By Natalie Goyette

With a little creativity and stellar bookkeeping, you can make the job of figuring out taxes a whole lot easier. Here are a few tips to make the tax process easier, and a couple of ways you might consider to save some money in the end:

The cost of doing business – Keep the receipts for anything that you have to spend money on related to running your business. This means everything from the gas in your vehicle (usually calculated with a set mileage amount), to production costs, right to the professional advice you seek for helping you with your taxes. These are all costs related to your craft show business and building your crafts, and they can be deducted from the overall gross income you have made during the year.

Hire a professional – Whether you hire a tax accountant, or a tax lawyer to provide you with the guidelines for calculating and filing your taxes – they will provide you with a wealth of knowledge and expertise to help you keep as much money in your pocket and out of the greedy grasp of the tax man. Most professionals are not going to charge you a fortune, and can often find numerous ways to help you lower your overall tax bill.

When in doubt, keep track of it – You don’t always know the ways that your tax accountant can help you. If you are wondering about whether you can claim a certain expense for your craft show business, then you should probably err on the side of caution. This way, you aren’t going to kick yourself for something that could have saved you more money.

Be diligent in your records – It is important to put yourself in the same mindset to save money as you are in to make it: that means the little things count. If you blow off one craft show expense because you think it is minimal, imagine if you did that 4 times per month – that’s nearly 50 times per year! All of those ‘little’ craft show expenses can amount to a lot of savings at the end of the year!

Who enjoys paying taxes on their small business? No one! That’s why you need to take this part of running your craft show business as serious as you would the money making part. By being prepared, and knowing how you can limit the amount you are required to give back to the government – through good accounting and knowledge of the claims you can make as a business owner – you are going to save yourself a great deal of money at the end of the year.

One of the things that baffles artists and crafters is how do I manage the money for my business.

First see my post on business licenses requirements.  Having a business license is actually an asset to your business that allows you to open a business account, buy wholesale, do business in your location and more.

After you have a business license and have registered in your state as DBA (Doing Business As) go to the bank and open a business account.  Mine was inexpensive (something like $5 if I remember correctly plus an initial deposit).  My bank included a stamp that basically says:

Pay to the order of xxxxxxxx Bank
For Deposit Only
Business Name
Account Number

Be sure and get a checkbook register and record that first deposit.  Put this in a safe location that won’t easily be forgotten.

Get a lock box that you feel is secure.  A keyed lock box that is fairly heavy will allow you just a little more security at shows.  Get petty cash just before shows so that you will be able to make change for your customers.  See my hint on things to take to shows including change by clicking here.  Record how much petty cash you put in the box.

When a customer makes a purchase always write them a receipt which should include your business name, address, web address, email and phone number.  A stamp or printed address label can make this easy to add.  It should also include the customers name, address, phone and email (you can ask them if they would like to be added to your mailing list at this point and write it on the receipt with a simple “Y” or “N”).  A memorable description of the item or items purchased, for instance jade and pearl necklace and earring set.  Recording an accurate description of the item will help you determine your best sellers later on.

If they pay in cash place the money they hand you next to or on top of the lock box and make the appropriate change.  This way you will know if they handed you a $1 bill, a $10 bill, a $20 bill or even $50 or $100, no confusion or debates.  Then don’t forget to place the money in the appropriate place in the lock box and lock it if you won’t be using it again right away.

If they pay with a check immediately take out your stamp and stamp the back of your check.  Place all checks in the bottom of the lock box.

If you accept credit cards follow the procedure defined by your merchant account and place all slips in the bottom of the lock box.

After shows:

• run credit card purchases if they aren’t processed automatically at shows.
• Count cash, checks, and credit card purchases.
• Subtract petty cash from the total and verify that nothing was lost or stolen.
• Deposit cash and checks into business account.
• Transfer funds from merchant accounts, wait for check, or wait and verify direct deposit for all credit purchases.
• Record all transactions in your business account register and on any accounting software you run.

At the end of the month balance your account with the statements from the bank or have your accountant do it.  Immediately correct any mistakes.

If you use good accounting software that is it.  You will simply need to print a profit and loss statement at the end of the year and give your accountant the invoices from your income and receipts you’ve saved for all your business purchases.  You can create a handmade profit and loss statement if you don’t have accounting software (I recommend the free trials of accounting software though ).  Your profit and loss statement should include all sources of income broken down by categories such as purchases, interest, rebates etc.  It should also include all expenses such as supplies and materials, travel, discounts given, donations, and more.  Add all the income, add all the expenses, subtract the expenses from the income.

KEEP ALL PERSONAL EXPENSES SEPARATE FROM BUSINESS EXPENSES

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I often hear the question is a license required for my art and craft show booth, art and craft show, or online art and craft business.

The answer is it depends on the city, county, and state you live in.  Every city, county and state creates their own rules and regulations regarding business licenses and special event permits etc.  Each location will also have it’s own rules on tax collection at art and craft shows.

So how do you find out if you need a business license or special event permit for your craft business?  Call your city offices and ask them what department handles business licenses and special event permits.  You can also type your city, county, state and the keywords business license requirements or special events permits into a search engine.

My business is outside the city limits so my city won’t issue me a business license.  My county and state don’t require business licenses for my type of business.  I finally visited a neighboring city and was issued a business license.

You will usually need a business license to buy wholesale.  It is to your benefit to get a business license even if you aren’t required to have one.

Register your business with your state as a DBA (Doing Business As) as this allows you to get a business checking account which will make doing your taxes so much easier.

Visit the State Resources page at Extravaganza Craft Productions for more information if you live in Washington, Oregon, Idaho, Montana, Utah, Colorado, Wyoming, North Dakota, or South Dakota.

If you live in the areas mentioned above and know the requirements for your city, county or state please comment on this post with the address, phone number and website.  I will add that information to the State Resources page to help other crafters in your area.

Thank you,

Shasta McLaughlin

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