Useful Stuff


If you are interested in writing or illustrating books, here are some useful tips...

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WRITING AND ILLUSTRATING FOR YOUNG READERS

PICTURE BOOK LAYOUT

Keeping Business Records

General rule: Keep records for everything! Keep accounts and receipts for 5 years, keep copies of taxes you send in for forever.
Why: Because if you don’t keep a record of it, the IRS may get you. Just kidding. But if you don’t
keep records of your expenses, you can’t claim them as deductions; therefore, you’ll owe more taxes.
And if you don’t keep records of jobs/income, you may forget what the numbers are and who you
worked with. Then you lose valuable contacts.

What Records to keep:
  • Records of Jobs: date assigned, description of job, person for (address etc.), amount paid, dateb completed, invoice number, date paid. 
  • Records of expenses for jobs: assign them to the specific job used for (art supplies, model fees, props)
  • Records of expenses for business: office supplies (paper, pencils, envelopes, printer inks), business
  • expenses (self-promotion, equipment, travel, car-mileage, legal and accounting, entertainment of
  • clients, studio space rent or portion of home, utilities, assistants, telephone, capital equipment,
  • portfolio expenses, postal fees, insurance related to business.

HOW TO KEEP TRACK: computer or book form (back up if on the computer)
Keep 3 separate ledgers or sections in one binder: 
Business Expenses (include receipts/mileage rpt.)
Income
Job record – mostly for your personal use/referral
EXPENSE BINDER: Keep receipts on file separated into categorical folders or at least labeled.
Have a chart of mileage here (where, why, what, begin mileage, end mileage, total miles trav.)
INCOME BINDER: Client name, address, phone etc. Copy of invoice, job#, date received,
date completed, date paid. Log in checks: Keep copies of them
JOB RECORD: Keep a folder for each job (label with name, client, date and job#) – a
record/copies of receipts, contracts, labor, invoices, copy of mileage, travel, model releases
USEFUL HINTS:
Open up a separate business account and make all your transactions from there. AMEX card has a
quarterly business report good for record keeping or checking account.
If you are consistent in logging these things in, the IRS is more likely to forgive you if you’ve lost a
receipt. If you have trouble with the IRS, then call your congressman, then the IRS has 30 days to fix
it. You can reschedule an audit to make it convenient for you and to get your papers in order.

TAX INFORMATION:
The following are excerpts from the article “The Tax Man Cometh; What’s
deductible for Artists?” by Carolyn Blakeslee, April 1995 (I believe from “Art
Calendar Magazine”) go to www.artcalendar.com for more information on Carolyn.



“In order to qualify as a business as opposed to a hobby, you must be able to demonstrate  if asked
(audited)  that you actively pursue income from you endeavor. The IRS’s rule of thumb is that your
business should produce income three out of five years…”

“Schedule C is the tax form used by Sole Proprietors to report business-related income and expenses. 

The gross income is listed first. All business-related income is listed. Examples are:
• Sales of artwork and related items
• Grant moneys;
• Teaching income if the teaching was done on an independent contractor basis;
• Awards

Expenses are listed next and subtracted from the gross income.”
“The following costs of doing business are deductible…

• Advertising expenses. [box 8] Examples: Direct mailings,…adds in…newspapers, …etc.
• Capital expenditures. [box 13 or box 27 and part V] …is a relatively permanent purchase;
…a car or computer is a capital expenditure. [use box 13 for those] Easels and drawing
tables can be considered capital expenditures or you may categorize such expenses under
“Miscellaneous” [box 27 and part V] under a category you name “Studio fixtures.”
• Car and truck mileage expenses. [box 10] …I have found that the per-mile deduction is
simpler and costs actually work out to be exactly the same, no matter what car I drive.
…a travel log must be kept which includes, date, distance traveled and the reason for
each business-related trip.
• Commissions. [box 11] If you receive money for a sale and then pay a commission to a
dealer, agent or art league later, then that commission is deductible.
• Courses and seminars. [box 27 and part V under a category you name] …use common
sense and honesty.
• Depreciation. [box 13 and form 4562] The cost is “capitalized” for the life of the item; in
other words, a percentage of the cost of the item is deducted each year for a certain
number of years.
• Dues and publications. [box 27 and part V under category you name] Membership fees;
magazines and newsletters to which you subscribe in order to further your…business;
books.
• Employee benefit plans. [box 14] cost of benefits you give to your apprentices or
employees, such as health insurance or retirement.
• Freight. [box 27 and part V under category you name] shipping completed commissioned
works to clients, or shipping entries to juried shows.
• Insurance. [box 15] Insurance on artwork, studio insurance, umbrella business insurance.
• Interest. [box 16] The interest on your business debt….
• Legal and professional expenses. [box 17] The fees of accountants, lawyers,
conservators, appraisers, art advisors, and other consultants….
• [box 18] Other office expenses would include stationery, staplers, etc., as well as almostcapital
expenditures such as your typewriter and file cabinet.
• Repairs (to business property). [box 21] Examples: Fixing the wiring in your studio, or
repairing your camera or slide projector or computer.
• Studio rental [box 20] This is a straightforward business expenses with none of the
complications of an office or studio in the home.
• Taxes. [box 23] Only taxes on real and personal property use in business…along with
payroll and FICA taxes you paid for your employees. Sales tax is no longer deductible.
• Travel, meals, and entertainment. [box 24] Only [50%] of your expenses incurred in
entertaining customers and business associates is deductible, as well as [50%] of any
expenses associated with strictly-business travel and meals. The IRS figures you’ll be
paying for food and shelter anyway.
• Utilities and phone. [box 25] If you use part of your home as your studio, you may
deduct a percentage of you home expenses. That same percentage is divided into the total
amount you spend on electricity and heating. However, you may not deduct your
residential phone expenses even if you use it largely for business; you must install a
separate business line [you have a business cell phone or 1-800 number]. If you rent a
studio, and utilities and/or phone are separate charges, they are deducted in this category
too.
• Wages paid to others. [box 26] Salaries to models, apprentices, secretaries…. You can
even pay relatives is the pay is reasonable and fair.
• Miscellaneous. [box 27] Art supplies. Waste removal. Framing matting. Photographic
developing fees. Slide documentation. Entry/acceptance fees. P.O. box rental. In short,
everything directly applicable to running your … business, but difficult to categorize in
to the above … divisions.”

“Check with your accountant before filing your tax return. And be sure you accountant is OK tooget a recommendation of a CPA…from someone whose financial situation you respect. The “red flag” which triggered my audit might have been my sudden use of an accountant; I had prepared my own returns in the past. When I was informed of the audit, I could not find the accountant (he wasn’t a CPA). He never returned any of my phone calls, and I had to go to the audit alone. …Maybe the red flag was using an accountant whose reputation was in question already, rather than any questions the IRS had with my return.”

“The tax law literally changes daily and tax law is not within my expertisethis article is intended as an overview.”

Some IRS Publications to Order
Pub. 17 – Overview of Everything
Pub. 334- Small Businesses
Pub. 535 – Business Expenses
Pub. 533 – Self-Employment Taxes
Pub. 534 – Depreciation
Pub. 560 – Self-Employed retirement plans
Pub. 587 – Office in home
Pub. 583 – Info for Business Taxpayers (EIN record keeping)
Order by calling 1-800-829-3676
Or on web www.irs.gov

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I'm a freelance illustrator working in the children's book industry. I love kids and raising my own 4 children. They are the inspiration and the passion behind all I do in art and in life. See my website at JulieOlsonbooks.com

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