Candace was a student in one of my classes, and she had a problem: every year when tax time rolled around she found herself in a stressful, overwhelming last minute scramble to sort through 365 days of receipts, financial documents, and income before frantically plugging in as much of it as she possibly could on her DIY tax software. Every year she was sure she missed some income which made her nervous, and every year she ended up owing money she didn’t have to spare.
In short, her finances were a total mess.
As Candace told me, at a family party, she had a long talk with her Aunt Trudy, also an independent artist who always seemed to have things in order. She lived in a nice house and traveled and, even though she had always supplemented her art by teaching just like Candace did, she just seemed to have things pulled together better.
Candace learned a lot from her Aunt that day.
It turned out that there was a time when Aunt Trudy was just as disorganized as her niece. It was only after a particularly terrible year when she found herself actually in debt that she made a promise to herself to turn her financial picture around.
She began organizing her paperwork, contacted an accountant, and from then on got things in order. She even managed to start investing money for the future because, contrary to what Candace had always imagined, Trudy saved money by using an accountant. Even though she had to pay for the service, having an expert in charge of her taxes allowed her to take full advantage of any and all deductions.
There is much to be learned from Candace and Trudy’s stories. As an independent artist, you are responsible for a lot of balls in the air. It is not only your artistic life that you must consider but your financial one as well. There are some concrete steps to be taken in order to avoid a stressful mess when it comes to tax time.
- Keep good financial records throughout the year. This means organizing paperwork for any accounts or investments as well as tracking business expenses and income.
- Know your rights when it comes to employer reported income. If you work for anyone under a 1099, know that they are responsible for sending that information to you by the end of January during tax season. Don’t hesitate to send reminders.
- Strongly consider hiring an accountant. While it may be an additional expense, chances are it will be well worth it to have someone who understands the complicated tax code inside and out and can make it work for you.
At Praxis Center we offer a full course about taxes and finance for artists. Each module will help guide you toward making better decisions when it comes to managing your money. While you may have years of education and experience as an artist, it’s unlikely you are also a seasoned financial planner. Don’t leave things to chance or inexperience, find the information and the support you need to run a healthy financial household.