Art and Taxes, with Steven Goldglit, CPA to the art world
THE ART OF RECORD KEEPING OFTEN ELICITS A GROAN. ARTISTS WOULD RATHER BE IN THEIR STUDIOS WORKING OR THINKING ABOUT THE CREATIVE ASPECTS OF THEIR WORK. GALLERISTS AND DEALERS WOULD RATHER BE CURATING THE NEXT SEASON’S EXHIBITIONS AND ART FAIR PROGRAM OR CLOSING ON A CURRENT SALE. WHAT CAN THE SOURCE OF MOTIVATION TO INSPIRE CAREFUL AND METICULOUS ACCOUNTING? THINK OF IT AS A GROWTH STRATEGY. BY KEEPING YOUR BOOKS IN ORDER, YOU HAVE A REALISTIC, OBJECTIVE EVALUATION OF THE VALUE OF YOUR BUSINESS, THE AREAS THAT NEED ATTENTION, THE EXPENSES THAT COULD BE REDUCED OR ELIMINATED, CASH FLOW, THE STRENGTHS AND WEAKNESSES OF YOUR CURRENT FINANCIAL SITUATION AND ITS POTENTIAL TO EXPAND AND EVOLVE IN WAYS THAT YOU DREAM ABOUT.
THE OTHER SMART STRATEGY IS TO HAVE THE SUPPORT AND GUIDANCE OF AN EXPERIENCED AND SOLID ACCOUNTING FIRM, PARTICULARLY ONE THAT SPECIALIZES IN THE NUANCES, RISKS AND REWARDS OF THE ART BUSINESS, SUCH AS GOLDGLIT & COMPANY. ORIGINALLY CO-FOUNDED BY STEVEN GOLDGLIT AND HIS FATHER SEVERAL DECADES AGO, IN A WORLD OF COMPLICATED AND CHANGING TAX LAWS AND LOOPHOLES, IT IS CRUCIAL TO FISCAL HEALTH BE IT PERSONAL OR PROFESSIONAL.
TODAY, THE LRFA BLOG IS VERY PLEASED TO CONTINUE ITS CONVERSATION WITH STEVEN GOLDGLIT ABOUT HIS FIRM’S SERVICES AND ITS PARTICULAR FOCUS ON ARTISTS AND ART RELATED BUSINESSES.
STEVEN, WELCOME BACK! HOW LARGE IS GOLDGLIT AND COMPANY AND WHAT ARE THE SCOPE OF SERVICES IT PROVIDES?
HOW MUCH INVOLVEMENT WITH THEIR TAX, BUSINESS AND FAMILY ESTATE PLANNING DOES THE FIRM PROVIDE? WHAT IS SCOPE OF ACCOUNTING SERVICES AT GOLDGLIT?
We are a 10 person firm, with 8 accountants and 2 support staff. Small enough to be very nimble in response to clients’ needs but mature enough to have the ability to handle just about all client issues. We provide a variety of services to our clients:
- Tax preparation and accounting needs
- Business consulting including sale and acquisition of business
- Estate planning and post death reporting
- Audit representation before IRS, NY State and other jurisdictions
- Audit, review and compilation reporting
- Transactional services
WHAT ARE SOME OF THE SPECIFIC NEEDS THAT AN ARTIST OR AN INDIVIDUAL IN OTHERS CREATIVE FIELDS REQUIRE IN TERMS OF ORGANIZING THE PRACTICAL ASPECT OF THEIR BUSINESS. WHAT IS THE BEST ADVICE YOU GIVE A NEW CLIENT IN TERMS OF RECORD KEEPING, TAX FILING AND ESTATE PLANNING?
Artists need to understand that being an artist requires being a business person. The most successful artists understand this and manage their art careers like a business. This requires proper record keeping and hiring the support staff that is needed for a business – CPA, Attorney, Bookkeeper and assistant. They should make sure their offices run properly and that they are keeping track of all business expenses using a simple Accounting program such as Quicken or Quickbooks.
WHAT ARE THE CONCERNS OF INDIVIDUAL SELF-EMPLOYED PROFESSIONALS IN THE ARTS? FOR CREATIVE CLIENTS, WHERE THE FLOW OF INCOME IS UNPREDICTABLE, HOW DO YOU RECOMMEND THEY CUSHION THESE PEAKS AND VALLEYS?
Artists should organize their business studio as a single member LLC for liability protection, especially if they have employees. They should maintain separate business and personal bank accounts and understand the monthly costs of running the studio so that they can plan cash flow properly. But the 1 thing I always tell Artists is to keep a few artworks they create each year and store them away and only sell when necessary – cash crunch, real estate purchase, etc. It’s like built in savings accounts that can be turned into cash as needed.
It is always best to organize your business properly to maximize your deductions and minimize tax costs and potential liability. Hire a good CPA that is familiar with your business field and they will help guide you to make the proper business decisions. Accounting records must be maintained properly with easy access so that you understand how your business is running, if it’s profitable and if expenses are in line with standards, or if they are excessive and require some cuts. You may eventually need a business loan and clear concise accounting management and records will give a banker comfort to know that the business can handle and repay a loan.
IN THE NEXT POST, STEVEN WILL EDUCATE US ON THE CURRENT TAX LAWS AND THOSE THAT SPECIFICALLY AFFECT ARTISTS AND ART-RELATED INDUSTRIES. THANKS FOR FOLLOWING THE LRFA BLOG!