Category Archives: Accounting & Finance

Things every art business owner needs to know about accounting and finance

Financial Statements For Artists – Understanding The Balance Sheet

Mesopotamian Balance Sheet for Artisans

Balance sheets have been around for a long time! Annual balance sheet of a Mesopotamian State-owned farm, drawn-up by the scribe responsible for artisans: detailed account of raw materials and workdays for a basketry workshop. Clay, ca. 2040 BC (Ur III).

An important part of running your art business or any business for that matter is to be able to understand your financial statements and use this information to better manage your business.  You may get these statements from your accounting system, your accountant, bookkeeper or even on your phone.  In this article I am going to take a look at one of the most basic yet most useful reports – the Balance Sheet.  The balance sheet is a financial report which you may have seen or even prepared if you have ever applied for a home or other type of loan.

Unlike the Income Statement which measures your financial activity over a period of time like a month or year, the balance sheet measures your financial condition at a point in time and not over a period of time like a year, quarter or month.  This point in time is a date where a “snapshot” of your financial condition was taken.  These points could be December 31, 2014 or any other date in the past of your choosing.  One of the advantages of using an accounting system is that you can create a Balance Sheet by pressing a few buttons.

What’s a balance sheet all about?

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Financial Advisors For Artists – Who’s On Your Team?

Painting of accountant

Every art business needs good advisors and this starts with your accountant!

The people you surround yourself with play an important part in the overall success of your art business.  The accounting and finance world can be complex and is ever changing so it is important that you get good advice in running your business.  As your business grows, so may your needs for additional or different kinds of financial advisors.  You may need financial advisors for different purposes and in many cases it may make sense to use a specialist.  It is highly doubtful that a good bookkeeper or even CPA can fill all of your needs.

You need to make sure that you have access to and consult financial advisors as you need them.  Whomever you choose to help you with your accounting and finance needs, make sure that there is a high level of trust!  A good financial advisor will explain things to you and help you understand but remember, understanding of what you are getting into is up to YOU.

Types of financial advisors you might need

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Sales Taxes & Compliance For Artists

After_Reymerswaele_Tax_collectors_in_their_office

Tax collectors have been around for a long time and even the subject of art!

When working with students or people just starting an art business, I ask the question of how many of them have made a sale. Usually several hands are raised. I then ask them how many of them have a sales tax license and the number of raised hands is usually less. Just like any business, your art or creative business has to be in compliance with your local and state taxing authorities.

Sales and use tax compliance may get complicated especially if you sell your products or services outside of your local area. Many taxing jurisdictions require you to collect taxes on the sales of products and/or services. To make matters more complicated many taxing authorities want to tax the sales you make on the Internet as well. One thing is for certain: as local and state authorities struggle to balance their budgets and pay for services they are going to be looking for additional sources of revenue including the sales tax on your art or creative business.

The basics

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Artists – A Tool To Help You Make Better Business Decisions

Some examples of using Return on Investment in your art business

To answer questions like these a Return on Investment analysis can help you decide!

Every business is challenged with making decisions and your art business is no different. Some of the decisions you make may be creative while others are more business related. More often than not these decisions will have financial implications that will affect your overall profitability.

In making most business decisions you will be faced with choosing among various alternatives. How do you choose the best? In this article I will take a look at a tool that will help you choose among various alternatives called Return on Investment (ROI). You don’t need a finance degree to understand Return on Investment, it’s just a matter of understanding a basic concept and applying some simple math.

One of the questions that successful business owners frequently ask themselves is, “Was it worth it to do …., or should I spend X dollars on…” Business is a lot of trial and error to find out what works and what doesn’t – not everything you do will be successful. Many successful entrepreneurs have said that success was the result of a hundreds (or even thousands) of failures. Your art business is no exception.

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