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Add You - How To Save All That Money You Aren't Making At Art
How do you create a breakthrough in your business or your life? It's hard to see the possibility, to see that you can create a breakthrough, especially when times feel hard or tough. What it comes down to is getting out of your own way. How do you stop your own success? Do you sabotage yourself?Jinny Ditzler, in her book, "Your Best Year Yet" outlines a process for shifting your paradigm. As a program leader of the Best Year Yet program, I have seen this shift happen over and over. What I have witnessed is people creating break throughs by looking at themselves, their beliefs and their behaviors. How do you do this?First is understanding: Beliefs lead to behaviors which produce resultsSo often, when we aren't achieving what we want and need we change our behavior. Underlying our behavior are our beliefs. If those beliefs are limiting beliefs then we must shift and change the belief. Since we are in charge of our beliefs we do have the power and the ability to make this change. First, look at your behaviors. What are the behaviors that limit your success? Some limiting behaviors that I see with business owners are: procrastination, not following up with leads, not asking for referrals.The next part of the process is to look at the underlying belief. What do you say to yourself about the behaviors? In essence what do say to yourself, that inner voice, that justifies the behavior, the excuses for the behavior. Now, some of these excuses are things that you believe to be true. Perhaps you are telling yourself -- they are only going to say no, or I'm not good enough, or they won't buy. What are your limiting beliefs?Shift the beliefs The key to the breakthrough is to shift the belief. This is more than positive affirmations. This is taking control of your inner dialogue and changing it. Often our inner voice is saying things to us we wouldn't allow people to say to our children. The trick is to replace the inner dialogue with more empowering dialogue and stop the negative talk. If you are telling yourself you aren't good enough, then how will people believe you are? In Jinny Ditzler's book she recommends creating a new empowering paradigm that is positive, short, written in the present tense. A new paradigm for the example we have been working on could be: "I am more than enough".How do you live the new paradigm? Because that is really the key. It is a grea
2. WHAT IS INCOME?
In the common usage, Income means (literally) any money coming in – whether it be a loan from the bank, a paycheck from your job, a gift from Grandma, or a sale of a painting. However, in the accounting world, many words take on different meanings. This is one of them.
Income, for someone running a business, derives from operating the business. If it’s an art business, then sales from your art business is your main form of income.
That income can have several categories, though; You can have sales of existing art and art products, such as bookmarks, you can have commissioned sales of art, and you can have sales of excess supplies, or shipping, or display equipment. The majority of your income should come from the first two categories, though.
COMMISSIONS
For those that are unfamiliar with commissions, it is when someone contracts with you to produce a piece of art to their own needs and desires, rather than purchasing art you created before you met them.
CONSIGNMENTS
Another form of sales is consignment sal
With the growing popularity of e-books (electronic books) and the convenience of surfing the web, printed books are having more and more competition. They are not only competing with other printed books but with books that are digitally available as well. Add this to the rising cost of book printing and book lovers are likely to bear the price for all these.So here are some tips on how to be taken off the shelves and be picked up by those that are still loyal to the written form.Choose a book design that would truly represent what is inside it. Don’t place an image that does not have anything to do with the content of the book. You can be as subtle as you want with the image but still try to make a connection between the design and what the book is all about.Try to be as consistent as you can in terms of design and fonts. If you are planning to publish a series of books, strive to be constant in your design to be able to create a sense of familiarity to your readers. If you are used to using two-colored inks on your books, do so with all your books so that your readers would know even from afar which books you wrote. And try to minimize the number of fonts that you are using and make the sizes as uniformed as you can.Carefully think about the title of the book. This could make or break the launching of your book. Aside from the design, the title would give the reader an idea on what the book is all about. Most book lovers also depend on the title if the book is worth reading. Most titles only consist of 2 – 4 words and this is much more effective than using a whole phrase. This creates intrigue and mystery on what the book is all about.Stick to one genre and limit it to two if you want. Your style of writing would be evident with any literary piece that you write. If you do choose to focus on one genre, make sure that it is your own choice and that it is what you want to write about. Focusing on a genre would help you create a following of your own. There are writers that can write on two separate genres, if you are one of these, you may want to use a different pen name to avoid skepticism. Most people can be very skeptic when they see the name of a writer they know that writes fiction and then found out that the same writer writes romantic novels as well. This can start a comparison between your works and thus the decline of the other genre.Find a reputable book printing company that would
1. WHAT STRUCTURE SHOULD I USE? The first question to ask in setting up your art business is how you should set it up – i.e., what structure it should have. This may seem like a silly question, but it is a very important one, as it determines how you report your income and expenses. And report them you must! There are several types of organization to choose from, and the determining factor is risk. How much risk are you willing to take? Are you willing to pay more for less risk? I will demonstrate what this means:
a. SOLE PROPRIETORSHIP The most risky organization is the sole proprietorship. This is because if someone sues you as a sole proprietorship, they can, theoretically, take your home, your car, and all your worldly possessions in a lawsuit. There is no separation between the business and you, so any lawsuit can take everything. However, most art businesses have little lawsuit risk attached to them. I am unlikely to get sued for damages unless I steal someone else’s art. (don’t do that!) If I was installing stairs, on the other hand, I would definitely want to limit my risk. The term for this characteristic is ‘unlimited liability.’ Now, there are advantages to being a sole proprietorship. There is little to no cost in setting it up, no legal forms to fill out, no paperwork to file with the state. When you report your income and expenses, it goes on the Schedule C of your own personal tax return (1040), and isn’t taxed separately. There are also disadvantages, such as the aforementioned unlimited liability. There is also the fact that the company has a limited life – when you pass away, so does the business. (Ask Disney if this is important). It is also more difficult to get financing from banks and therefore difficult to expand.
b. CORPORATION If you are willing to pay a little more money on a regular basis, you can get the advantage of limited liability with a corporate setup. A corporation is a separate entity from you as a person, therefore if it is sued, only those assets owned by the company can be taken, not your personal home and possessions. This is the main advantage of having a separate corporation. It is also easier to expand, as banks are usually more willing to offer financing for this. It can have a life beyond the life of the founder, as many corporations have (i.e., Sears, Disney).
Now to the disadvantages; The main one is the cost and complication of setting up and upkeep. There are fees to setting up the corporation with the state (none for the federal government), and annual fees to keep the license in good standing every year. In my home state of Florida, it is about $75 to set up the corporation, and $150 a year to keep it going. There is also additional paperwork, as you need to file a separate tax form every year (1120 or 1120S) with the federal government. You may also need to file one for your state. And, you may have to pay taxes at a corporate rate, which is usually higher than your personal rate.
I would like to go into the differences between a C corporation and an S corporation. C is the corporations we are most familiar with – corporate monsters like Microsoft, IBM, Disney, Sears, etc. These get taxed at a corporate rate, which is currently 15% up to $50,000 in profit, and goes up from there. An S Corporation (S stands for Small) has to have less than 100 stockholders (among other requirements) but does NOT get taxed at the corporate level. Let me repeat that – no tax is paid on the corporation itself. Instead, the income gets reported on each shareholder’s tax return, and is paid at their personal rate. This is usually the better deal for small companies, as personal returns are not taxed at all for the first $7000 in income.
c. LLCs and LLPs Many people ask me about Limited Liability Corporations and Limited Liability Partnerships. These are both fairly new entities, and as such, don’t have (as of yet) their own share of rules and laws by the IRS. I personally don’t recommend them, as they have little advantage over the S corporation, and are usually more expensive to set up. A savvy person can set up an S corporation fairly easily. A lawyer is required for LLCs and LLPs, and they like charging a good deal of money to do so – which is why they recommend them so much.
d. RECOMMENDATIONS In my personal opinion, most artist would do best as a sole proprietorship, unless there is a significant possibility of liability (i.e., you do 3D installations that someone could trip and fall on). In that case, I would recommend S corporations as the best alternative.
2. WHAT IS INCOME?
In the common usage, Income means (literally) any money coming in – whether it be a loan from the bank, a paycheck from your job, a gift from Grandma, or a sale of a painting. However, in the accounting world, many words take on different meanings. This is one of them.
Income, for someone running a business, derives from operating the business. If it’s an art business, then sales from your art business is your main form of income.
That income can have several categories, though; You can have sales of existing art and art products, such as bookmarks, you can have commissioned sales of art, and you can have sales of excess supplies, or shipping, or display equipment. The majority of your income should come from the first two categories, though.
COMMISSIONS
For those that are unfamiliar with commissions, it is when someone contracts with you to produce a piece of art to their own needs and desires, rather than purchasing art you created before you met them.
CONSIGNMENTS
Another form of sales is consignment sal
You don’t need to be a professional copywriter or have a huge vocabulary in order to write a good sales letter. If it’s your first time to write one, all you need to exert is a bit of time and effort and you’ll sure to produce a good sales letter in no time.7 Things that Distinguish a Good Sales Letter from the RestA Good Sales Letter is Easy on the Eye. Whether it’s an email or an actual letter, reading it must not be difficult for anyone with relatively good eyesight. Firstly, the font size must be at least 11 but no greater than 13 because anything more would take up too much space. Use special fonts only for emphasizing certain points but the main body of your content must still be written in easily understandable font like Times New Roman or Arial. Choice of colors is also important. Use dark ink for light backgrounds and vice versa. This may seem like common sense stuff, but you’d be surprised to know just how many people have continuously violated this rule!A Good Sales Letter is of Appropriate Length. There are unwritten rules regarding the appropriate length for sales letters, and they depend on factors like the number of times you’ve already corresponded with your recipient, the objectives of your sales letter, and so forth.In most cases, nothing more than a one-pager is a must if it’s your first time to contact a prospective customer. You could definitely write more if your reader has indicated an interest in receiving more news and updates from you in the future, but just how much will again depend on what you’re talking about and how well you know your target readers.A Good Sales Letter Does Not Beat around the Bush. It will always have a few lines dedicated to showing courtesy and appreciation towards the reader, but it will afterwards mince no words in saying what it has to say. If it has a buy-one-take-two offer in mind, the sales letter must state this directly. Time is a precious commodity, and a reader will appreciate it if you show your understanding of this concept by writing only what you have to write.A Good Sales Letter Has a Personalized Touch. Readers often like it better when the letter is directly addressed to them and most especially when they are old or existing customers already. Addressing the letter directly in their names make them feel special and appreciated. And you can validate this feeling by signing the letter at the end with your
b. CORPORATION If you are willing to pay a little more money on a regular basis, you can get the advantage of limited liability with a corporate setup. A corporation is a separate entity from you as a person, therefore if it is sued, only those assets owned by the company can be taken, not your personal home and possessions. This is the main advantage of having a separate corporation. It is also easier to expand, as banks are usually more willing to offer financing for this. It can have a life beyond the life of the founder, as many corporations have (i.e., Sears, Disney).
Now to the disadvantages; The main one is the cost and complication of setting up and upkeep. There are fees to setting up the corporation with the state (none for the federal government), and annual fees to keep the license in good standing every year. In my home state of Florida, it is about $75 to set up the corporation, and $150 a year to keep it going. There is also additional paperwork, as you need to file a separate tax form every year (1120 or 1120S) with the federal government. You may also need to file one for your state. And, you may have to pay taxes at a corporate rate, which is usually higher than your personal rate.
I would like to go into the differences between a C corporation and an S corporation. C is the corporations we are most familiar with – corporate monsters like Microsoft, IBM, Disney, Sears, etc. These get taxed at a corporate rate, which is currently 15% up to $50,000 in profit, and goes up from there. An S Corporation (S stands for Small) has to have less than 100 stockholders (among other requirements) but does NOT get taxed at the corporate level. Let me repeat that – no tax is paid on the corporation itself. Instead, the income gets reported on each shareholder’s tax return, and is paid at their personal rate. This is usually the better deal for small companies, as personal returns are not taxed at all for the first $7000 in income.
c. LLCs and LLPs Many people ask me about Limited Liability Corporations and Limited Liability Partnerships. These are both fairly new entities, and as such, don’t have (as of yet) their own share of rules and laws by the IRS. I personally don’t recommend them, as they have little advantage over the S corporation, and are usually more expensive to set up. A savvy person can set up an S corporation fairly easily. A lawyer is required for LLCs and LLPs, and they like charging a good deal of money to do so – which is why they recommend them so much.
d. RECOMMENDATIONS In my personal opinion, most artist would do best as a sole proprietorship, unless there is a significant possibility of liability (i.e., you do 3D installations that someone could trip and fall on). In that case, I would recommend S corporations as the best alternative.
2. WHAT IS INCOME?
In the common usage, Income means (literally) any money coming in – whether it be a loan from the bank, a paycheck from your job, a gift from Grandma, or a sale of a painting. However, in the accounting world, many words take on different meanings. This is one of them.
Income, for someone running a business, derives from operating the business. If it’s an art business, then sales from your art business is your main form of income.
That income can have several categories, though; You can have sales of existing art and art products, such as bookmarks, you can have commissioned sales of art, and you can have sales of excess supplies, or shipping, or display equipment. The majority of your income should come from the first two categories, though.
COMMISSIONS
For those that are unfamiliar with commissions, it is when someone contracts with you to produce a piece of art to their own needs and desires, rather than purchasing art you created before you met them.
CONSIGNMENTS
Another form of sales is consignment sal
The German Code for Germany is perhaps best illustrated in a story.Lego, the Danish toy company, found instant success with their interlocking blocks in the German market, while sales foundered in the U.S. Why?The company’s management believed that one of the primary reasons for their success was the quality of the instructions they provided inside each box that helped children build the specific item (a car, a spaceship) that a particular box of blocks was meant to build. The instructions were quite a breakthrough in the field: precise, colorful, and refreshingly self-explanatory. They made construction with Lego blocks not only simple, but in some ways magical. If one followed the path through the instructions, tiny plastic pieces methodically turned into something grander.American children could not have cared less. They would tear into the boxes, glance fleetingly at the instructions (if they glanced at them at all), and immediately set to a construction project on their own. They seemed to be having a wonderful time, but they were as likely to build, say, a fort, as they were to build the automobile for which the blocks were intended. And when they were done, they would tear their fort apart and start over from scratch. Once purchased, to Lego’s dismay, a single box of Lego could last for years.In Germany, however, Lego’s strategy worked exactly as intended. German children opened a box of Legos, sought out the instructions, read them carefully, and then sorted the pieces by color. They set to building, comparing their assembly progress to the crisp, helpful illustrations in the instruction booklet. When they were finished, they had an exact duplicate of the product shown on the cover of the box. They showed it to Mother who clapped approvingly and put the model on a shelf. Now the children needed another box.Without even knowing it, Lego had tapped into the Culture Code for Germany itself: ORDER. Over many generations, Germans perfected bureaucracy in an effort to stave off the chaos that came to them in wave after wave, and Germans are imprinted early on with this most powerful of codes. It is that imprint which makes children reach dutifully for the instructions, and it is that code which prevents them from immediately destroying their neat construction in order to build it anew. Lego’s elegant, full-color instructions had tapped into the German code in a way that assured repeat sales.
Now to the disadvantages; The main one is the cost and complication of setting up and upkeep. There are fees to setting up the corporation with the state (none for the federal government), and annual fees to keep the license in good standing every year. In my home state of Florida, it is about $75 to set up the corporation, and $150 a year to keep it going. There is also additional paperwork, as you need to file a separate tax form every year (1120 or 1120S) with the federal government. You may also need to file one for your state. And, you may have to pay taxes at a corporate rate, which is usually higher than your personal rate.
I would like to go into the differences between a C corporation and an S corporation. C is the corporations we are most familiar with – corporate monsters like Microsoft, IBM, Disney, Sears, etc. These get taxed at a corporate rate, which is currently 15% up to $50,000 in profit, and goes up from there. An S Corporation (S stands for Small) has to have less than 100 stockholders (among other requirements) but does NOT get taxed at the corporate level. Let me repeat that – no tax is paid on the corporation itself. Instead, the income gets reported on each shareholder’s tax return, and is paid at their personal rate. This is usually the better deal for small companies, as personal returns are not taxed at all for the first $7000 in income.
c. LLCs and LLPs Many people ask me about Limited Liability Corporations and Limited Liability Partnerships. These are both fairly new entities, and as such, don’t have (as of yet) their own share of rules and laws by the IRS. I personally don’t recommend them, as they have little advantage over the S corporation, and are usually more expensive to set up. A savvy person can set up an S corporation fairly easily. A lawyer is required for LLCs and LLPs, and they like charging a good deal of money to do so – which is why they recommend them so much.
d. RECOMMENDATIONS In my personal opinion, most artist would do best as a sole proprietorship, unless there is a significant possibility of liability (i.e., you do 3D installations that someone could trip and fall on). In that case, I would recommend S corporations as the best alternative.
2. WHAT IS INCOME?
In the common usage, Income means (literally) any money coming in – whether it be a loan from the bank, a paycheck from your job, a gift from Grandma, or a sale of a painting. However, in the accounting world, many words take on different meanings. This is one of them.
Income, for someone running a business, derives from operating the business. If it’s an art business, then sales from your art business is your main form of income.
That income can have several categories, though; You can have sales of existing art and art products, such as bookmarks, you can have commissioned sales of art, and you can have sales of excess supplies, or shipping, or display equipment. The majority of your income should come from the first two categories, though.
COMMISSIONS
For those that are unfamiliar with commissions, it is when someone contracts with you to produce a piece of art to their own needs and desires, rather than purchasing art you created before you met them.
CONSIGNMENTS
Another form of sales is consignment sal
1. You aren't managing your employees effectively because you aren't fully comfortable in your role and fear conflict/power struggles.2. You are focusing your energy on distractions and "small stuff" thereby avoiding the larger strategic issues that will keep you in business 5 years from now, or in your role within it.3. Thinking about your business/your career 5 years from now feels overwhelming and you aren't sure how to think through it clearly.4. You have difficulty delegating and need help letting go of the reins. It's easier to just do things yourself than to figure out how to develop your people.5. You don't always bring out the best in those around you.6. You feel a bit like an imposter in your role and aren't always sure you are worth what you get paid (and hoping no one else feels the same way!).7. You have difficulty prioritizing and often feel overwhelmed or inefficient as a result. You can't see the forest for the trees.8. You suspect you may be like the fish in the tree but have been avoiding asking yourself really pointed, direct questions about your career or business path.9. You have been treating your business like a hobby and it isn't performing much better than that.10. You've been hoping that with the right people your business would run itself, and yet you haven't been able to achieve the streamlined operation you have been dreaming of.Call me an over-achiever...here's 5 more for you...11. There are some conversations you have been avoiding at work because you just don't know how to have them.12. You aren't sure your employees will be able to handle the growth of your business.13. You can't decide how big or small you want your business, or your role within it, to be.14. You worry about your business getting too big for you so you end up stifling its growth.15. You fear losing control of your life if your business becomes too successful. You don't know how to have a business/career AND a life.
c. LLCs and LLPs Many people ask me about Limited Liability Corporations and Limited Liability Partnerships. These are both fairly new entities, and as such, don’t have (as of yet) their own share of rules and laws by the IRS. I personally don’t recommend them, as they have little advantage over the S corporation, and are usually more expensive to set up. A savvy person can set up an S corporation fairly easily. A lawyer is required for LLCs and LLPs, and they like charging a good deal of money to do so – which is why they recommend them so much.
d. RECOMMENDATIONS In my personal opinion, most artist would do best as a sole proprietorship, unless there is a significant possibility of liability (i.e., you do 3D installations that someone could trip and fall on). In that case, I would recommend S corporations as the best alternative.
2. WHAT IS INCOME?
In the common usage, Income means (literally) any money coming in – whether it be a loan from the bank, a paycheck from your job, a gift from Grandma, or a sale of a painting. However, in the accounting world, many words take on different meanings. This is one of them.
Income, for someone running a business, derives from operating the business. If it’s an art business, then sales from your art business is your main form of income.
That income can have several categories, though; You can have sales of existing art and art products, such as bookmarks, you can have commissioned sales of art, and you can have sales of excess supplies, or shipping, or display equipment. The majority of your income should come from the first two categories, though.
COMMISSIONS
For those that are unfamiliar with commissions, it is when someone contracts with you to produce a piece of art to their own needs and desires, rather than purchasing art you created before you met them.
CONSIGNMENTS
Another form of sales is consignment sal
Venturing into your own business is indeed taking a risk. You have no way of knowing if your business will be successful or not. There are many factors that affect the growth, development and expansion of a business. One of these factors is administration and management.Business administration is a tough row to hoe, and it could actually make or break a business. This aspect of business includes a number of things: managing the entire business, looking for possible niche markets that the business can tap into and ensuring the growth and expansion of the business.Sometimes, owners of companies feel like they need to have additional financial resources to support and expand their business. One way to acquire badly needed funding is through business administration loans.Business administration loans are easily obtained by business owners, provided that their businesses meet all the necessary requirements. The requirements could include a specified number of employees, the right size and scope of business, as well as the average profits that the company receives. Business administration loans are actually one of the best options that companies can turn to if they need financing. Such loans offer better equity as well as a sufficient amount of time to pay back the loan.There are many foundations and organizations that offer business administration loans. There will be, however, different rates, requirements and conditions for these. Some of these foundations and organizations offer monetary assistance as much as $750,000 to deserving companies.If you are interested in acquiring a business administration loan from a trustworthy organization, or if you want to learn more about loans and their benefits, search the World Wide Web. The internet holds a wealth of information. Who knows, your online efforts just might get the loan you've always wanted.
2. WHAT IS INCOME?
In the common usage, Income means (literally) any money coming in – whether it be a loan from the bank, a paycheck from your job, a gift from Grandma, or a sale of a painting. However, in the accounting world, many words take on different meanings. This is one of them.
Income, for someone running a business, derives from operating the business. If it’s an art business, then sales from your art business is your main form of income.
That income can have several categories, though; You can have sales of existing art and art products, such as bookmarks, you can have commissioned sales of art, and you can have sales of excess supplies, or shipping, or display equipment. The majority of your income should come from the first two categories, though.
COMMISSIONS
For those that are unfamiliar with commissions, it is when someone contracts with you to produce a piece of art to their own needs and desires, rather than purchasing art you created before you met them.
CONSIGNMENTS
Another form of sales is consignment sales, which involves placing your artwork in someone else’s store, and only receiving money when it is sold. Sometimes this is a gallery, sometimes a gift shop, sometimes online – but the portion of income you receive is the only income you declare, not the total price. For instance, if I have a print on sale at the local gift shop for $30, and I get $20 from it when it sales (the other $10 goes to the gift shop) then I declare $20 income from the sale.
SELLING OTHER STUFF
Sometimes an artist has too much of a particular supply, and decides to sell off the excess on ebay, or doesn’t need a table anymore, or a particular display piece. This is called incidental income – not something you do on a regular basis in your business. It’s not the sale of art, but it is slightly related. These sales are income, but not always sales income – sometimes it’s called ‘gain’ rather than profit. It’s reported differently only if you are selling fixed assets, i.e., your computer, your desk, your display equipment. If it’s just paint or brushes, it’s regular income. Sometimes size DOES matter!
SHIPPING
If you also charge shipping on your sales, this too is considered income. The cost of your shipping shows up in expenses, and usually these two cancel out.
SALES TAX
Many people ask how Sales Tax comes into play with income. In reality, we never ‘earn’ sales tax – we merely collect it and hold it for the state government. Whenever we make a sale that is taxable, we collect the sales tax. Once a month, or once a quarter, or sometimes once a year, we tally up all the sales tax we SHOULD have collected and pay it to the state. That SHOULD is a very important word! If you did not collect sales tax, but should have, you are STILL liable to pay it to the state, out of your own pocket.
Since Sales Tax is not income, when we collect it we do not include that as income (thus we don’t get charged income tax on that money). It’s not an expense that we can deduct, either… it doesn’t go on the federal income tax return at all!
CONCLUSION
All in all, income is any money coming in that is a result of a business transaction in your business. That sounds complex, but it helps differentiate between things that aren’t income – like a gift from your dad, or a loan from the bank. Those aren’t income, and you don’t pay taxes on it!
We wouldn’t want to be paying Uncle Sam MORE than he is asking for, now, do we?
3. HOW DO I VALUE INVENTORY? Inventory is one of those mysteries of the accounting world, an esoteric subject fit to backroom discussions by candlelight and adding machines, right? WRONG! Inventory is a very simple concept – the cost of the stuff you have that you can sell.
INVENTORY Inventory can include any number of things, but they should be things that can be traced to a particular piece. That means that you can include the canvas, paper, frame, matboard, and hanging hardware that you bought for that painting – but not the paint itself. The reason is that this tube of Titanium White has been used to paint on 12 other paintings, and is still only halfway used. There is no easy way to attach the cost of the paint to a particular piece, so it is instead deducted as ‘supplies expense’, along with the paintbrushes, turpentine, disposable pallet pages, etc.
So, the cost of one of my digital prints would NOT include the computer, or the program, but would include the cost of printing, the matboard, and the bag. It wouldn’t include the ink from the pen to sign it. Be reasonable, and you’ll be ok.
This inventory cost is usually counted at the end of the year. The amount you have in inventory is the cost of each item you have that is ready for sale, plus unfinished pieces, which are considered ‘work-in-process’ inventory. Also include items that will be used for such pieces, like blank canvasses and uncut matboard, etc.
On your tax return, you list a beginning inventory amount (the amount of these items you had at the beginning of the year). You add the cost of purchases during the year, and you subtract the amount of these items you sold (at cost, not at sale price!). The ending figure should match how much you have on hand at the end of the year. If not, you make an adjustment so it does – this is breakage, spillage, spoilage, loss, etc. and can be deducted as an expense.
By structuring it this way, the expenses for inventory are only deducted when the item is sold, as opposed to when the items were purchased. This is an important difference to the IRS!
SUPPLIES As I mentioned earlier, items that are used for many pieces are supplies, not inventory. They are deducted when they are purchased, rather than when they are used. Supplies typically include items used up over the course of time, such as paints, inks, regular paper (office supply rather than photographic paper), pencils, pens, erasers, tape, etc. You get the id
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