All of you who read this probably know all about taxes therefore this writing is more for the beginning artist that has transitioned from hobbyist to business owner, dabbler to artist.
Hopefully you have licensed your business and display it proudly in your studio or office. This not only tells people you are serious about your work but speaks volumes about your expectations for the future.
For those of you not familiar with a Sales tax license, if you sell anything you have to collect sales tax whether it be city or state. Even if you are showing in an event out of state the management will come by after the event and collect the taxes or you will report your sales and mail it to them later.
Most events will even give you the paperwork in your packet prior to beginning of show in order for you to know how to calculate your sales (whether they charge 6% or 7.5% you need to calculate it in ahead of time to achieve the amount that will cover both your expenses, seed money and taxes).
I have always paid Colorado Sales tax quarterly but you don't have to if your disciplined enough to set your funds aside each time earmarked for taxes.
You should have an old fashioned receipt book (even if you use your square for credit cards) all sales should be recorded thereby collecting all patron information for your mailing list. Name, telephone number, address and even email come in handy when keeping records of sale listing, edition number and any special notes you may need in referring later to this sale. (This is a good place to write your reminder of the 10% discount for this patron when he returns for future purchase.)
As an artist that likes to contact my patrons at later dates to remind them to check their pieces for scratches or damage this list is crucial.
Along with my receipt book data I keep a file labeled whatever year I am saving for with all receipts throughout that year. Also I log them into a financial record book breaking down into columns (for instance office, toward edition and number, supplies, travel, and marketing.
My accountant keeps all pieces inventoried from year to year so I am accountable and when I donate work for Cancer Society or Audubon society allows me only to write off what it cost to create that piece (not what your selling it for.)
If these single records are kept as they occur (rather than a mad rush to write down all your receipts approaching April 15th) then come tax time you have all the information you need to transfer easily to a spreadsheet to give to your tax preparer. All you have to do is add up your columns and supply your income.
Here is a great place to put something I have learned over the years, you must be careful claiming part of your home as your business, check with the legalities of this. If you quit or sell the house you must pay extra for the sale of a shed (or whatever you have been using as a business write off.) Just be very informed...also there is the old dilemma of hobby versus business as far as proven income...all I can say is ask, ask, ask a qualified tax man.