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Bookkeeping For An Artist
Submitted: 2007-01-17 15:35:52
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Income in and expenses out being recorded into their proper accounts is the essential tasks of bookkeeping. However, each type of business needs special treatments of these items. And the art business has its own unique requirements. If you are an artist then I apologize for being so blunt, but the fact is when you are considering your financial records, you are manufacturer of a product to be sold. And such your “product” is treated as any other manufactured item would be. This means that each of your creations is entered into an inventory account until sold. This is the accounting theory that says you must match expenses with the appropriate revenue.
Both the manufacturing and construction industries use job costing to track the expenses incurred for each product assembled or built. An artist’s bookkeeper can take advantage of the job costing tool as well. In the cost of a piece of art work the costs of materials, such as paint, paper, ink, brushes, and miscellaneous small tools should be considered. But if you are using many colors and other items creating your piece than just how do you determine the cost of one piece of art? And what do you do if you go through several pieces of canvas or paper to create just one piece? Set up a job cost record for the piece to be created and then add the cost of the paper/canvas and other materials as they are purchased. If you are using items that have been bought previously for other projects, then add the estimated cost of what is used for this new piece. If when a project is finished and small amounts of materials are left over or if materials are discarded then you may chose to include the entire cost of these materials in the current project’s job cost record. Don’t forget to include framing costs, shipping charges, commissions, show expenses and any other expense incurred to get to a sale. I am using painting as an example in this article, but this bookkeeping method would apply to any type of art creation or craft such as sculpture, pottery, jewelry, etc.
I know that most artists or craft persons will not have the inclination or time to devote to these tasks – after all they are busy creating. But hiring a bookkeeper that has experience with your unique needs is well worth the money. The Internal Revenue Service looks closely at tax returns filed within these fields. They are looking to determine if what you do is a hobby or a true business. Having good records can make all the difference in whether they allow you to report certain expenses.
Copyright all rights reserved Bookkeeping R Us 2006 Donna MacMillan, certified QuickBooks consultant and president/founder of MacMillan Associates provides a unique set of services covering all aspects of successful business growth and financial health for all business types and sizes. Offering comprehensive, confidential, and professional services, MacMillan Associates can analyze, design or redesign your current systems to maximize productivity, cash flow and solidify your bottom line. Bookkeepers R Us is dedicated to honoring the profession of bookkeepers with current news and resources for bookkeepers and businesses. Our articles discuss the everyday details of running a business, career/education opportunities, workplace ethics/behavior, software choices and many other subjects to help you increase your value in the workplace and the value of your business. Visit us today to read free articles that will update your skills and knowledge and increase your worth within the business world! |
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