I recently had the pleasure of hosting a fascinating conversation on the Art Coaching Club podcast with Ashley Ford, an expert in business accounting. We delved into the world of finance for artists, covering topics such as inventory management, tax write-offs, and budgeting. It was an enlightening experience!
As an artist, I understand that managing your finances can be overwhelming. But fear not! Ashley is here to help. She is the founder of Pretty Penny Accounting, a virtual accounting firm that specializes in assisting female entrepreneurs, like us, in understanding the financial aspects of our businesses. They offer more than just number-crunching; they also provide teaching programs and resources to empower business owners. How amazing is that?
During our discussion, we explored the topic of tax write-offs for artists in greater detail. Ashley shared valuable insights, suggesting that you consider writing off art supplies and anything that enhances your workspace efficiency. This could include computer software, reference materials, or even a new desk. And don't forget about the home office deduction if you primarily work from home. It can make a significant difference!
We also emphasized the benefits of tracking your expenses on a monthly basis. By closely monitoring your expenses throughout the year, you can avoid last-minute panic during tax season and identify areas where you may be overspending or can cut back. Additionally, we stressed the importance of separating personal and business finances. Having a separate bank account or credit card for your business not only simplifies matters but also provides a clear view of your business expenses. It's a win-win situation!
Now, let's delve deeper into when it might be appropriate to hire an accountant or bookkeeper. Ashley provided some valuable insights. If you have a good grasp of your finances but lack the time to manage them as your business grows, it may be time to seek assistance. An accountant or bookkeeper can handle the day-to-day financial tasks, allowing you to focus on your art. Alternatively, if you prefer to outsource the financial side of your business from the beginning, that's perfectly fine too. It's all about doing what works best for you!
We also discussed the distinction between bookkeeping and advisory accounting. Bookkeeping involves accurate record-keeping of past financial information, while advisory accounting looks ahead and helps you make informed decisions based on financial projections. It's like having a crystal ball for your business finances! Understanding this distinction enables you to determine which type of financial support is most beneficial for your artistic journey.
Oh, and let's not forget about the legal aspects. Ashley mentioned that Pretty Penny offers a course called Business Foundations, which guides you through all the essential details of starting your own business. From researching a business name to registering in your state and setting up a business bank account, they've got you covered. They even provide strategy sessions for that extra one-on-one support. Talk about going above and beyond!
We also touched on understanding forms such as the 1099 and W-2. The 1099 form is typically used for contractors, while the W-2 form is for employees. It's crucial to comprehend the distinction to ensure you properly classify your workers and fulfill your tax obligations.
Additionally, we discussed the concept of budgeting, or as we prefer to call it, a "spending plan." By creating a spending plan, you can determine how much money you'll need for supplies, software services, and even paying yourself. It's all about being intentional with your money and ensuring you have the necessary funds to support your artistic endeavors.
Ashley also shared her personal journey of starting her own business and how she took the necessary steps to legitimize it, even when she wasn't making substantial profits. We couldn't agree more that treating your small business as a legitimate entity from the beginning is crucial. It's all about adopting that entrepreneurial mindset!
To wrap things up, Ashley revealed some fantastic tools and resources for small businesses. They have a wealth of valuable information on their website, Hey Pretty Penny, and their Instagram page, Pretty Penny Accounting. So be sure to check them out and get ready to elevate your financial game!
Ultimately, our conversation highlighted the importance of understanding and managing your finances as an artist. With the right tools, mindset, and guidance from experts like Ashley, you can successfully balance your creativity with your finances and thrive in your artistic journey. So go forth, my friend, and conquer those financial mountains! You've got this!
Interested in listening to the full conversation? You can do so here!