A couple of weeks ago, I had the pleasure of teaching a financial skills workshop for the Arts Enterprise Institute in Arlington, VA. The workshop objective was to bring awareness of managing business finances to artists who create beauty in many forms – sculpture, painting, and ceramics. One class participant was a make-up artist, who uses the human face as a canvas.
The ten professional artists in the class started their businesses to create art, not to keep financial records. They gave up a beautiful Saturday afternoon to learn tips and tools to get control over and understand their business finances, and to make informed decisions about pricing their work and assessing their profits and sustainability.
We covered a lot of ground in two hours. Here are a few highlights, based on the artists’ enthusiasm and questions during our time together:
- Track Income and Expenses – Collecting the details of all funds that are coming in and going out is essential to understanding the financial health of your business. 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 to manage your business.
- Budget and Forecast – Planning your income and expenses provides a roadmap for your business. Start building your budget with the income and expense items that you know, like rent and fee contracts. Estimate other income and expenses based on your plans, knowing that you will have to make adjustments as you learn more information. Forecast your expected cash flows to ensure you have funds available when you need them.
- Manage Your Cash – Use a separate a bank account and credit card for all business transactions. Having all of your business financial activity separate and in one place makes it easier to identify, understand and manage your business’ overall financial health. Reconciling your business bank account within a few days of receiving your bank account statement is very important for staying on top of your funds.
- Pay Sales Tax – Selling a work of art is considered a “taxable product sale”. Your state and county want a share of your sales in the form of sales tax. Every location has its own rules. Here in Arlington, sales tax is collected by the business and remitted to Arlington County, which forwards the state portion on to the Virginia Department of Revenue in Richmond. The more tax you collect, the more frequently it has to be remitted.
The Arts Enterprise Institute Financial Skills Workshop was a valuable investment for the ten professional artists who gave up a beautiful Saturday afternoon to sit in a conference room learning about business finances. One of them sent me a lovely e-mail the next morning, “Thank you for a fun and informative workshop… I have clear next steps to professionalize and organize my painting career, and I am looking forward to getting everything in order.” Those kind words made it totally worth for me to be indoors on a beautiful Saturday, too.