Doing freelance artwork can be great, but it can also take a lot of work. Not only do you have to work on getting your art pieces out to customers, but you also have to keep track of insurance and tax issues. If you're artistically-minded that can sometimes be a challenge, but to avoid becoming overwhelmed at tax time, consider these suggestions.
Use a Bank Account Only for Your Art Business
Coming from an art background, it can hard to think of yourself as a business professional. You are probably still using your personal debit card and your personal credit cards to purchase your art materials and payments from customers. This can create a muddled tax situation at the end of the year that's more stressful than you expect. For that reason, it's very important that you open up a different bank account right away. Because it will be for your art business, the account should be a checking account. Then, have the discipline to only use your business account for art-related expenses. At the end of the year you'll find that it's easier to answer tax questions with information from your account rather than going through reams of printouts to find the information you're looking for.
Start Filing
If you don't have much experience with balance sheets and other financial documents, you may not realize that you may be eligible for work-related tax deductions if you're a self-employed person. However, you can only do that if you have sufficient receipts and other documents to show that you deserve those deductions. For that reason, you've got to file those documents throughout the year in a way that is organized and easily accessed.
For instance, you can go the old-fashioned way and buy a lot of different filing folders and drop receipts into the appropriate one as the year goes on. You could also decide to scan each receipt or document with your smartphone or scanner and then store the image on your computer. You can also back up those images on a flash drive or in the cloud. Being able to prove what you've spent on your art can pay off when you file your taxes.
As an artist, tax considerations can be stressful. However, when you pay attention to the pointers laid out in detail above, getting your things together should be somewhat easier. See a reputable Dave Ramsey recommended tax professional to get more financial advice that you can use to avoid problems with your taxes.
