How to Make Tax Season Less Taxing for Artists

Creatives, I know tax season can seem like a nightmare. But it doesn't have to be! Here are a few tips to make sure you're not leaving money on the table and spending too much time on a task that gives you anxiety.

First, choosing the right accounting software is subjective. Some popular options include Quickbooks, Xero, and Freshbooks. Don't know which one to choose? Don't worry, find the software that works best for you and your unique style. Some have a free trial period, and they all come in at similar pricing. I think all three of those are great options. The most important thing is to keep track of your books to maintain a clear view of your financial position and keep you organized come tax time. Hire a bookkeeper or take some free classes to upgrade your own bookkeeping skills if you don’t want to fork out money for that yet.

Now, let's talk about deductions. Art supplies, studio rent, travel expenses to art shows, website costs, marketing, and legal and accounting fees are all common deductions. The IRS states that you can deduct any ordinary and necessary items that help you run your business and make a profit. If you have any questions about what you can or can’t deduct, keep a receipt and ask your tax pro.

But how do you know if you're running a business or just pursuing a hobby? Here's a quick test: If you're selling your art, advertising it, and consistently trying to make a profit, then you're likely running a business. Keeping separate business vs personal accounts, keeping track of your income and expenses, and working to increase your income if you’re not making a profit are good ways to set yourself up to pass the hobby vs business test. And, as always, talk to your tax pro!

Lastly, let's talk about tax strategy. Here are a few simple tips: make estimated tax payments throughout the year, so you don't get hit with a big bill come tax season, check on special tax credits in your area, consult with a financial advisor about retirement fund options for self-employed people, look into an HSA, and of course, consult with your friendly tax pro.

Taxes don't have to be a nightmare. Just like creating art, it's all about finding your own style and taking the time to perfect it. Happy tax season!