Tutorial: The Business of Art
How to start your own business as an artist
You know, one of the strange things I noticed while in art school was that there was a distinct lack of direction for how your life will be outside of academia. What does this mean? Well, simply that if you want to be an “artist”, and are not independently wealthy, you have to not only think of yourself as a business but become a business as well. It seems simple enough, but when I first went out to set myself up as a business, I realized that there was much more to it than just printing off a few business cards and calling it a day.
“This all sounds tedious and unnecessary” you may say. “I’m an artist, so why should I be a business”? Well, that’s all fine and good to think, but the reality of it is this: if you wish to make a living as an artist, you MUST be established as a company. Sorry to be the one to tell you that, but the taxman’s not going to take too kindly to you should he find out you’ve been doing business under the radar. Just the facts of life guys. So you gotta do it. >)
Not only that, but you get the most uber awesome gift of all!!!! TAX BREAKS!!! That’s right folks, anything that you need to produce artworks or other items you sell are tax exempt. This is because when you buy retail you pay tax and when you sell, you collect tax, and pay that to the man. That’s why you are exempt, so no double taxation! Yay for business tax breaks! To break it down for y’all, this means all the paint you buy, all the photo prints, all the paper, clay, etc… All this is tax free to you!
But wait! There’s more! One word… WHOLESALE! When you become legit, you get an EIN number, which gives you the super power of being able to buy directly from wholesalers. So you will never have to buy over inflated retail art supplies ever again! Pair that with no taxes and you’re saving so much money! My only regret was that nobody told me about this in art school! I could have saved a fortune!
So there’s a few things you have to do to get started up. And a few questions you need to ask yourself. What will your business name be? What’s your business model? Where will you sell your goods? Pretty much the easiest route is to become a Sole Proprietor and operate via internet or market sales. An LLC is fine too, but the coverage from “damages” isn’t as extensive as the definition may lead you to believe. Also, starting a gallery or physical location involves a lot more steps that I wont get into here, but you can go to your local Small Business Development Center for more (FREE) information.
Getting started is fairly easy though… Just lots of little obnoxious parts. So here’s sort of a list of things that you need to do to get set up.
1. Create your business name!
Unless it’s your full name (and I mean full, first and last), ie “Shawn Tommelleo Photography”, then you’ll need to file for a Fictitious Name! For some reason I’ve heard this interchangeably with “doing business as” but it’s really a fictitious name. So hold onto this in your head for now, we’ll get back to it soon.
2. Get your EIN!
This is my favorite part because this number has served me well. Quite possibly the easiest step too. All you have to do is call up the IRS! I know, it sounds scary, but the IRS actually has the most helpful and nicest customer support staff I’ve ever spoken with. Probably cause they want to facilitate getting your money with as much ease as possible. Anyways, go to THE IRS WEBSITE at this link which has the phone number to call. Getting the number is FREE and pretty darn instant. I think you can use the online application too, but calling is easier… just expect to be on hold for a while first.
Also, when they ask you what your business activity is, you’ll say RETAIL. Follow up with what you do, like painting, art services, magnets, prints, that sort of thing. Other than that, it’s pretty quick and easy. You’ll get your number either over the phone or at the end of the application then a nice letter in the mail that you should copy then store in a safe place. So, uh… yay! 1 down!
3. Fictitious Name
You’ll have to do this from your own state’s business portal. GO HERE to find a list of states and their DBA pages. Again, fairly straight forward but for this step you’ll need your shiny new EIN. There will be a filing fee though. $50ish? There’s a ton of other junk you can buy too, like certificates and whatnots, but you’ll get pretty much an email and that’s it. All you need really is just to print the email and know where to find yourself on the database. Oh, also do a search first before you apply to make sure nobody has taken your name. Not to mention, it will take anywhere from 30-60 days for the system to update and include your name. While this doesn’t really effect you immediately, it will delay you if you are wanting to get a business banking account.
4. State Sales And Use Tax
This one you’ll have to google, but look up “sales and use tax” for your state and it’s somewhere in your state’s official Department of Revenue page. You just have to register for this, probably easiest online, but you should be able to do most of this without trouble. There’s probably a small fee involved, I forget how much, but not a lot at all. Remember to make copies (front and back) of the certificate you get in the mail! This is what you’ll be needing for your tax exemption. Oh, and a few notes here… You’re selling your goods at retail (to customers), purchasing items to be used in a finished product, and purchasing items that were not taxed by the seller (buying from internet). Those three will make sense when you get to the checkboxes for sales and use tax activity.
This will be one of the longer forms you fill out so get a snack ready. But once you’re done, you’re good to go! You’ll be able to charge sales tax and be exempt from taxes for your materials. Not only that, but the DoR will give you a handy dandy booklet (well, Florida anyways) like a checkbook but with forms, that makes payments easy. They also take care of the county tax, so you just have to pay 1 place. Easy!
** NOTE! These you will pay quarterly! So keep tabs on your sales and how much you collect because you’ll have to hand that over every 3 months. Your income taxes will be pooled with your, well… income taxes at the end of the year. Personal and business are together if you are a Sole Proprietor, so just use one of those online things like Tax Slayer or H&R Block and you should be fine. And again, if you need ANY help, just give them a call! The IRS and DoR are the most helpful people you will ever talk to. Cause, you know, they want their money, so I guess it’s hard to be surly when people call for help in giving you more. >)
5. County Tax
So now you need to get your county tax receipt (license)! This will enable you to sell in your county. For this, you go down to your local tax collector. You can find them everywhere. But you need to make sure you do this in your own county. Again, pretty simple… in theory. I had trouble but tell them you’re an ARTIST, they should have the code for that, but for some reason it took them a while to figure that out. Just insist you’re an artist and you sell your art at retail. You’re not a manufacturer or publisher or anything else like that. Should just cost around $30ish and you get the certificate right then and there.
6. City Tax!
This is an evil one that can sneak up on you. Give your city’s business tax collector a call to check for this. Basically, if you live within the city’s boundaries, you will be charged a fee to do business. And not a small fee at that! Here in Tampa, it was something like $150ish give or take. Oh, and the best part is that the tax collectors, the ones who can do your county tax license, they don’t do city licenses… so you’ll have to go down to wherever they do it. Give them a call first to make sure you’re not in the area, but if you are (sorry), drag your feet down to their location and get it done.
7. Location, Location, Location
Like I said before, doing internet sales and stuff like trade shows, conventions, market places etc. are the easiest ways to go. You’ll probably want to check with your local property appraisers (the people you WILL have to call for zoning if you are doing business out of your home/apt or commercial location). But, if you are NOT selling anything from your residence, then there’s really nothing for you do worry about here. I spoke with my SBDC and they confirmed that doing business through a virtual storefront does not constitute a physical location… meaning, I don’t need to worry about zoning or weird stuff like that. But, if you want people to come to your residence or commercial property, you’ll have to contact the property appraisers in your area get the proper documents/zoning stuff/etc. And it’s probably something you’ll have to drop a few bucks into doing as well.
The best resource for you, should you need help… and lots of it… is the SBDC “Small Business Development Center”. Certainly there should be one in your city and most likely it’s free/non-for-profit. For tax questions, do not hesitate to have the IRS or your state’s DoR on speed dial! They are a pleasure to speak with and will take a lot of time with you without you feeling rushed. And of course, you may consult the interwebs… lots of good info out there, but you have to sift through the bubkis first. I’d stick with official sites through the state, local, and national government. They really “try” to help (especially the tax people… they have LOTS of info on their sites).
9. Get Back To Work!
Now you’re set up! With the exception of some extra things like a business model, 5yr plan, chat with a lawyer, business bank account, and maybe insurance (which the SBDC says check your auto insurance company if they do small business liability insurance), you’re pretty much good to go! Just keep records and backups of your sales, copies of your certificates handy, and the originals in a decent fireproof safe (trust me, getting duplicates costs way more than a cheapo safe). Other than that… you should be ready to start selling!
I know all of this seems like a lot, but it’s pretty straight forward once you follow the steps in order and it should just take you a little bit of running around to get on your feet. Always make sure you balance your artistic/productive side with administrative work. It seems tedious, and it is, but it’s a necessity to your survival.
So I hope this little tutorial has helped fill in the gaps art school may have left. And good luck to you all with your new art career!