Legal requirements for your business

Whether getting paid for work or selling art, it is a legal requirement to become self-employed – but what does this mean? Artists are often asked for a bewildering range of information to get paid – VAT registration numbers, self employment number, National Insurance number and more – but finding out what this information is, and why you need it, can be a difficult process. In this lesson, we’ll walk you through all of the legal requirements to turn your art into a creative business.

Skip to: Registering | Paying taxes | Invoicing

Registering

When you’re in business, the governement obviously needs to know you’re doing this and therefore you’ll need to register yourself as self-employed. To do this, you will need to contact your tax office and request a unique taxpayer reference number (depending on your country of residence it might be called differently, but the concept of this is fairly common throughout Europe, Northern America as well as Australia) – this is the number you need to quote on invoices for your self-employed work so you can get paid without the organisation paying you taking off tax and paying it on your behalf. Having this “taxpayer number” means that any organisation paying you will know to pay you all the amount and you will be responsible for paying tax.

It’s a good idea to carefully record what money you spend in relation to your business (your self-employment as an artist) so you know what payments are relevant to your tax return and what are personal expenses. You may decide to open a business bank account, but this is not necessary, and they usually charge fees. A (second) current account will be much cheaper since you won’t have to pay on any cheques or transactions.

Paying taxes

Artists and craftspeople, like any other person, have to ensure they pay the correct amount of tax on their earnings.
For people in employment – full or part time – tax will be deducted by their employers, and if this is the only income you have you should ordinarily not have to pay more tax on earnings. It is possible to pay too much tax as well, and with limited resources are unlikely to correct these mistakes themselves. It is every employee’s responsibility to make sure their tax is being paid properly, and you can be liable to fines if you do not pay the correct amount.

Many artists have an accountant who can fill in and calculate their tax payments for the year; accountants can also submit tax returns and answer questions they may have. Many practitioners also fill in their own tax return themselves, and there are extensive resources available online about how to do this, plus helplines and other free online help sites to contact if you are considering filling in your own tax return.

Accountants fees, like other professional fees to support your practice (or business) can be offset against your income and lessen your tax burden.

Paying the right taxes at the right time
Pay your tax on time. If you don’t, you are charged interest on outstanding payments. Make sure you know what you need to pay and pay it on time to avoid the unnecessary interest charges. Ensure that you have included all your costs in your business. Keep every receipt and ask yourself this question: ‘is this expense exclusively for my business?’. If the answer is yes, make sure you include the expense when calculating your profit. When paying your taxes, make sure you include everything to avoid paying too much tax.

Some costs that artists often forget to include are:

- Magazine subscriptions
- Art books
- Travel to clients
- Any trips to museums/art galleries
- Computer costs
- Studio rent

If you work at home, there are number of costs that will potentially be business costs. The business calls on your telephone and mobile, your Internet connection (if you use the internet in your business), heat and light of your office (as a proportion of your total house), stationery, files, furniture for your office, software, computers and laptops. Also make sure you record all of your business mileage every single time you do something that relates to your business. If you don’t claim the correct number of miles, you will be paying unnecessary tax.

You may use an asset in your business that you bought before you started your business. Even if you don’t have a receipt, you can still include this as an expense (the cost will be the market value of the asset when your business started). This could apply to a computer or laptop.

Invoicing

An invoice is basically a bill – a sheet of paper on which you state the costs of whatever it was that you’ve done for them (this can be selling your art or providing them a creative service) and some details about your business for filing purposes. Again, some specific details may be requested in your country of residence, but in general most invoices should include:

- An invoice number. This is a number made up by you so you can track the payment more easily. This can be any number you want as long as you keep it consistent throughout the year. ‘Resetting’ it every year is perfectly fine. In fact, here’s a quick confession: I usually start my invoices with the number of the year and a totally random number, i.e. ’1245′ being the first invoice of the year, to make it less obvious that I’ve only had one invoice for three weeks straight, and then continuing on with 1246, 1247, and so on.)
- Date of invoice
- Description and timeframe of the work you’ve done
- Insurance number and tax number
- How you would like to be paid and under what conditions (within 2 weeks? within a month? you set the rules)
- Information needed to make a payment, like your bank account details
- Contact address and telephone number
- Any other relevant information

While there are certain things that should be always included in your invoice, there are no limits and no rules to how it should look like. Go creative and create one that matches your branding, or download and enhance some great sample invoices here.

« Back to lesson index

Keeping your art and your business organized

Overall, creative people can be categorized into the “right brained” people, with non-linear creative ideas flowing through their minds day in and day out, while “left brained” people are more analytic and linear, thus having a clear overview of what is going on and keeping track of big chunks of information in an organized matter. Because of these different approaches and the tendency for artists to be more focused on the non-linear things in life, keeping organized and taking care of an administration can be a time sucker and a cause for many headaches. Let’s see how we can keep things light and dynamic while keeping track of the most important things in our creative business.

Skip to: Your inventory | Your supplies | Listing sales | Keeping track of events | Your client list | Turning it into a habit

Your inventory

Keeping track of your inventory might seem silly when you only have a few pieces of art currently in stock, but when you’re creating art on a large scale, organizing your inventory will become one of these necessary evils every artist will have to do eventually. Your inventory list could be anything from a word document in which you enter the titles of your artworks to an excessive spreadsheet listing things like item name, quantity, buyer, date it was made, date it was sold, and so on.

Download a sample Visual Artists Inventory Sheet

Your supplies

Often overlooked but very important is listing your supplies and observing how much of it you use for every piece or timeframe. There is nothing more frustrating than running out of supplies half way through a piece or having to postpone working on a new one because you have to run to the store to get whatever it is that you need to get started. I suggest you observe your use of supplies over a timeframe of 30 days and jot down everything that is in your hands and is being used. This also includes the use of supplies that don’t “run out”, like a tube of paint, but your equipment as well, as they will wear out over time and you’ll have to replace these too.

Make sure to enter the price of the supplies as well, as this will be of great help to you when you are watching your expenses and whenever you have to file your taxes (remember that you can save yourself a lot of money when you keep track of these expenses since chances are you’ll be able to get some of these investments back, based on your country’s tax law).

Listing sales

Whenever you’ve made a sale, after your silly happy dance, don’t forget to write down as much contact information from the piece and the buyer as you can, as having these on record will save you a lot of time and trouble in the future. It is also a great way to improve your marketing plan as knowing more about your collectors will enable you to get in touch with them for future opportunities. Quick tip: ask them about their day of birth and send them a special Happy Birthday Discount Coupon on their birthday.

When listing sales, always attach a picture of the item you’ve sold to the record. Maybe you can’t imagine losing track of your precious art right now, but after several (similar) pieces, you’ll quickly forget what was it exactly that this buyer took home from you. This again is also a great improvement to your marketing efforts as you can quickly glance over your sold items list and see who would like your new piece to match up with their previous order.

Keeping track of events

As we’ve learned in previous lessons, participating in events is one of the best things you can do to improve almost every part of your creative business. To never miss out on an event, it pays off to list all of the interesting events in your neighborhood one a month and jot these down on your calendar or on an event list you keep on your fridge. This will remind you of interesting events whenever you feel like your business could need a boost or things have been going slow. Not sure which events to go to? Turn to your artist friends and ask them what shows they’re visiting in the future, or even better, create a list of events by merging your lists and go to these events together (it’s fun AND sharing a booth saves you a big chunk of your investment).

Your client list

Your client list should be the most precious thing in your file cabinet. As with listing your sales, you should write down as much information as possible. Ask them about their physical address (good for sending flyers, samples, thank you notes and invitations), about their email address and about referals to some of their friends, of which you could also collect email addresses to further build your email campaign.

Turning it into a habit

Get yourself into the habit of creating lists as quickly as possible. As a creative person you have a lot of creative ideas floating around in your head, and creating lists prevents you from being stressed out. Having a kind of structure or framework will empty out your mind and keeps your mind of worrying about things you need to remember and you need to keep track of.

Whatever it is that you’re using, always find a system that is simple enough to know you’re going to follow through time after time, since keeping track of every part of your activities is not always the most fun thing to do in your day, but it certainly is important if you’re looking to stay organized in your creative business.

« Back to lesson index

Launching your art business

When you feel it’s time to take your creativity to the next level and actually make it a business, it goes without saying that going in prepared and with the attitude of a true entrepreneur will greatly increase your chances of a successful launch and making your art your dayjob. In this lesson, we’ll go through all the things you need to think of when you’re at the point of boosting your art career and getting your creative business in place.

Skip to: The basics | Your businessplan | Alternative businessplan | Planning, licenses and administration

The basics

Don’t freak out
This might sound silly, but not freaking out over the word ‘business’ might actually be the most important thing you can do for yourself and your potential business right now. Most artists love what they do and they love it so much that they want and actually can make a living from it day by day, but there’s something holding them back. Most artists cringe when they hear the word ‘business’ and feel it’s the exact opposite of the word ‘creative’, so jumping in and turning their art into a proper living for themselves feels like a huge step and something that is very hard to undertake. I get that, you want to be a creative artist, not an ‘entrepreneur’, but when you’re creating, marketing and selling art, that’s basically what you are. A creative entrepreneur.

To avoid you freaking out over the word ‘business’, I will try to use it in a more fun and actionable context. Because it is actually fun to find out who could become your fans and collectors (doing market research) show your art to as many people as possible (marketing) and then make a living through people wanting to buy it (selling).

Gradually vs. suddenly
What you probably will experience in your own life is that becoming a professional artist grows on you, it’s a more a gradual process than a sudden event. Hardly anybody wakes up thinking ‘yes, I’m launching my art business today’. It usually doesn’t work that way, more often you’ve been working on your art for ages and started getting inquiries from others and sold some of your art to friends, family and perhaps on some artshows already.

Look for the signals
If you’re unsure about whether selling your art is something you’d want to do, see if there are signals around you that say that you’d probably be successful at it. Have you had requests for custom work? Did people sincerely compliment you on your work? Can you think of around 20 people that would be interested to buy you art as soon as you put them up for sale?

Don’t worry about being a 100% sure about your decision if this is just what you really want to do. Also, don’t put it off until you’re ready, you will never be ready, so don’t wait until you finish school, until all your kids leave the house, until you retire… You always keep creating your own perfect milestone in your head, but don’t wait for the moment to be perfect; a lot of the things in your every day life will always keep interrupting – don’t let it put off the starting point of your art career.

Your vision
A business that knows where it’s going is more likely to succeed than a business that is just wandering around. Having a vision will come in handy and by assisting you through all of the decision you will need to make.

Where does this fit in, does it take me in the direction I want to go, or is it pulling me off the road and distracting me from my goal?

The more clear your vision of what you want to do with your art is, the more realistic and actionable it will become. It’s fairly easy to say ‘get a vision’, but where do you start? Ask yourself these questions if you’re unsure about your own vision.

Start thinking big from the get go about where you want your business to be 5 or 10 years from now. What does a successful art business look like to you? If you’re very clear about your own definition of success, you’re absolutely more likely to succeed.

Your businessplan

When you’ve got your vision right in front of you and can’t wait to make all this happen, it’s time to create a business plan. Don’t make it a huge project, just spend a couple of hours to a day on it. If all your ideas live in your head, you will not be able to fully take advantage of them. Writing them down makes them real and actionable. And since actionable is what Work Your Art is about, I encourage you to create one.

Make your business plan workable, flexible and usable. Not only will a business plan be useful to show the outside world that you are serious about your creative business for the coming years, it’s also a great tool to calculate your inventory, costs, investments, etcetera. Businessplans are living documents, so make sure to check back often and see if the data in there is still realistic once you see some results coming in. You might want to get ten sales a day in your first month, but if this doesn’t happen, you should alter the calculations to keep up with your current situation. It takes some time to grow a business to a point where you feel you’ve achieved your goals, so make sure you calculate some savings and have a backup plan as well.

Here are some great businessplan templates that will get you started:

These are powered by Score.org and make it very easy for you to get some first insights into your business. You don’t have to fill out every single thing on there if you really don’t want to, but reading the most important bits and getting familiarized with some of the things that are involved with setting up a business will be very educational. The biggest question will always be: what do I have to spend and earn for my business plan to break even and grow from there?

Make sure to check out this table in the business plan, it's a very useful table to copy a couple of times and keep for future reference.

Now, if you’re absolutely reluctant to filling out such a long form, I understand. You could also write your own personal business plan by thinking over and answering the following questions on a piece of paper.
 

Alternative businessplan

What do I want to achieve with my art business?

How many income streams can I get from this? (Prints, notecards, workshops, teaching, licensing?)

How much revenue could these income streams generate?

How can I build on these products and services to create additional income streams? (Sometimes your initial plan takes a different direction, that’s okay)

Who is the perfect customer for my art and my services?

How can I reach my potential art buyer?

What methods will I use to promote my art?

What will it cost to create, deliver and promote my art?

How much of the revenue do I want to transfer to my personal bank account?

How much do I have to save up in order to have a backup plan for myself?

Planning, licences and administration

Permits and licenses
The bottom line is pretty simple. Whenever you’re creating something, selling it, and getting money in return, you will be legally seen as a business. If you’re not earning any money, the government will identify your activities as a hobby. In order to officially become a business and pay your taxes, you need to go to the county building for a legal business license and get a sales tax number. The latter makes it possible to declare the sales tax that you collect. Check your country rules and regulations for this, since every country has it’s very own set of rules for this.

 
Do I need to hire an accountant?
If you can, I suggest doing your own bookkeeping for the first couple of years, to get familiarized with everything that is involved with running your own business. On the other hand, it is very handy to have someone do your first time taxes to make sure you’re doing everything right, and have them explain the process to you. After that, it’s up to you if you feel comfortable doing it yourself and taking it from there, or having an accountant do it for you.
 

Planning
Once you’ve got the business part down, it’s time to make plans for the coming months and get used to a professional attitude towards your newly launched business. Create an environment that allows you to thrive and be creative. Don’t put a huge calendar in front of your workspace with deadlines and appointments on it if it feels to restraining for you, but go for it if that’s what you need to stay on top of your game.

Building your professional network
Start an excel spreadsheet with everyone you know. Family, friends, connections. They are going to be open to being on your mailing list and seeing what you do. You can quickly grow the people that are interested in your art and open possibility to send out messages about upcoming events and your first achievements. Online is cheaper than offline marketing, you can send out announcements for free online, postcards are more personal but cost a lot of money. People are getting used to being invited by email anyway.

Creating your branding
A big part of launching a business is building a brand around it. We’ll discuss all of this in the personal branding, verbal branding and visual branding lessons in this month.

Creating an online presence
Even if you don’t intend to sell your art online, you should still create a presence for your business online. You can do this yourself by following along in the creating a website lessons this month, by asking a friend to do is or by hiring someone to create it for you. There are endless possibilities out there, so there shouldn’t be a reason to stay behind on having a website for your business.

Engaging in social media
Build your network of artists, friends and supporters on social media channels like Twitter and Facebook. I suggest you start with this the second you know what the plans are for your business in order to create a buzz around it. If you’re unsure how to go about this and, most importantly, how to manage this without losing too much of your time, you’ll be happy to know that week 4 of this month’s course is all about taking full advantage of the social media channels and setting them up the right way.

Again, don’t worry about not knowing absolutely everything about business there is to know, and don’t wait for the moment to be perfect – just do it now, start doing something small every day to start and improve your art business and it will be amazing where you’ll be a month to a year from now.

« Back to lesson index

Copy these business tactics from Andy Warhol

This article is part of a Work It Weekly newsletter that was sent out to all subscribers. To find out more and get actionable tasks on creative entrepreneurship in your inbox weekly, sign up at the bottom of this post.

When it comes to marketing and selling art, there is still a lot to learn from the greatest artists in history. One of these inspiring artists is, of course, Andy Warhol. Not only was he an amazing artist, he was also famous for his methods of (re)production used in ‘The Factory’, his studio, where a skilled staff produced silkscreens according to Warhol’s ideas and instructions. Copy these business tactics from Andy Warhol and see if it can positively influence your creative business as well.

Copy Andy Warhol's business tactics to boost your sales and market your art

Using ‘upselling’ to get more business from one customer

At some point, everyone was able to own a portrait painted by Warhol for twenty-five thousand U.S. dollars. In most cases, a non-refundable deposit of ten thousand dollars was enough. If Andy thought he could sell a client more canvases, he made several portraits. The second piece would cost fifteen thousand dollars, the third ten thousand, and the fourth five thousand. These cheaper portraits were very popular amongst collectors; it was a great way to own a Warhol for a relatively cheap price.

How you can use this: Offer new fans the possibility of buying your pieces with a bulk discount to stimulate repeated orders and the possibility of becoming a collector.

Organizing meetups to get customers in

Andy usually came in the office around noon to ask one of the most important questions of the day: who’s coming for lunch?

Warhol and his staff organized ritual lunches on a daily basis, ensuring that the following characters never lacked:

- two-society figures,
- an aspiring Hollywood star,
- a European title of nobility,
- and the victim.

The latter was a potential customer. Andy’s employees knew exactly who were in town and performed endless phone calls to invite people for lunch. If the lunch generated no immediate results, the clients were invited again, and they then ensured that there were even bigger celebrities present.

How you can use this: Throw regular events at your studio or at a public place to have your current customers convince new customers of how great your work is, and to connect the people you care about with people you’ve recently met.

Using Affiliate Marketing to generate word of mouth

Andy paid his employees low wages, but gave them a commission whenever they personally brought in new customers. Most of his assistants were quick and efficient workers; they wanted to go out as soon as possible to promote Andy and his work.

How you can use this: Give your customers a discount on their next purchase whenever they bring a friend into your shop, or hand out two discount coupons with every order; one for the buyer, and one for one of their friends.

« Back to lesson index

5 Ideas for selling drawings online

If you’re a visual artist selling your drawings, the ideal business model would be to wake up in the morning, work on your sketches and/or drawings, publish these online, and make a living by selling them. And by taking regular trips to the post office, of course. Sounds like a perfect dream? With these 5 ideas for selling drawings online, you might just have a great quick start on selling your drawings.

1. Open an Etsy shop

When you open a shop on Etsy, you will be able to engage in the marketplace that is already there and reach a targeted audience of people looking for handmade items or artwork by professional artists. They value the fact that it’s handmade by a person, and not a machine, and are often willing to pay for it. It’s also convenient if you don’t know how to build an online shop or website, since it’s got a shopping cart already built in that will send you your payment along with a receipt to you and your client. No scary and complicated tech skills needed.

2. Start a daily project on tumblr people can follow

Another great tool you can use without any technical knowledge is Tumblr. It’s a blogging tool that will allow you to post short messages and pictures or videos of your artwork. Putting up a daily project on Tumblr will make you work on your art daily, create a great exercise for your skills and have people follow you to see where your project is heading.

3. Get active on Flickr

Putting your work up on Flickr will get you good Google search results exposure and will show your work to millions of people searching for pictures and illustrations every month. Publish your drawings to your Flickr account and, in the description area, include a link to the page where you’re offering the drawings for sale.

4. Auction yourself on Ebay

Ebay is great if you’re looking to furnish your new home, buy baby clothes or find awesome deals in China, but it’s also a great way to market your art and selling drawings online. Look for the category called ‘Self representing artists’ and put up some ads over there. It’s less personal and more crowded with a less targeted audience than Etsy, though.

5. Offer drawings off of Facebook profiles or other submitted pictures

In the end, the most important element in selling your drawings online is to form an audience around you and be able to constantly show your work to these potential buyers. By starting authentic and creative projects on social media, you will be able to connect with a large group of people and will have the potential of going viral. People who get their portrait drawn by you will post it on their profile, and will get people asking them about it, getting them to tell your story, and generate more customers, because their friends envy the cool profile picture illustration they are showing off.

Have you tried any of these? How are you selling drawings online?

« Back to lesson index