Taxes for artists (in the US) are often confusing, this video reviews the nuts and bolts of how to file as a self-employed artist with a Schedule C, whether forming an LLC (limited liability company) is worth it, what you can claim as a deduction and how to organize invoices, receipts, and more.
- Most artists don’t need to form an LLC. (limited liability company)
- An LLC is required if you want to have employees and have to run payroll.
- Schedule C (form 1040) is a form you file with your personal income taxes as a sole proprietor. (“profit or loss from business as a sole proprietor”)
- For Schedule C, you’ll need to report your “gross sales and receipts”
- Most artists have multiple revenue streams that they need to report.
- 1099-MISC is a form to report income for work you do for an outside vendor.
- Invoices are important to send in order to get paid, and also to track your income during the year.
- Paying quarterly taxes makes it so you avoid getting hit with tons of taxes to pay when you file annually.
- You can deduct many expenses on your Schedule C, which will save a lot of money
- Tools and equipment that are less that $500 each fall under expenses.
- Tools and equipment that are more than $500 count as a business asset listing.
- Expenses you can deduct include art supplies, office supplies, meals/entertainment, dues/subscriptions, outside services (web hosting, monthly fees for a podcast, etc.) advertising/promotion, shipping/postage, legal/professional fees, printing, travel costs, car expenses like maintenance, gas, and more.
- Keep all your receipts and log them into spreadsheets during the year so you don’t have to do it all at once when you file.
- If you have a home studio or office, you can deduct that part of your home as an expense.
- You’ll need to calculate the total square footage of you home and the total square footage of your studio space to figure out what percentage of your home is your studio.
- You can deduct home expenses toward you studio like home mortgage interest, rent, gas, electricity, water, insurance, and more.
- You can’t keep declaring a business loss every year, if you do, the government will count your business as a “hobby.”
As a free educational source, Art Prof uses Amazon affiliate links (found in this page) to help pay the bills. This means, Art Prof earns from qualifying purchases.