Bookkeeping Tips for Artists

artists & BookkeepingWritten by Eddy Hood

Artists typically enjoy producing art more than they enjoy producing business records. However, artists who want to make money from their work should adopt good business practices to ensure a long-lasting income stream. Bookkeeping is the backbone of good business practices. Good bookkeeping allows businesses to understand their profit margins, know how much money is in the bank, and confidently file their taxes. Artists who don't enjoy math might find bookkeeping confusing, but there are many resources available that explain bookkeeping for freelance artists and those who are forming small businesses.

What Does Bookkeeping Accomplish?

The main goals of bookkeeping include:

  • Tracking all income
  • Keeping tabs on all expenses
  • Collecting documentation, including receipts and contracts, which will be useful in corresponding with clients and with government tax authorities

Daily Bookkeeping Tasks

Bookkeeping is largely made up of a series of repeating tasks, so setting up simple systems to schedule and complete the steps of this routine can help artists run their businesses efficiently while focusing on their art. Tasks will need to be completed on different time scales, so plan out your routines accordingly. For instance, daily tasks will include:

  • Counting cash on hand
  • Checking bank accounts
  • Looking over expenses and income

Weekly Bookkeeping Tasks

Weekly bookkeeping tasks focus on keeping necessary supplies and labor available and efficiently billing for completed projects to maintain a healthy cash flow.

  • Send out customer invoices.
  • Record customer payments.
  • Issue payroll checks.
  • Order needed supplies.

Monthly Bookkeeping Tasks

Monthly tasks allow for the owner to see a bigger picture of the business and should let the artist focus their attention briefly on what art has sold, what art is available to be sold, and what commissions are outstanding before returning to their creative work.

  • Reconcile the checkbook or ledger for the business's bank account.
  • Follow up on outstanding invoices.
  • Update inventory.
  • Review cash flow for the month.
  • File all receipts and other financial paperwork.
  • Create a monthly profit statement.

Quarterly Bookkeeping Tasks

Many freelancers and small-business owners will be required to file quarterly tax documents accompanied by estimated tax payments. Even if an artist doesn't need to file quarterly, looking over and updating tax information every three months will make completing an annual tax return simpler.

  • Update profit and loss statements.
  • Follow up on delinquent invoices.
  • Pay quarterly payroll tax if needed.
  • Pay sales tax to local government(s). Some localities require monthly sales tax payments.
  • Make a quarterly income tax payment, if paying taxes quarterly. If not, consider estimating the amount of taxes that will be due in an annual payment and setting aside 25% of that amount.
  • Review inventory and update it if needed.

Annual Bookkeeping Tasks

Annual financial tasks should allow the business owner to take a larger view of the financial health of the business, understand where money is being spent, and hopefully find ways to run the business more efficiently.

  • Decide on a course of action on severely delinquent accounts and outstanding invoices.
  • Review tax returns with an accountant.
  • Pay federal and state taxes.
  • Develop year-end financial reports, including a profit and loss statement.
  • Create the next year's budget.

Additional Resources for Artists