Practical Tips to Easily Understand the Financial Performance of Your Art Business
A full time career in art isn’t something you can immediately decide on; not unless you’re fortunate to be endowed with funding to support an art business. Regardless, even if you have the financial means for making art your full-time business, you will have to deal with financial matters at some point in time. That is, if you want to preserve the longevity of the resources that enable you to dabble in art without tinancial constraints.
Financial recording, planning and analyzing records and transactions might not be your cup of tea, so you’d think hiring someone to do it for you is the best solution. However, bear in mind that an obvious lack of interest and knowledge over such matters can make you a vulnerable target for financial misdeals.
Segregate Finances for the Art Business and for Personal Funds
Establish a clear financial structure for your art business, to at least have financial security, Getting your finances in order is not complicated as you may think, Although you have to figure out how much you can really afford to spend to fund your artistic freedom and how much you need to cover as basic cost of living without need to rely on the sale of your art works.
That way, you’ll have awareness of your financial limits when contemplating to spend your life as a full-time artist. It’s as simple as having separate deposit accounts to physically separate business funds from personal funds.
Segregation in two different accounts will enable you to keep track of how much money the art business is bringing in and of how much it is using for materials, cost of utilities, maintenance, rent and similar expenses.
Any money transferred from the personal account to the business account indicates that not enough was generated by the art business. If on the contrary a certain amount was transferred to the personal account after all business expenses have been paid, it denotes that there’s a surplus in the money generated.
It’s a simple technique of immediately knowing if your art business is self-sustaining; or if you need to look for other channels with which to market your artistic creations.
Consider Using Digital Tools and Applications When Dealing with Different Financial Resources
While this technique is practical as it is, but only if you have few income and expenses to take into account. Remember, independent artists who produce and sell art as a business also have to pay taxes.
As opposed to selling through art galleries and dealers from which taxes are withheld before the proceeds are transferred to the artists, you have to pay the taxes generated by your art business. Here, your art pieces pose as the business inventory, and all expenses related to any inventory sold during can be used to reduce the taxable income.
Well okay, it’s beginning to sound complicated, which is why we recommend using accounting software like Quickbooks. That way, even if you don’t have to do the accounting yourself, you’ll have a clearer insight on how the money coming and out of yout art business is having a positive or negative impact on your personal finances.
As starter, we suggest a visit to smartshopperusa where there’s a broad array of financial tools with great offers for smart shoppers.