Taxes and Record Keeping

By Karen Atkinson, courtesy of Side Street Projects
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Keeping records is vital to a successful business.  I have included a list of items that you should keep track of in the taxes section.


Things to consider regarding keeping records:

  • Get and keep a ledger, either on your computer or by hand, of all your income and expenses.
  • Keep track of your billing and collection of those payments
  • Keep track of your inventory of goods for sale.
  • Do this once a month at the minimum, and don’t wait until the end of the year.
  • Do your taxes on time, and remember to file your sales taxes according to the timetable (based on the amount of money you bring in).

This is a brief overview of what you need to keep track of for your taxes and is by no means exhaustive.  Plenty of Web sites will give you more detailed information, or you can contact your local government office.

You will need to file both state and federal taxes, as well as 1099 forms.  If you collect money for goods, you will need to charge and file sales taxes, which differ from state to state.  You may also be required to charge and file city taxes.  If you have employees, you will need to know the laws for employee taxes.  If you are overwhelmed, this is a good time to consider an accountant.  Be sure that your accountant understands the art laws, or you could get yourself into trouble.


You need to keep track of the following EXPENSE items:

  • Travel expenses
  • Office rental and expenses either at home or at a different location
  • Commissions or payment to managers or employees
  • Equipment used in your trade
  • Auto insurance and repairs
  • Supplies and materials
  • Special clothing or safety equipment for your work
  • Legal and accounting
  • Fees or services
  • Bank fees
  • Studio rent and expense
  • Utilities and phone/Internet
  • Entertainment and meals related to your business
  • Business fees
  • Rental of equipment
  • Publications and research materials, periodicals
  • Fees for workshops and other seminars
  • Memberships or other dues
  • Shipping or mailing
  • Repairs or maintenance
  • Insurance
  • Advertising
  • Sales taxes


You need to keep track of the following INCOME items:

  • Proceeds from the sale of your work
  • Income from rented or leased work
  • Wages or salary paid for work as an artist, including honoraria, commissions, fees and stipends.
  • Grants, awards and fellowship funds
  • Copyright royalties for published or distributed works
  • Advance payment for work to be completed in the future
  • Sales taxes

     

You should have the following information for each item:
  • Date
  • Amount
  • From whom it was received
  • Reason for the income or expense
  • Check number or other tracking number or indication of other form of payment (i.e.. cash)


This article is excerpted from Get Your Sh*t Together, an artist's professional development series produced by Side Street Projects, Los Angeles.  Visit their web site to order the complete series on CD-ROM.


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