Record Keeping – Ok, this isn’t the most exciting art business topic but it is something you need to pay attention to. Your records may be electronic or simply paper receipts – these are the kind of things that need to be organized and managed so you can have timely information about your business.
Today many more artists are using the internet to sell their art, collect payments, pay bills and run their accounting system. Other artists may have minimal record keeping requirements and a well organized filing cabinet is adequate. Whether your business is large or small, records are a part of your business life.
In this article I will give you some ideas and tips on how to get your records organized so you have more time to do other things like creating art.
The benefits of good record keeping
- Keeps you organized with things easier to find and less clutter
- Makes you more productive with less time wasted
- Saves you time when filing and paying taxes
- Keeps you informed on how your business is doing
- Allows you to spend more time doing what you do best – creating!
Tips on record keeping
What should you keep?
- Examples of records you need to manage include: sales invoices, accounts receivable, bank and credit card statements, receipts, contracts, employee time and payroll, accounts payable, travel and entertainment, equipment and supplies purchases, sales tax , project proposal and estimates, email, paper correspondence etc…
- For tax purposes the IRS has a good publication on the types of records you will need to keep – IRS Recordkeeping.
Organizing paper documents
- You need a place to store your records whether they are paper or electronic. Create an office or business space – this could be as modest as a filing cabinet next to a desk with a computer on it.
- Get a good file cabinet or folders to organize your paper records. Organize them by subject such as correspondence, invoices, contracts, bills to be paid, paid bills, bank records, receipts etc.
- For important documents get a document fire safe or bank deposit box. You may also want to use the fire safe to store backups that you may have on CD or DVD.
Organizing your business transactions
- Get a separate bank account for your business. This will allow you to keep your business and personal expenses separate.
- If you use credit cards in your business look into getting a separate account just for your business.
- If you make cash purchases for business purposes, keep the receipt and write on the back what it was for. Trying to remember what a faded invoice was for months earlier can be difficult.
- For travel and entertainment expenses keep a record of your appointments and mileage. You can use calendar or computer program like Outlook to record this information.
Don’t forget about your electronic records
- Organize your computer files so that you can easily find the files or folders you need. Don’t forget your computer screen desktop – use this space to display the files, folders or programs you need most often. Keep your desktop screen clean of clutter and be creative in organizing your digital desktop.
- For your electronic records make sure you have a good backup system. I recommend that you purchase an external hard drive and make frequent backups of all of your data. Don’t forget to backup your important online files as well. You may also want to consider using a cloud based backup system. It is not a matter of if your computer will fail but when. Don’t be caught without a current backup – trust me it isn’t fun, fun at all!
Your accounting system
- Accounting system – a great deal of your records are financial in nature. You have many choices when choosing an accounting system to fit your needs. If your art business does not have a great deal of transactions then you might be able to get away with just a spreadsheet. You may also prefer to have someone else keep your books such as an accountant or bookkeeper.
- You may also want to consider purchasing a computer accounting system such as QuickBooks – the basic software can be had for less than $200. QuickBooks also offers an online system and one of its advantages is that you don’t have to worry about backups and updates. Check with your accountant before you make a choice of the type of system that is best for you.
- Lastly stay up to date and don’t get behind on your record keeping.
Good record keeping will make your business life easier and give you more time to do all of the other things in life – not a bad tradeoff.
Neil McKenzie is the author of The Artist’s Business and Marketing ToolBox – How to Start, Run and Market a Successful Arts or Creative Business available in softcover from Barnes & Noble and Amazon and as an eBook from iTunes, Amazon and Barnes & Noble. He has developed and teaches the course “Artrepreneurship” at the Center for Innovation at Metropolitan State University of Denver, and is also a visiting professor at University College at the University of Denver.
Neil has over 30 years’ experience as a management consultant and marketing executive, working with some of the world’s top brands. Neil is a frequent lecturer to artists and arts organizations, a guest columnist for Colorado Biz Magazine, where he covers the creative sector of the economy, and the author of several articles for Americans for the Arts, a national arts organization. Follow Neil on Twitter: @neilmckenzphoto