Make artWORK: You and Your Books, Part2

By Clay Schudel

Last month I wrote about getting more control over your life by getting a better understanding of your finances. Click here to read that post! If you are just getting started, or don’t know where to start, here are a few useful tips:

1-      Organize your paperwork. Whether you’re making your living as an artist / performer or if you’re just getting started as a working artist (but all of your income is from a day job), remember to take your business seriously.

l  Get into the habit of keeping all bills in one place, so that you can easily put your hands on them, and commit to visiting your home “financial center” at least once a week. Develop a simple system that works for you and stick to it – for example, if you need to, use a red pen to write at the top of each bill the due date so you never get stuck paying a late fee for a credit card bill or miss an important payment.

l  If you’re an individual artist your business expenses and personal living expenses are likely mingled; this makes it extremely important to save your records in an organized way so that when you file your tax returns you can claim every legitimate business expense as an independent contractor against any income, to make sure that you only pay taxes on any profit that your business made. Do this organizing as the year goes along. If you are going to claim a deduction, you’re going to need a record of:

When: The date of the transaction

Where: Where you bought the item

What: What the item was

Why: What purpose it served in your business

Try making a simple spreadsheet with these columns: 

Date  |  Category  |  Vendor  |  Cost  |  Purpose

Make a note on your receipts (“rent; costumes; business meeting”) and file them as you pay them; $10 spent at Staples now on a few file folders will save you so much stress at tax time, digging through every drawer in your apartment and trying to remember what these receipts were for.

·         If you’re prefer saving digital copies of your receipts, there are several phone apps that allow you to photograph and save a cloud based copy of your receipts; probably the two most popular ones are Shoeboxed ($9.95 a month, but this app has many other mobile accounting features than just organizing receipts) https://www.shoeboxed.com/features/

and the much more basic One Receipt (free app) http://www.onereceipt.com/

2 - Evaluate and understand your income and your expenses. Knowing what you spend, and what your income is, over a period of time will let you make intelligent budgets, better use what resources you have, and do all kinds of short and long-term planning. As I wrote last month, the program that I still rely on MOST OF ALL is one that almost everyone already has if they have a home computer – the old fashioned Excel spreadsheet.

·         Start by listing regular income and expenses you know will happen or feel pretty sure about:

Make a thorough list of your regular income, and note when it happens; you should put down things that happen monthly (a job that pays a salary every 2 weeks), a few times a year (do you a get quarterly royalty check?) or once a year (do you usually get a tax refund every May? Teach a paid workshop every summer?)

·         Make this same list for your known fixed expenses. Be as thorough and as realistic as you can; after you list your large and regularly repeating expenses like rent, utilities and internet, take a good look at your cash or credit card spending and try to understand your patterns and to group your spending into categories; use your bank and credit card statements to help you note regularly repeating automatic payments you may not think of (Netflix? Insurance premiums?) and notice when your credit card payments themselves are due.

Lining these two categories (Income & Expense) up side by side in two columns will go a long way towards showing you the bare bones of your financial picture and will help you see cash flow gaps that you have to prepare for or changes you want to make in your spending.

 Follow the links below for pre-loaded templates! 

Microsoft Office (maker of Excel) has lots of preloaded Excel spreadsheets that you can download from the Office website, and easily modify for your own uses. 

SCORE, a nonprofit that provides mentorship services for small businesses and entrepreneurs also has many templates you can download and modify to help you analyze your expenses and cash flow

Here’s a very simple cash flow forecasting spreadsheet that I created using Excel

You don’t need to be stressed out about the money side of your creative business. A plan that’s simple enough for you to actually keep up with (and doesn’t take too much time away from your real work of making art) is the one that’s right for you.

Make artWORK: You and Your Books, Part 1

Part 1, By Clay Schudel

Understanding your financial situation – what you have, where it comes from, what you really spend it on and when you need to spend it – gives you much more control over your life. It gives you more control over creating the work you love. It lets you make smarter choices. Understanding your finances lets you plan bigger projects, and avoid the stress of not being sure if you’re on the right track or of being caught by surprise by something you could have seen coming.

You may already have a great accountant (or you may BE a great accountant; I have seen some amazing financial records from some member artists at The Field!) but if not, there’s no time like the present to take a fresh look at your bookkeeping system.

There are some great accounting software packages out there that can help people with very little accounting training keep an impressive and accurate set of books; while you may think of a complicated software systems as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process. You don’t need any special tools to keep good financial records. Until 30 years ago, almost every system relied on paper, pens and ledger books! But there are a lot of tools now that can make bookkeeping much simpler.

By definition, bookkeeping is “the recording of financial transactions, including purchases, sales, receipts and payments”, so at the most basic level, we’re talking about keeping clear records of your income and bills, all in one place, and understanding your bottom line. Having an accurate sense of how your money flows in and out, over a period of time, will help you plan in every way, from putting together a long term budget for a business plan, to strategizing a fundraising plan for a one-time performance.

The program that I still rely on MOST OF ALL is one that almost everyone already has if they have a home computer – the old fashioned spreadsheet. If you’re comfortable at all working with spreadsheets, Excel (Microsoft) or Calc (Open Office, and free) are extremely flexible programs that you can use to set up any kind of budget, cash flow forecasts and other planning tools, checkbook registers or really anything to do with numbers. The web is FULL of free tutorials on how to get the most out of Excel, sample templates you can download and tips about using spreadsheets in general. Google is your friend!

QuickBooks is a great software package with a not-too-steep learning curve but it’s sophisticated enough for most small businesses. The QuickBooks Pro desktop package costs about $250.
QuickBooks also has a cloud-based online product that costs about $10/month.

I have heard good things about Zoho, another cloud-based accounting program (but have not used it myself).
https://www.zoho.com/books/

Another cloud-based personal budgeting app that has been recommended to us is “You Need A Budget” ($60 one-time fee for download)
http://www.youneedabudget.com/

No matter how well you understand your business figures, unless your finances are extremely simple and you’re filing a basic non-itemized tax form, it’s a good idea to find a professional accountant to look over your books once a year (or quarterly if necessary) and to prepare your taxes. A good accountant will almost always be able to help you find deductible expenses that you may not have thought of yourself, and she may be aware of changes in the tax code that can make a big difference.

April 15th is just around the corner, so grab life by the horns and good luck!

Make artWORK: I Love Budgets

Make artWORK: I Love Budgets

By Jennifer Wright Cook

Do you hate budgets?  Do you get hives when you are asked to do one for a grant or a presenter?

I love budgets! Yes, I do. Budgets are just numbers really.  And numbers are just numbers. They won’t judge you.  They won’t tell you how much you are worth.  They won’t reject you.

Budgets are information that you can use to make strategic decisions about your creative projects or your personal life or anything involving money.  Without a budget plan you risk making last minute decisions and using your credit card to finance your show or your life.

Budgets are mutable.  As your creative project unfolds over time you can update your budget with new information.  For instance, if you estimated that you could raise $3,000 from Individual Giving and you actually raised $3,500 that means you have $500 more for your work!  Amazing.  Maybe that means you can afford a consultation with a Costume Designer or you can pay your artists a tad more. 

And if you raise less than you estimated then you can make strategic decisions in advance about what you can cut.  Rather than going into debt yourself (again and again and again).

A budget is also a moral document.  It shows what you believe in and what you value.  If you show that you are paying your artists a decent fee for their time then that shows your donors and presenters that paying your artists is vital to you.  Conversely, if you don’t have artist fees then that shows something else.  (Yes, of course, whether you can afford to pay your artists or yourself is another matter.  But most funders and many presenters want to see that you aspire to that.  And, yes, you should aspire to that.  And you can make it happen.  Maybe it’s all inkind/donated for now but maybe you start small with a stipend for a show. And then you grow from there….)

Ok fine.  So in terms of your artistic life: how do I make a budget for my show?

Start with expenses by projecting what you will need and researching or figuring out how much each of those needs will cost.  Ask people you know, use your contacts and resources to find this information, and tackle it one item at a time.  Think about your whole project and any possible expenses.  Is your show outside for example? Then you might have expenses for permits, sound amplification, port-a-potties, etc!  You might also consider adding a Contingency or Miscellaneous line item (FYI some funders want to see detail on such lines and some won’t let you have any lines like these though).   

Your budgeted income should realistically include a variety of sources of support, including individuals, fundraising events, ticket sales, grants, in-kind (free) donations etc.  Count all possible sources, noting any sources already “secured,” or "received."   If you list any grants please be realistic and do your research.  For instance, if you list Jerome Foundation at $25,000 that’s crazy town.  Jerome (and any other arts funder) would think you don’t know what you are doing.  You want them to trust that you know what you are doing.

It’s really that simple.  Income and expenses. Not your worth.  Not your value.  Just plans and ideas. 

Some other things to consider:

·         Make sure that your overall budget is not too large or too small for your level of experience, scope of the project, and your history of carrying out similar projects.  Do research on your peers’ budgets.

·         Inkind income must be matched in expense.  So if you show $5,000 in donated rehearsal space you must show at least $5,000 in expenses for rehearsal space.

·         For internal purposes I often have 3 budgets!  My big dream budget, my realistic budget and my sh*t  hits the fan budget.   As the project unfolds I tweak my budget as needed.

·         Your final budget should always balance—meaning that income equals expenses.

And if you want an app or a program to help you deal with budgets?  Our amazing choreographic colleague, Yanira Castro, recently pointed me to YNAB (aka You Need A Budget).  She swears by it for her home budgeting.  And understanding your personal finances is key in knowing what you need for your artistic work! 

What budget tricks and tools do you love?  Tell us on Facebook or Twitter.

Make artWORK: OMG!! Tax Time

If you are feeling anxious about taxes, The Field understands.  Below are some tips on taxes from February 2014’s Field Tip.  These monthly writings are chalk full of advice on various topics related to artist’s lives.  Generally, you do have to be a Member of The Field to have access, but we thought this one should be for everybody.  Happy 2015 Tax Season!

The Field Tip

February 2014

OMG!! TAX TIME

By Shawn René Graham

While it is nice to enjoy the freedom of being a self-employed artist, we must also be diligent about keeping our paperwork in order and paying our taxes on time.  By April 15^th of every year, taxes must be prepared and paid and, like you, I feel a slight amount of unease at this time of year.  Like most artists, I receive a lot of income as an independent contractor and that means taxes have not been deducted from the money I received.  I find myself sitting amongst a pile of 1099-Misc forms by mid-February. On top of that, I have other expenses related to the services I provided and must make sure I have valid paperwork to verify that these expenses are related to my business.  So what are our tax obligations when it comes to being self-employed?  Here’s what you need to know:

Generally, you are self-employed if any of the following apply to you. 

·         You carry on a business as a sole proprietor or an independent contractor.

·         You are a member of a partnership or collective that carries on a business.

·         You are otherwise in business for yourself, including a part-time business.

As a self-employed individual, pay your estimated self -employment tax quarterly.

·         Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld if you are an employee of a company or organizations. If you hear the words "self-employment tax" is used, it only refers to Social Security and Medicare taxes and not income tax.  You can find information on how to pay these taxes here.

You must also file an annual tax return with the IRS.

·         Because we must also pay income taxes, you will need to file an annual return.  Your annual return is where you deduct your expenses.  In addition to a 1040 Form, you will also need to use Schedule C or Schedule C-EZ to report your income or loss from a business you operated or a profession you practiced as a sole proprietor. Click here to find out more.

So who can do all of this paperwork?  You guessed it!  You can prepare all of these forms yourself.  All of the forms can be found at www.irs.gov.  If you feel that you really need a tax professional, get one.  In some cases the expense of hiring a tax accountant is well worth it.  Just know that this will still require some work on your end.  You need to make sure that general accounting books, expense receipts and 1099-Misc forms are all in good order before handing them over to someone.  And well, it’s February, so if you have not put all of this paperwork in one safe place, now is the time to get organized.  April 15^th is just around the corner!

To fail and fail big: In Action: F*ck You Money (or how to build a Working Capital Fund)

In mid-May my partner and I adopted a beautiful newborn girl.  We named her Miranda.  I went on maternity leave the day she was born.  I was out for 3 months.  Sort of (e.g., I’m a control freak).

Six weeks of my 3 month maternity leave were paid by The Field.  2 weeks were vacation.  This means that for one month I wasn’t paid.  I have now come back to work ¾ time.  (My partner and I have some personal savings to support one month unpaid.  My partner works in tech and he also got paid parental leave.  We were both able to be with the baby for three months while working very intermittently and remotely.  Amazing.  Unheard of. We are privileged.)

How did The Field pay for my maternity leave?  In 2008, The Field strategically set aside unrestricted surplus money in a Working Capital Fund for “special initiatives, cash flow needs and financial challenges.”  We used it for the first time in 2013 when our first staff member went on maternity leave and we had to move offices.  We used it for the second time for my maternity leave.  Success! The Field has money to support staff leave!

Now how did we save that money in the first place? 1) We committed to saving. Every year, we included an expense line item in our budget for $2-$5k for our Working Capital Fund - right alongside traditional expenses like rent, salaries and paperclips.  And then we fundraised and earned income toward meeting this and all annual expenses.  We were transparent with all of our stakeholders and donors that we were doing this for our resilience, innovation and nimbleness.  No one questioned it. In fact, we were applauded for being “capitalized” unlike many of our peers who were undercapitalized.  2) We committed to ending every year with an unrestricted surplus  that we could then allocate to the Fund.  (How? We grew our earned income and unrestricted individual giving.) 3) We paid strong attention to our expenses.  We probably scrimped at times. (I wouldn’t necessarily do that again.  I would rather push income than scrimp.)

How can you do this in your life? At our “to fail and fail big” APAP session last January one of our guest speakers, Nature Theater of Oklahoma, told us that they always have a small pile of “f*ck you  money” so that their projects are not vulnerable to the vagaries of funders and producers.  You too, dear reader, should have a Working Capital Fund or f*ck you money for cash flow, medical needs, dream projects etc.  Don’t tell me you can’t.  Don’t tell me you are already hand to mouth. I know.  But even you, dear reader, can save a dollar a day.  Yes, you can.

So can a leader of a small non-profit really go on maternity leave?  Yes.

I have three Executive Director friends who are pregnant right now. They are all a bit nervous about maternity leave.   One of them also has a Board of Directors that is anxious about her leave (“what will happen without YOU?”).  The Field Board was incredibly supportive of my adoption plan and I gave them little to no reason to worry about my absence. 

Here’s what I learned on my maternity leave, some failures and some successes. 

1)      Give people an opportunity to lead (and then really let them lead): Instead of hiring an outside interim Executive Director I promoted two senior staff to “Interim Co-Executive Directors”.  They each brought different skills to the table and different energies.  The rest of our small staff and Board trusted them deeply. Success: They did a stellar job.  They became closer as colleagues.  They seemed to feel more empowered and invested in The Field.  Failure: see #3 below. 

2)      Check-in: I did weekly check-ins with my Co-EDs on any major projects or decisions to be made.  Success: They felt supported.  I felt connected and that I wouldn’t come back in 3 months to an unrecognizable situation, project or decision.

3)      I am a control freak:  This has definitely served me at times (i.e., success: I’ve gotten a lot done the way I want it done) but not for the long haul.  Failure: I worked more during my maternity leave than just weekly check-ins. I spent some time on a few grant reports and proposals that I just felt I had to do myself.  It wasn’t terrible for me (and my family) but I am sure it would have been fine if I had NOT worked on them.  Failure: the staff felt a tad confused (who is doing what? when?) and maybe less empowered.

So what’s the end result? I feel valued by an organization and a Board that supports me as a rounded human being with a growing family.  I feel like it’s possible to be an Executive Director and a Mom.  I leave work on time now.  I work 4 days a week.  I don’t work 80 hours a week.  I feel efficient and effective.  So far.  So good.

But I’ve been warned by Mom/artist friends to not talk about my baby.  “No one wants to hear it.  Everyone is working 80 hours a week for too little money. This is what we value.  Not family.”

Bullsh*t. I disagree.  I want it to be different. For me, for The Field, for others.  I’m working in my small ways to make it different.  At The Field at least and by being transparent, vulnerable and active in my work and in posts like these.

My question to you dear reader is: where do you want the arts to be different?  How do you want your life to be different? And what are you doing to make it different?

P.S.  I love the Artists Raising Kids compendium from Headlong!  Check it here http://static.squarespace.com/static/53767189e4b07d0c6bf4b775/t/5388abffe4b02f7f94909052/1401465855677/Artists%20Raising%20Kids%20Compendium.pdf