Most people think that there’s not a lot in common between accounting and the arts. But the two do have something in common – money. Even artists have to eat, and to make a living as an artist, you have to make money. It’s not about winning million pound commissions or selling your work at Sothebys. Instead, a good accountant can help artists make the most of their money. The accounting principles are the same across industry, although expertise in the arts always helps.
Many people working in the arts do not have traditional employment set ups, instead working as self employed freelancers, on a contract basis, or through grants and tenders. Finding these opportunities isn’t always easy. To be successful you need to have a diverse range of revenue streams. Great places to start include the Arts Council and your regional group (they do a great daily Arts Jobs round up), industry bodies such as the Association of Independent Musicians, or even your local council. It’s also worth following influential people in your industry on social media.
Accountants for artists
Good accountants for artists can advise you on whether you would be better off being a sole trader or setting up a limited company, community interest company, or another structure. We’ve written about the benefits of each elsewhere, but there’s main things to think about when you are working as an artist. Such as how much money you will be making, and who you will be working with. Some organisations will only employ people who operate as limited companies for example. And if you will be employing other people, you might be better off with this set up.
They can also help advise you on what you can expense. Materials and resources all count as a legitimate business expense and can be claimed when you file your tax return or accounts. Studio space should be added to the list, and if you use a room at your house you can claim a proportion of your bills too. Ensure you record all your business mileage and claim your travel. Keep every receipt and a detailed spreadsheet of what you are spending for the purposes of progressing your business and creating your art.
Setting your rates – account for more than your art
Work out how much you need to live on. That’s the most important thing. What do you need to not only survive, but thrive? Do some research – what are other people charging? Don’t be the most expensive person out there, but don’t be the cheapest. You will undersell yourself, and it may come across as though what you do isn’t valuable and of good quality. Also remember that the time you spend creating or performing is only a fraction of the time that you spend on your business. You have to put in hours that aren’t obviously billable to a client or customer. However that doesn’t mean your income shouldn’t cover them. So many artists undersell themselves and when they work out their hourly rate they would be better off working in a supermarket. There’s nothing wrong with supermarkets, but that’s not why you create, is it?
If you’re putting on an exhibition or performance, you will need to sell tickets. The same goes if you want to sell a piece of art, or a creative service. It’s important to charge the right amount. Work out how much you have spent on materials, how much time you have spent on it, and how much people are willing to spend. Be competitive, but not cheap.
Cashflow for artists
We have said it a million times, but cashflow is king. Accountancy in the arts is like accountancy in any other business – you have to have the flow of money right. Make sure you always have enough in the bank to pay your expenses and pay any other artists you are working with. Send out your invoices at a regular time each month, and set payment terms of 21-28 days. You’re perfectly within your rights to charge an upfront fee, or at least a 50% deposit, and many people do. You might be an artist but you’re also a business owner so need to be savvy with the numbers and make sure the money is coming in to keep you creating. And keep aside money for tax. A good rule of thumb is to save a third every month.
So as you can see, accounting is important when it comes to working in the arts. And with these hints and tips, you can get it right.
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