Financial Recordkeeping for Artists

Tax season isn’t “nose to the grindstone” every minute. I got a fun break from my computer last week when I taught a financial recordkeeping workshop for the Arts Enterprise Institute, a unit of Arlington Economic Development. The workshop, Business Skills for Artists, provided artists who create beauty in many forms – sculpture, painting, and ceramics – awareness about business finances with their needs in mind. 

The twelve creators in the workshop started their businesses to create art, not to keep financial records. They came to the workshop to understand their business finances and to make informed financial decisions. I am very happy to say that the attendees said that they got what they came for from the workshop. Yay!

We covered a lot of ground in two hours. Here are a few artist-focused highlights:

  • Cost and Pricing – Pricing artistic creations was a popular topic. There is no easy formula, so we focused on what to consider. We started with knowing the direct and indirect costs of creating your art. Your time investment is important, but it is not possible to be remunerated for your time. Price should reflect the special piece of your heart and soul that goes into your creations. Another consideration is the market for art in your area or within your creative niche or genre.
  • Hobby or Business – Many creative endeavors do not make a profit, even after working hard at it several years in a row. That doesn’t necessarily mean that you are dabbling in a hobby. If you satisfy nine IRS tests, you are running a business. The nine IRS tests include whether you maintain complete and accurate books and records, whether the time and effort you put into the activity indicate you intend to make it profitable and whether your losses are due to circumstances beyond your control (fairly typical for an artist).
  • Track Income and Expenses – Like any other type of business, collecting the details of all funds that are coming in and going out is essential to understanding the financial health of your creative business endeavor. How do you know the status of your business finances without a complete and up-to-date report of where your money is? Many user-friendly tools are available to help you track and report financial information.

Artists who attended my Business Skills for Artists workshop certainly didn’t start their businesses to keep financial records. They showed a lot of commitment to the financial success of their art to invest time and effort learning to understand their business finances and make informed financial decisions. Based on the feedback that I received after the workshop, they considered their time investment well spent.