Because of the wide diversity of industries and professions in our state, Pennsylvania accountants and CPAs need to be versed in a variety of client needs. Artists are an excellent niche market to develop.
When we think “artist,” many of us think of the visual arts, such as painting or sculpting. But there are many other visual artists, such as photographers and graphic designers; there are body artists, such as tattoo artists and make-up artists; and there are a wide variety of artistic categories in the performing arts, such as actors, dancers, writers, costume designers, directors, producers, and more.
While some artists work for companies, such as producers who work for a production company or graphic designers who are employed in a variety of industries, many artists work for themselves.
The artist as a small business owner
If you work with small businesses or sole proprietors, you will be able to guide your artist client as you would one of them. Like every industry, however, artists have some unique expenses that should be tracked and deducted, if possible.
And while most artists are entrepreneurs whose income is taxed as personal income, you may want to discuss with your artist client the advantages of filing as a business entity rather than as an individual taxpayer.
Common deductions for small businesses that artists may incur include:
- Startup and organizational costs (a capital expense that can be amortized)
- Rent or mortgage for business property
- Rent or depreciation on equipment
- Home office expenses – deductions for the percentage of the home that is used exclusively for business purposes
- Office supplies
- Technology expenses, website costs, and subscriptions
- Advertising and marketing – artists may refer to this as promotion
- Travel expenses
- Contracted labor or employee expenses
- Legal and professional fees
- Business losses (if the artist is a business entity)
Some additional expenses unique to artists may include:
- Professional instruction for completing a job
- Conferences and festivals
- Trade publications
- Storage rent for housing completed projects until resale
- Supplies used in the creation of the art, such as paint for the painter, ink for the tattoo artist, and makeup for the makeup artist
- Unreimbursed medical expenses and health insurance premiums when not covered by an employer
Help your artist clients organize their financials by avoiding the key mistakes self-employed people make: not tracking all expenses; not reporting all income; not making quarterly estimated tax payments; not separating personal and business finances; and not budgeting for fluctuations in cash flow.
As you help your clients organize their books and track their income and expenses better, they will probably see a significant improvement in their yearly taxes. Word-of-mouth recommendations to other artists should help you build a steady clientele of creative entrepreneurs.