I am having trouble finding info on this. I have found what paperwork may be necessary but need help. For s part-time artist how would I go about reporting taxes on earnings?
I charge $15-$50 depending on size of piece and this year will be making enough that taxes should be done for it. I have read that I should just keep a notebook with the info i.e price, date. Is this true?
I do not want to make a mistake and have the IRS think I am selling crack or something.
[quote]maverick88 wrote:
I am having trouble finding info on this. I have found what paperwork may be necessary but need help. For s part-time artist how would I go about reporting taxes on earnings?
I charge $15-$50 depending on size of piece and this year will be making enough that taxes should be done for it. I have read that I should just keep a notebook with the info i.e price, date. Is this true?
I do not want to make a mistake and have the IRS think I am selling crack or something.
[/quote]
I’m not an accountant, but I used to be self-employed as a consultant.
I’m assuming you are a self-employed artist, so your gig and my former gig are not all that different in the eyes of the IRS.
You will need to estimate your earnings and then pay quarterly installments to the IRS using form 1040-ES.
Keep records of your business in the meantime.
Keep track of all of your expenses (art supplies, vehicle, home office, consultation lunches at a strip club with your clients, paperclips, mileage traveled, etc.) Keep all receipts. These are deductions - i.e. money in your pocket.
Keep clear records of your income as well. Submit invoices to your clients and keep records of payment.
This is, of course, assuming you WANT the IRS to know how you are making money.
It is also worth noting that your state’s revenue service may have an equivalent to the IRS’s 1040-ES form and may be expecting quarterly payments.
You should also be aware that you will be penalized for failing to submit the quarterly payments.
Oh, and there is a self-employment tax as well. You’re going to have to pay it.
You may also want to consider hiring an accountant. This can be a tax deduction as well, so be sure to meet at a pricy strip club and keep your receipts.
Best of luck to you!
Oh, and I forgot to mention that when your actual taxes owed are not calculated until you file your tax return. That amount is then compared to your estimated payments. If your estimated payments were over the actual taxes you need to pay, then you get a refund. If they were under, you will need to get out your checkbook and write Uncle Sam a check.
[quote]twojarslave wrote:
You may also want to consider hiring an accountant. [/quote]
This, lol.
But otherwise a decent enough post to cover the basics given the questions asked.
[quote]countingbeans wrote:
[quote]twojarslave wrote:
You may also want to consider hiring an accountant. [/quote]
This, lol.
But otherwise a decent enough post to cover the basics given the questions asked.
[/quote]
Yes, I think that point is worth re-emphasizing, especially if you are looking to grow your business and keep everything above-board.
My tax returns when I did consulting (ERP software implementation with lots of travel) were hundreds of pages thick. I hired a real accountant who charged nearly a grand just to do my state and federal returns.
He was worth every penny. Doing it on my own would have been a nightmare.
Thanks, will look into finding an accountant. As for invoices what can be done in situations when there is none?
Is there an art organization in your area? If so, I would recommend you look into joining. Many organizations have bookkeeping and accounting workshops for artists. Some even have accountants who will do your taxes at a reasonable price.
[quote]maverick88 wrote:
Thanks, will look into finding an accountant. As for invoices what can be done in situations when there is none?[/quote]
Just download a template online and customize as needed.
[quote]twojarslave wrote:
[quote]maverick88 wrote:
Thanks, will look into finding an accountant. As for invoices what can be done in situations when there is none?[/quote]
Just download a template online and customize as needed.
[/quote]
Or quickbooks.
Take an online tutorial and use the shit.
[quote]countingbeans wrote:
[quote]twojarslave wrote:
You may also want to consider hiring an accountant. [/quote]
This, lol.
But otherwise a decent enough post to cover the basics given the questions asked.
[/quote]
Agreed. I’m most of the way done with my accounting degree yet don’t actually plan on being an accountant. The career path I’m on means that I’ll be owning my own business in the somewhat near future, and even though I’ll have an accounting degree I’m absolutely going to hire an accountant. There’s too many things to keep track of for me to feel comfortable handling all of my business decisions plus the accounting side of things.
Maybe I’ll get to that point and realize I actually do remember enough to handle it myself, but I really doubt that.
[quote]staystrong wrote:
[quote]countingbeans wrote:
[quote]twojarslave wrote:
You may also want to consider hiring an accountant. [/quote]
This, lol.
But otherwise a decent enough post to cover the basics given the questions asked.
[/quote]
Agreed. I’m most of the way done with my accounting degree yet don’t actually plan on being an accountant. The career path I’m on means that I’ll be owning my own business in the somewhat near future, and even though I’ll have an accounting degree I’m absolutely going to hire an accountant. There’s too many things to keep track of for me to feel comfortable handling all of my business decisions plus the accounting side of things.
Maybe I’ll get to that point and realize I actually do remember enough to handle it myself, but I really doubt that.[/quote]
Look at it like this:
Someone without a degree is an open plot of land
Someone with a degree is a cleared plot of land with a hole for a foundation
A third year staff in industry has the foundation poured and backfilled
A third year senior has the framing up and the utilities roughed in
A third year manager has a livable house
A third year partner has nice interior decorating
A partner with 20+ years of experience has a killer house, great landscaping, a three car garage and can afford a mistress.
[quote]countingbeans wrote:
[quote]staystrong wrote:
[quote]countingbeans wrote:
[quote]twojarslave wrote:
You may also want to consider hiring an accountant. [/quote]
This, lol.
But otherwise a decent enough post to cover the basics given the questions asked.
[/quote]
Agreed. I’m most of the way done with my accounting degree yet don’t actually plan on being an accountant. The career path I’m on means that I’ll be owning my own business in the somewhat near future, and even though I’ll have an accounting degree I’m absolutely going to hire an accountant. There’s too many things to keep track of for me to feel comfortable handling all of my business decisions plus the accounting side of things.
Maybe I’ll get to that point and realize I actually do remember enough to handle it myself, but I really doubt that.[/quote]
Look at it like this:
Someone without a degree is an open plot of land
Someone with a degree is a cleared plot of land with a hole for a foundation
A third year staff in industry has the foundation poured and backfilled
A third year senior has the framing up and the utilities roughed in
A third year manager has a livable house
A third year partner has nice interior decorating
A partner with 20+ years of experience has a killer house, great landscaping, a three car garage and can afford a mistress.
[/quote]
Especially when put that way, I’m hiring an accountant the second I get my business lol. I’m not going to ever actually even work an accounting internship, let alone a real-life job so all I am is someone with a basic understanding of the fundamentals of a financial system that I learned in school. A good knowledge base to have, for sure, but compared to people like you I’m like a toddler trying to do calculus after learning how to do 2+2.
I wanted a basic understanding of finances, and I have that, but I find it interesting how many people I run into that seem to think that because of my major I’m qualified to handle all of the financial aspects that accompany owning a small business.
[quote]staystrong wrote:
I wanted a basic understanding of finances, and I have that, but I find it interesting how many people I run into that seem to think that because of my major I’m qualified to handle all of the financial aspects that accompany owning a small business.[/quote]
What you will have is enough understanding to allow:
I suspect you’ll do just fine, lol.
Do not mean to hijack but, did not want to start a new thread. How would you go about depositing or paying taxes (if necessary) on saved birthday, christmas, etc. cash gifts, that added up over the years.
In regard to the invoice thing. What would street artists i.e caricature artists do? I have gotten one done and all they do is take the cash no paperwork.
[quote]xXSeraphimXx wrote:
Do not mean to hijack but, did not want to start a new thread. How would you go about depositing or paying taxes (if necessary) on saved birthday, christmas, etc. cash gifts, that added up over the years.[/quote]
Taxes on gifts are paid by the giver, and I assume unless you have rich ass rich people giving you those gifts they are under both the yearly and lifetime limits for tax purposes.
Well they likely don’t report the income. You only have to file if you make more than $600 in revenue as self employed.
However, I’m a cpa right, so my W2 wages are for being an accountant, if I went out and made $500 on my own, I’d technically have to report it because it is what I do.
[quote]xXSeraphimXx wrote:
In regard to the invoice thing. What would street artists i.e caricature artists do? I have gotten one done and all they do is take the cash no paperwork.[/quote]
I love the innocence embodied in this question.
[quote]Dr. Pangloss wrote:
[quote]xXSeraphimXx wrote:
In regard to the invoice thing. What would street artists i.e caricature artists do? I have gotten one done and all they do is take the cash no paperwork.[/quote]
I love the innocence embodied in this question.
[/quote]
On a completely unrelated note, I find it tragic that strippers only earn an average of $12,000 per year according to the latest IRS figures.
True story:
My dad is from the old country. He had a friend who had a cash business and the friend used to bring his mom over from the old country twice a year to see her grand kids. Each time his mom went back to the old country, she had $40K in cash in her purse. Sometimes a bit more, sometimes less but over the course of 10 - 12 years she took nearly a million dollars out of the US, tax free.
His kids graduate school, he decides he’s going to retire a millionaire back in the old country and leaves the US. He comes back 4 months later. My dad talks to him, it seems his mom converted the US$ into the local currency which depreciated significantly during this time (mid to late 80s up to 2000) and he had less than $250K waiting for him. Significantly less than he would have had had he kept it in the US and paid taxes.
[quote]twojarslave wrote:
[quote]Dr. Pangloss wrote:
[quote]xXSeraphimXx wrote:
In regard to the invoice thing. What would street artists i.e caricature artists do? I have gotten one done and all they do is take the cash no paperwork.[/quote]
I love the innocence embodied in this question.
[/quote]
On a completely unrelated note, I find it tragic that strippers only earn an average of $12,000 per year according to the latest IRS figures.
[/quote]
Did you know, that a stripper can write off her boob job as a business expense. But a woman with cancer can only write it off as a medical so subject to the floor?
One thing to add is you should open a separate bank account for your business. Will make your accountant’s life so much easier and should you ever get challenged by the IRS as to whether your business is legit or just a hobby, having a separate bank account is evidence in your favor. Don’t co-mingle business and personal expenses.
Same goes for credit cards.