Keeping track of income and expenses is essential, even if you don't own a business. And if you do own a business, things get even more complicated. There are paychecks to issue, taxes to track, and subcontractors to pay out. All of these details are a whole lot less challenging when you hire an accountant to oversee them. However, it is still important to know a little bit about accounting yourself. Dig into the articles on this website, and you'll gain a better understanding of accounting principles, what services accountants really offer, and the benefits of hiring these professionals to assist with your finances.
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4 Accounting Issues All Artists Should Understand
Dianne Graham
Working as an artist can present a host of issues that aren't common to other trades. If you're worried about your bookkeeping needs, consider these four issues that apply to accounting for artists.
Segregate Personal and Business Finances
When you are just starting to your art into a business, there can be a moment where it's challenging to keep personal and business money separate. Even if you've taken too long to learn how to properly segregate your finances, doing it late is still better than not doing it at all. Not only will this making handling your accounting work simpler, but it will reduce your exposure to liabilities attached to the business.
Get your business organized as a proper enterprise as soon as possible to make sure your tax situation is clear. It will have the added benefit of distancing personal finances from liabilities such as the business being sued, as well. Likewise, if you ever have to file for bankruptcy, this will keep your own money out of the blast radius of whatever goes on at your business.
Adopt Accounting Software
Once you've settled on an accountant, ask them what software they use. Most accountants will use pro versions of common accounting software. Make sure your accounting software is compatible with whatever your accountant is running.
Expense Everything Possible
Now that your artwork is a business, you have the right to expense a number of things. Painters, for example, can claim things like brushes, paints, canvases and other items as expenses that allow them to produce their work and turn profits. Get receipts for everything you purchase and drop them into a set of folders that are organized by year and month. When in doubt, keep the receipt and bring your questions to a professional. It's always better to have a few more receipts than you need than to end up wondering where a big one went.
Develop a Business Process
Many folks have a hard time mixing the pleasures of art with the reality of business processes. The harsh reality, though, is that untalented people with great business processes thrive while talented folks with no processes in place go under. Develop a billing and inventory system that allows you to document everything that goes out the door. Use accounting software to keep tabs on what sells and what doesn't so you can focus your efforts on being profitable while doing amazing work.
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