if you require it, internet provider fees. You must have a dedicated studio space in your home to do this though. In addition to all those categories we can’t forget the usual suspects: Medical costs, Prescription Medicines, Property Taxes, and Charitable Contributions. I know you’re seeing a filing cabinet looming in wavy motion before you as you get dizzy from all the folders needed.
I also use an MS Excel spreadsheet to enter the expenses as they occur and have it feed to a worksheet at the end that keeps a running total of each category throughout the year. Where I’ve faltered is in entering the information regularly. So this year I’m adding a folder that is simply items to be added to Tax Spreadsheet. The plan is that this folder will lay in a strategic location where receipts can be slipped in and once every two weeks I’ll sit down and put all the data into the spreadsheet. I’ll let you know next year how that worked out. Oh, a simple tip for online purchases-print out the email from the supplier showing the totals and slip it in the folder. Not only is this great for overall costs but it can help keep track of your inventory costs as well.
The other crucial tool to have is a notebook in your car to keep track of the miles you drive for your business. You can make your own, use a downloadable template or buy one ready-made. Again, where I faltered was being diligent in writing in the mileage. I know I’m losing out on some business trips this year because I failed to enter them in my book. Keep the book and a pen in your car and wait until the end of the year to take it inside and tabulate your mileage – not doing so was the source of at least a couple of my missed entries.
I’m still not where I want to be in this arduous but highly necessary task but I’m hoping I’ll keep tweaking my process until tax time no longer brings on panic attacks and guilt at not working on my art.
This approach can also be used for other parts of your artistic endeavors. I keep a expandable file folder with my ongoing information. In it there’s a folder for Exhibit Prospectuses, upcoming exhibit paperwork, current exhibits and shows, marketing tips I run across, blog ideas, gallery lists, and submissions awaiting response. It’s also a great place to keep current hard copies of Bio’s, Artist Statements, and resumes and CV’s.
Admittedly there’s a lot of work to be done up front but it can pay off in the long run – if you use it!
Another thing I’ll mention, and no I’m not paid by anybody to tell you this, but I found a great program this year that, again, if used properly can store information on inventories and works (costs, prices, images, sizes, dates, etc.) all in one place. If you are looking at a way to get all this information in one place take a look at Working Artist. I priced a lot of database storage systems before stumbling onto this reasonably priced, fully functional, system designed by an artist.
If you have ideas about how you organize your business information or art and inventory data please share in the comments here. We can all benefit since one way of doing things doesn’t work for everybody.
Here’s hoping the tax information gathering is almost complete! I’ve got work to do!
- TurboTax – Video: Changes in the Standard Deduction for Certain Tax Filers (turbotax.intuit.com)