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Your Art is Your Business: Making Time for the Business to Keep Making Art

There are three things that work against artists making a living from making and selling their work: the (seemingly) fickle nature of people’s taste, the fickleness of the market, and (sometimes) the artists themselves.

Movies and television have fed us that trope for years: the temperamental artisté who isn’t good at “real life.” The writer who won’t use a computer. The painter who hates cell phones. It’s not that there’s anything wrong with liking typewriters or hating cell phones. But if you are counting on being discovered, lauded for your eccentricities, and left alone to create while other people handle your money for you, you might be waiting a really long time.

If you’re not interested in making a living with your art, that’s one thing. You working a day job and you make the time to create. But if you want to make a living with your art, you can’t afford embrace that faux artistic temperament and ignore the practicalities of running a business.

If you’re going to make a business of making art, you need to be able to approach it, in part, as a business. It helps to start doing that from the very beginning. That means creating a workable business plan.

What you need to know about creating a business plan

The Mission and Vision Statements

Every business plan, and every business, begins with mission and vision statements. Naturally you know why you’re an artist. You understand the drive it requires. But there’s something about putting it down in writing, codifying and clarifying it so that as you move forward, they are more than words on a screen. They are the foundation of your future success.

Goals

Yes, you want to create art and sell it. That’s the larger goal. Establishing some benchmark goals, however, will help you plan the steps you need to take in order to make that a reality. Where do you want to be in three months? Six months? Nine months? A year? You want your goals to be ambitious, but they should also be reasonable. You want to be able to march forward, but you also want to make sure that your goals aren’t so abstract that you grind to a halt when you hit a stumbling block. (And you will.)

Identify your customer

No, it’s not about making art to satisfy a customer. It’s about focusing your marketing and social media strategies to create the best possible outcome. The thing about being an artist is that while it may sometimes feel like no one notices what you do, it’s important to remember that there is an audience – and a customer – for everything. The hard part is knowing how to focus your marketing so that you’re working smarter, not harder.

 

That’s really the entire trick to giving the business enough time so that you can keep making art. Work smarter, not harder. It means more than just being comfortable wearing multiple hats and working on multiple levels. It means that, on some level, you thrive on it.

Starting and running your own business is always a risk, regardless of the kind of business it is. Turning your art into your business is a unique kind of risk, though, because you’re risking more than just the very important tangibles of time and money. You are also risking that intangible part of you that drives your art and makes you who you are.  The bravery required to put your passion on the line is necessary. But you need to protect that passion as much as you can.

However, if you forged ahead without a business plan, that doesn’t mean you can’t sit down and write one out. There’s never a wrong time to sit down and rethink how you’re doing things, and creating a business plan is a good way to re-evaluate and reorganize your business so you can focus on your art. There’s plenty of information out there to help you, too. Remember, part of working smarter, not harder means making use of available resources. Check out the Small Business Administration (SBA) Small Business Development Center, and SCORE a nonprofit association dedicated to helping small businesses in your state.

Last minute tax tips for small businesses

As the April 18th deadline for filing taxes looms on the horizon, you may be in the enviable position of having already filed your tax return. If you haven’t already filed, however, as a small business owner or entrepreneur you are probably working overtime to get it done. Depending on the kind and size of business you run, you might have a tax preparation professional do your taxes for you. But you may be just starting out and want to save the expense; if that’s the case – and even if it’s not – there are a few things to keep in mind.

1. Know what you owe

As a small business, you should probably be paying your taxes quarterly. These payments can be easy to forget, though, especially if you are a sole proprietor working in the creative economy or the gig economy.

If you did make your final quarterly payment on January 15th, make sure you take that into account when you file. Take the time to deduct any levies or account for any late fees and penalties the IRS may impose if you happened to miss a payment.

2. Accelerate or defer.

Many sole proprietors use cash basis accounting – which means they report income when payments are received. Depending on the kind of business you have, you might consider scheduling your billing so clients can pay early in the new year for work you completed late in the previous year.

The advantage to this is that you’re getting income early in the year.

However, if you had a successful year you could accelerate your deductible expenses. There are a few things you can do to help relieve your tax burden if you plan ahead, such as:

  1. making extra charitable donations,
  2. renewing professional journals and licenses before the year ends, or
  3. replacing old business equipment.

If you are in the position to, you might also consider

  1. prepaying your state income tax,
  2. selling an investment property at a loss, or
  3. selling securities at a loss.

If you’re a small business owner or entrepreneur, there’s nothing you can do about taxes. They are as much a part of your business as your customers or client base. The trick to making it all less odious, though, is to be proactive. Think ahead early in the year so the end of the year doesn’t hit you any harder than it needs to.

Timely Tax Tips for Freelance Workers

There is a cost to the freedom you get being a freelance worker. While you can probably fudge on office-appropriate attire and set your own start time (Sleeping late can be a viable option!), there is one thing you can’t avoid if you hope to be successful.

Taxes.

When able to, a lot of freelancers prefer to hire an accountant. There are a lot of things to keep track of; and while tax law for freelancers really is a lot of common sense if you think about it, the problem is that there is really a lot to keep in mind. As a freelancer, you are your own employer. In addition to the usual responsibilities of a working adult — the electric bill, the water bill, the gas bill, and your rent or mortgage – you are also responsible for your obligations as your own employer. This means paying into Social Security and Medicare, and perhaps setting up a retirement account.

We’ve already talked about the self-employment tax . It’s important to keep in mind that because you are both and employer and an employee, that you are responsible for the Employer and Employee portions of Social Security and Medicare, 15.3% of earnings. It’s true that you can offset earnings with deductions; but you need to be as careful about what you pay as you are about what you don’t pay.

Here are a few things to keep in mind that will help you stay organized.

  1. Don’t trust your 1099.

If you earn $600 or more from a client, that client should send you a 1099-MISC. It’s very important that you compare. Look at Box 7 on your 1099-MISC and compare that number to the number you have in your records. If your client claims they paid you more than your records state, go through the steps to verify and get a new 1099.  Remember: the tax burden is on you, not your clients. The IRS won’t annoy them with phone calls and letters. They will annoy you.

  1. Get a separate bank account.

Yes, you work for yourself. It’s your money and if you’re making less than $600 total, you may not need a separate business account. If freelancing is your primary source of income, however, you really should consider getting a separate account. This will save you headaches when looking up transactions. If you use accounting software like QuickBooks, having a separate account will make it easier to download information to plug into your books. It also makes it easier to track business expenses for deductions.

  1. Pay attention to Estimated Tax.

As a freelancer, you will probably have to pay taxes quarterly instead of just once a year. You’re also an employer, remember?

If you’ve been freelancing for more than a year, you can get a good idea of what you should plan on paying by using one of several easy to use calculators on line such as:

http://www.bankrate.com/calculators/tax-planning/self-employed-business-tax-calculator.aspx

or

http://quickbooks.intuit.com/r/free-self-employment-tax-calculator-quickbooks/

It’s not always easy being your own boss. But it’s not impossible. And if you are the kind of person who enjoys the autonomy, then the additional responsibility is part and parcel. The trick is to be as careful with your books as you are with the work you do, and to be smart about it.

Help your accountant, help yourself: a few tips for home-based entrepreneurs

 

A 2013 article from Small Business Trends stated that 69% of entrepreneurs in the United States start their businesses at home. This makes perfect sense. Many new businesses are in part or entirely operated online. As people buy more and more goods and services online, there’s less need to take the expensive risk of investing in a brick and mortar business. Moreover, if you know what you’re doing, you can help yourself – and your accountant – come tax season.

Although it takes additional time and a few extra steps, you can really help yourself by understanding the upside of claiming a deduction.

First if all, you know need to know what you can and can’t deduct. It’s a good idea to check with the IRS regularly to see if these things change, but here are a few things you can deduct.

The cost of a home office

In order for this deduction to pass any potential audit, you need to make sure the space you call your home office is a separate space or separated and dedicated space in your home. It doesn’t have to be its own room, but it can’t be a multipurpose space, either. For example, many people use an empty additional bedroom as a home office. Others have a separate studio or redesigned barn they use for a home office. If you are using a corner of your basement, that’s fine, too. Your home office doesn’t have to have four walls and a door.

But you can’t set up computer desk in the corner of a guest bedroom or nursery and call it your home office. The key here is that it must be a regular and exclusive space you use to run your business.

You must also be able to show that your office is the principle place of your business. Even if you meet clients other places, you need to be able to show that you do the majority of your work in your home office.

Keep in mind that the IRS only allows up to 300 square feet. But they do allow for $5 for every square foot up to 300.

Technology and technology purposes

It’ll be a hard sell to convince anyone that if you have one computer that you are only using it for business purposes. If you do that, though, you can deduct the cost of depreciation.

If you decide to purchase a dedicated business computer, you can write the cost of it off. After that, you can write off the cost of depreciation. You can even deduct based on the percentage of use. TurboTax is very helpful with this.

You can also write off the cost of a dedicated phone, whether it’s a cell or landline.

It’s worth the hassle

When you’re starting a new business, whether you operate it out of your home or not, every penny counts. Staying on top of and taking advantage of tax laws can help turn a slow first year into a much better second year.

The most important thing to keep in mind is that keeping track of all your expenses, and keeping all of your business receipts will make it easier in your end of year accounting and tax preparation. You will save yourself and your accounant time, money, and headache down the road.