Tax Considerations

As an artist, your taxes will vary based on your discipline.  Please note that the following information is for educational purposes only and should not be considered professional tax advice or counsel. You should always consult a tax professional who will have deeper insight into your obligations for both your personal and work-related finances.

Before speaking with your tax professional you can use this guide to arm yourself with the proper information about the types of taxes that exist for small businesses and artist entrepreneurs. These definitions have been taken from Investopedia.

Property tax is associated with the property’s value. It takes into consideration the land, improvements on the land (such as building, remodeling, etc.) and personal property (moveable objects). Typically this tax occurs on an annual basis.

Income tax is associated with both personal income and the income of your business (if you registered your creative practice as a business entity). The tax is placed on any profits you make on your work, net gains, and any other type of income related to your work.

A sales tax is placed on any goods or services that are associated with your work. This tax is sometimes referred to as the value added tax (VAT) and mainly applies to a small business. It is important to note that sales tax is typically regulated by the state, and may vary. For that reason, you should be aware of the sales tax charged for the market in which you sell your work.

If you employ other artists or individuals, you will need to consider the employee payroll tax. In reality, this is a tax that is comprised of two similar types of taxes. Employers are required to withhold a specific dollar amount from the employee wages to help contribute to social security and income taxes. In addition, the employer uses their own funds to pay their portion  of  contributions to the social security system on behalf of employees.

As an artist, you may have to contribute to the self-employment tax if you employ yourself for creating work and obtaining benefits from your work. If you have established your work as a business entity (sole proprietorship, contractor, partnership, or Limited Liability Company) you may be required to contribute to this tax.

Often referred to as an indirect tax, excise tax is placed on a piece of work in addition to the sales tax. This tax focuses specifically on the creation of a piece of work with the intention that it will be sold. In simple terms, the artist will charge more for the piece than it cost to make. By pricing the work with the intention that he or she will recover the cost of the tax, you pass the tax burden onto the audience or consumer.

There are several additional resources for taxes on the web. A few of them are Arts Tax Info, the Ohio Society of CPAs, Ohio Department of Taxation, Tax Form Library, IRS Small Business and Self-Employed Tax Center.