The area that many artists have a hard time with is accounting. Yet, having some accounting skills continue to be a very important skill for anyone looking to start their own art business.
Accounting is an area of business that art entrepreneurs need to master. As an entrepreneur you should 1) do as much of the accounting by yourself as you can 2) invest in a good accounting program 3) have a proper accounting system in place 4) learn to keep your personal and business expenses separate, 5) work to actively improve your accounting skills 6) get professional accounting help as needed 7) understand your real operating and sales costs and 8) keep track of your important accounting data.
Here are our top 8 accounting tips for any art entrepreneur:
Tip 1 – Do Your Own Bookkeeping
A lot of entrepreneurs do not like accounting. I admit that accounting is not my thing at all and I have to almost force myself to do it. Because it is not something I enjoy, I also understand a few things about why it is important for anyone who is an art entrepreneur to do their bookkeeping and accounting.
If you do your own accounting then you are going to better understand your own accounts and business, You will be clearer about your art business profit and loss.
Also, as an art business owner, you usually cannot afford to have people doing things for you that you can do yourself. So if at all possible, try to do the basic accounting and bookkeeping work yourself.
Tip 2 – Learn An Accounting Program
There are many great programs you can get that will help you to do your accounting and basic bookkeeping. Some of them are free and others will cost you some money.
What program you decide to use may also be determined by where you live. We use QuickBooks online. This is a very advanced program and is great if you have to file and keep the accounts for the USA taxes. If you live and work in the United States one of the basic QuickBooks programs may be great for you, but if you do not, you may want to consider finding a program that will work well in where your art business is based.
No matter what program you choose, accounting and bookkeeping will be so much easier with a proper accounting program.
Tip 3 – Have An Bookkeeping System
The one place a lot of people fail is that they push their bookkeeping back to do at a later date. Bookkeeping is the one thing you do not want to push back or it can all get really messy.
You should have a system in place this will help you to stay on top of your bookkeeping. If you can say that by the 15th of each month you will have done all the accounting and bookkeeping for the previous month, meaning you have closed and reconciled the previous month. To accomplish this you will spend a few hours each Friday to do your bookkeeping, which means putting your expenses and payments into the system. Having this kind of bookkeeping system in place will help you to keep on top of all your accounting and bookkeeping needs.
Tip 4 – Keep Business and Personal Expenses Separate.
If you are running an art business out of your home, then one of the hardest things is to keep the business and personal expenses separate. This is where things can start to get messy. One way you can try to do this is to have one credit card for your business expenses and another for your personal expense. This will make your accounting and bookkeeping also a lot easier.
It is important that you try to keep your business and personal expenses separate as much as possible. For some countries, like the United States, this is essential for your USA tax requirements.
Tip 5 – Actively Improve Your Accounting Skills
If you are not a CPA or you did not graduate with an accounting degree, the chances are that you will need to improve your accounting skills. Today so many YouTube channels give really great and valuable information. You can find some free training in accounting and bookkeeping on YouTube.
Also, read some accounting and other blogs that give you some good information. Find a way to increase your accounting skills and knowledge, since as an art entrepreneur, accounting is an important skill to have.
Tip 6 – When Required, Get Professional Accounting Help
There will probably be some times you will need some good professional accounting help. An example of this would be a professional to help you file your taxes or do an audit.
The rule of thumb for your accounting and bookkeeping should be that you do what you can do yourself and then you get the proper professional accounting help when and where you actually need it.
If you are making a lot of money on your art and you can afford to have someone do your accounting and bookkeeping then by all means have hem do it. Even if someone does it for you, knowing accounting is an essential part of an art business.
Tip 7 – Understand Your Real Operating And Sales Costs
Understanding your real operating and sales costs can be a challenge for a lot of artists as selling your art can be really subjective as to the worth. Some artists can command a very high price and others are lucky to get one painting sold. But for aa art business to be profitable you need to still clearly understand your costs.
There are a lot of ways that people will price their oil painting. One simple way to look at it would be for the following formula:
Supplies + Time + Overhead + (Profit)= Sales Price
If you are a very slow painter and your time cost is very high, you may need to consider this in your costing formula. Also understanding the market cost or what your painting can sell for will be essential for you to understand what your sales price can be. This is why you need to do your research as to what the cost of the painting can be.
Here Is how you can look at each of the areas for your cost analysis:
- Supplies – This should include the cost of your canvas. You can prorate the cost of the other supplies such as your paints and any other supplies you may buy. If you buy a tube of paint and it can last you a year or two years, then you need to calculate that cost for the entire year or two years and not just one painting.
- Time – Time should be the amount of time you spend on the painting. If you decided you wanted to earn 25 USD per hour and the painting took your 3 hours of straight work if you worked on it from beginning to end, then that would be 75 USD time cost in the painting.
- Overhead – Even if you are working out of your house you should assign an overhead cost to your painting, even if that is just 100 USD per month. You can again prorate your overhead cost for all the paintings.
- Profit – Profit is how much you want to earn from the painting, but this will also be subjective as to what the market can bear. Maybe you can only get paid your time out of the painting, then you have broken even.
If your sales price is too high, no one will buy the painting. If you are too low you may also have a hard time for anyone to take you seriously. Your goal with this costing should be to sell the painting at profit. This is why you need to do your market search to make sure your painting will sell at the price you have set for it.
Tip 8 – Keep Track of Important Data
Learn to keep track of important data such as expenses, sales, net profit, and gross profit. A lot of very good accounting programs will give you this and a lot of other data. This can help you to really understand the general financial health of your art business.
Accounting is a very important aspect of any art business. It is one of the essential skills that every business owner, including art business owners, should acquire. There are many who say that good accounting and cost analysis is at the core of any successful art business.
Does An Art Business Need A Brand Tagline?
A brand tagline is a short yet memorable phrase that you can use throughout all your art business marketing. All artists should have a tagline as a part of their marketing campaign. The brand tagline should show your personality, be genuine, take into account your customer’s needs and problems, and be something that is memorable.
You can find out more about why your art business needs a brand tagline by reading our blog Brand Your Art, Why Every Artist Needs A Brand Tagline by clicking here.
What Are Some Business Strategies To Help You Sell Your Artwork?
Becoming a professional artist is like being an entrepreneur. You have to learn some very basic business principles in order to survive. Some basic business strategies that you can use to help your art business are 1) make buying your art easy 2) find ways to make your art attractive to potential buyers. 3) show your customers how satisfied they will be when they purchase your art and 4) also show your customers how you are the clear and obvious choice for them when they want to purchase artwork.
To find out more you can read our blog on 4 Proven Business Strategies to Help You Sell Your Artwork by clicking here.
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