Getting started with a business can be rather overwhelming. For many artists, it’s difficult to pin down a point when the gnawing need to create artwork actually becomes a profession. Someone innocently asks “How much would you charge for a picture?”, and before you know it, you’ve sold some prints and painted up some commissions and you’re thinking, “I could do this instead of flipping burgers or answering the phone for an insurance company!”
Then there are hurdles, and you look with horror at schedule C of your tax form and realize you might need a business license, and you have to decide where to put the printer (and which one to buy), and your kids want to know where dinner is and you can’t find the e-mail from an interested client. Hopefully, these tips will help smooth out your transition from a harmless hobby into the small business world.
Getting Started
Start with a plan. “I want to sell my art” is not a plan. You need to figure out what it is exactly that you want to sell. Do you want to do freelance commissions? Do you want to sell mouse pads and t-shirts with your images on them? Do you want to sell originals?
Decide what kind of income you need and desire, and sit down and figure out how many commissions you would have to turn out at what prices, how many prints you would have to sell and how much it will cost you to maintain the infrastructure to do these things.
For example, if you need to be making $1500 a month to pay off your student loans, rent and utilities, and you figure you can make a $10/per print profit, you need to be selling 150 prints a month, or doing 3 commissions with a profit of $500 each. Naturally, you’ll actually be doing some combination of these sales, and probably also taking odd illustrating jobs for a few bucks apiece. Having concrete numbers of the quotas that you would have to meet is very valuable in understanding the monetary importance of each kind of product or service, and for choosing where to invest your time and money.
Make a schedule and stick to it. Kids, pets, husbands and other distractions must be planned for. There are always piddly little details to be taken care of, like back e-mails, filing, finances, letters of inquiry to publishers and/or advertisers, and the all-important art creation itself. Make sure you are working regularly at all of these things, spreading out your workload and prioritizing wisely, and be sure to take into account your own personal time when you are laying out your schedule. You’ll go crazy without it, and it’s better to schedule a day off once in a while than to take an unexpected month off trying out the fit of a straitjacket.
Licenses and Taxes
It has been said that the only sure things in life are death and the fact that your government wants your money. The specifics in this category are going to depend on what country you live in, and what the local restrictions are, but you can count on having to pay for licenses and taxes.
Licenses: Nearly every country requires that you register for a license to conduct business, and they’re going to charge you for that privilege. In the US, that licensure is done on a statewide basis, and the license must be renewed every one or two years. In Alaska, I now pay $200 per year for the right to stay in business.
When do you need a license? This, again, varies per locale. Alaska regulations require a license when business is ‘regular,’ including seasonal. If you only sell an original or two a year, you probably don’t need a license. If you have tables at craft fairs every Christmas, have regular eBay auctions and sell prints through your webpage a few times a month, chances are good that you will need a license. Read your local regulations carefully to determine when you need to start filling out this paperwork.
Taxes: There are two kinds of taxes to be dealt with, sales and income. Sales tax is something that you will add to your product price, or code into your shopping cart in some manner. Sales tax may be levied at a city, regional (state or territory) or countrywide level.
Income tax is what you pay on your business profits. Here in the US, you can incorporate your business, which means that it is treated as a separate citizen and pays its own taxes. As a sole proprietorship (which is how most business will begin), your business is considered an extension of yourself. Sadly, you will be taxed twice: first on any profits that your business makes before paying yourself, and secondly on the wages that you pay yourself from those profits (self-employment tax). Look carefully at what you will be taxed before you start putting price tags on your work. Sometimes it is worth carrying a part-time job simply to take care of employment taxes. It is specifically spelled out in the US tax booklets at what monetary value you must start declaring business income and when you must begin paying self-employment.
