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Hey there, I'm going all over the place trying to gather info! I'll preface by saying I'm in the US.

I've officially made it to the point that I earn my living from commissioned work, primarily noncommercial (which makes a little nervous). I've been researching how to establish myself as a business, prepare to do taxes, and such, but the deeper I go the more terrifying things get—likely due to misinformation!

I could really use some guidance from people who already file taxes as a business! My question is super vague, but honestly.. I'm just at the fundamentals and totally overwhelmed by research.

Establishing a business name, and everything that comes with it seems freaking terrifying. For example, I read somewhere online that you need to "Complete a W-9 Form When You Get a New Client". Every time!? That seems realistic if you do large commercial projects, but what about these very small projects with tons of different clients? That's a lot of paperwork.

And, you need licenses/permit..? I've never even heard this for freelance artists.

It seems like there is an awful lot you'd have to do, and it's totally daunting. I feel like I may be getting the wrong info, too.

Can anyone set me straight on how I get started officially declaring myself as a freelance artist and the legal bits involved?

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( 7 comments — Leave a comment )
celestinaketzia
Jun. 22nd, 2016 10:12 am (UTC)
I don't fill out any extra forms when I have income. I keep track of all of my expenses and income through the year and then hand it over to my tax guy. He charges about $250 to do our joint taxes and associated business income.

It may help to seek out a professional, but there are plenty of artists out there who file their own taxes.

Keep track of everything! You can file your internet as a deduction, shipping, driving, and even your workspace*. The important part is records records records.


** Be careful with the workspace deduction. My tax guy says that one is difficult to claim, and may lead to an audit so I don't do it.
sapphistscot
Jun. 22nd, 2016 12:26 pm (UTC)
Seconding this - keep receipts for all your expenses. If you work with traditional materials then keep the reciepts for everything you buy - paints, canvas, brushes etc. If it's digital then keep receipts for any software, printing or even just new nibs for a tablet pen. No matter how small the amount, they all add up in the end.
laughsatthunder
Jun. 22nd, 2016 12:27 pm (UTC)
I actually just answered a similar question in another community last night so I'll copy and paste some of what I wrote there to here.

I consider being a freelance artist as my job, however I'm 17-years-old and have been making fursuits on commission for 4 years, but I did $32,000 in sales last year so I guess I can contribute to this post.

...
This year was my first year being taxed as an adult in the state of Connecticut; mine came out to $1,427. I decided to have my mother help me out with TurboTax (which charges you if you don't buy the physical, cheaper disc) rather than go to someone like H&R Block but I may do that next year. It's a bit stressful. I would look into the legalities on your state and see how much you'd have to make to be taxed on, if it reaches a certain "golden number" it really isn't a hobby any longer.
EDIT: KEEP YOUR RECEIPTS. I stored mine in an envelope. Any purchase related to your business (USPS shipments, JoAnns runs, even convention fares) can be applied to your taxes and will lower what you owe. I went from something like $12,000 to what I said above.

I don't believe you need a license or permit for anything UNLESS you plan on vending in your state. Some conventions require you to obtain one but also have the option of cutting corners and just taking a percentage off what you make at the end of the day towards the state's tax.

Declaring yourself as a freelance artist is easy. The business aspect of it is the harder part.
spartanwerewolf
Jun. 24th, 2016 10:03 am (UTC)
I can't speak from experience- I don't do full time freelance- but clientsfromhell.net often has posts about getting off the ground and building a business for freelancers. Web seminars too. Might help you out some, idk.
adzuki
Jul. 4th, 2016 01:36 am (UTC)
Re:
Question regarding clientsfromhell.com , I notice they seem to have a freelancer's kit. Have you tried that? Or attended a webinar?
Cy Mendoza
Jun. 25th, 2016 11:14 pm (UTC)
Hi! Here are some basic steps to get you started.

1. File for a FEIN. Because you'll likely be filling out w9's (like you mentioned) it's better to provide an FEIN than it is to provide a SSN, for security reasons. You can apply for that here: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

2. File for sales tax licenses, especially if you are doing any work inside your home state, or you go to conventions and take work there. As a general rule, if you are taking the money physically in the state, you need to pay sales tax to the state. If you are taking the money via the internet and it's being shipped to the state you live in, then you have to pay sales tax to the state.

Google your state's name and 'sales tax license' and you'll find the form to file for a sales tax license. If you need any help, feel free to ask.

3. File for your DBA. This is the name you plan on using as your business if it's not your regular, legal name. For instance, if you call yourself 'Dshainn' or 'Dshainn's Art Commissions' and your real name isn't dshainn, then file for the DBA. To do this, search your COUNTY's name and 'assumed business name.'

If your name is, for instance, Daniel Shainn, and you are taking commissions as Daniel Shainn, then you don't need to file for a DBA.

4. Read all of this. https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center It will give you an overview of how to file federal taxes as a self-employed individual.

5. Keep record of all your business expenses. Cost of materials, cost of convention tickets where you solicit for work, cost of convention hotels where you solicit for work, cost of shipping, etc. These are deductible against your income.

6. In general, assume that you'll be paying about 30% of your after-expenses income. For instance, if you sold $10,000 in gross sales, and your expenses were $5,000, then that makes your profit $5,000. You can assume that you will be paying $1500 of that to taxes, to try to always save 30%.

7. At one point, you may be required to file for estimated taxes if your tax liability is more than $1000 a year. This means that you will have to pay your taxes for the year every quarter and sending them off to the government. Then, come the next year, you can review the year's financial information in total and determine your *final* tax amount, and file accordingly. If you overpaid your estimated taxes, then you will receive a refund. If you underpaid your estimated taxes, expect to pay a penalty along with your amount due.

Feel free to ask me individual questions and I'll help as best I can.
adzuki
Jul. 4th, 2016 01:38 am (UTC)
I had a question about the DBA. Does this only matter if what you have on your invoicing isn't the same as your name, or if the commissions are coming in from other sites?
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