Ok, I know this next part isn’t too exciting for us artsy fartsy folks, so I added in a little humor where I could, and hopefully it won’t be that painful. Starting your own business isn’t as daunting as some people might think; it just takes preparation and organization followed by ACTION. You may think that you don’t need to set up a sole proprietorship, but if you sell over $600.00 of artwork in one year, it’s time to get your small art business set up.
Here are a few steps to get your business started on its way:
• Decide on a business name – Business names are very important. Does it have a ring to it? Does it describe your business intentions? Can it be remembered easily?
• Make a list of possible business names if you intend use something different than your name. Take your list of business names to the records building or county courthouse of the city you plan to do business out of along with your driver’s license and social security number and see if the business name you want use is already taken. If it is, choose another one on your list and try it.
• Get your business name registered with the county/city. There is a small fee for this, so you may want to check on this beforehand.
• After you have registered your business name, it’s time to go to your local county tax office and set up a reporting plan. (Here’s where the fun really begins!) You will need the documentation that you get from the county records office when you register your business name, as well as your drivers license and social security number. The tax professional will ask you how you want to report sales taxes to the state comptroller.
• Reporting sales tax to the state comptroller can be done monthly, quarterly or annually. You decide how you want to report taxes based off of what works best for you. I do it once a year. In December, I get a letter in the mail from the state comptroller requesting my sales and my state sales tax payment for that year. You can even do your reporting online, which makes it a lot easier.
• Open up a separate banking account for your business. You will need all of the documentation from registering your business name and the info from the tax office.
• Make sure that all of your business purchases are paid out of your business banking account from that point forward. This will save you a headache and some Advil when it comes time to do your tax reporting to the state.
• If you have the funding availabile, purchase equipment and items that can help you run your business with ease, such as: a computer, printer, fax machine, cell phone, multiple carbon copy receipt booklets, folders, small filing cabinet, envelopes, paper, inkjets, tape, a stapler, staples, highlighters, paperclips, etc. All of these items are tax deductible, so please keep your receipts!• Set up a filing system to keep track of your business bank statements, receipts, art catalog and patron info, etc.
• Keep track of your business related expenditures such as: office supplies, art supplies, marketing expenses, mileage to and from places directly related to your business, etc. If you set up a little office or studio in your home, from which you work out of, that is separate from your sleeping quarters, you can deduct a portion of your rent/mortgage payment and utilities as business expenditures. In order to claim mileage, keep a small notebook in your car and write down the miles you drive while delivering art work to a gallery/client, going to client meetings, going to get supplies, etc. Be sure to save all of your receipts…you can’t claim what you can’t prove! (or you could and risk an audit)
• If you donate artwork to a non-profit organization, be sure to get a receipt for your contribution to their cause, this is will be a deduction for you.
• For the first few years of sales tax reporting and income reporting for your new business, you may want to hire a CPA or Accountant to help show you the ropes. When it’s time for you to report the sales tax and/or do your income taxes, you simply take all of your business expense receipts, and accounts receivable info (records of the money you brought in due to sales) to your preparer. Your tax preparer will let you know what documentation to bring if you have any questions. (It’s better to pay someone a little money when you’re just starting out to help you get the tax reporting right than to risk an audit…once the IRS starts auditing you, they don’t stop…or so I’ve been told.)
• Be a perpetual student and take advantage of free entrepreneurial advice when you can. Attend seminars, visit websites (such as www.score.org) and ask other successful artists about how they promote and sale their art. This will help your art business BOOM!
- Michelle McSpadden
No comments:
Post a Comment