A mentoring committee cohort reminded me today that it’s good to get the more immediate prep stuff for open studios out there early. Good point, Caren! Check out Caren Catterall’s artwork, it’s amazing and she has good stories, too.
Valerie Adams and Caren both have experience with mentoring, both created action sheets, and I’m using some of their suggestions, insights, agendas to fill in the blanks. (Thank you both! I don’t need to reinvent the wheel…!)
First, legal stuff. Collecting sales tax (for state and city/town taxes), a business license (for the same reason), insurance.
I was spoiled in New Hampshire. No state income tax, and no sales tax. (I still apologize to people when I have to add sales tax to their purchase, and that bewilders them.)
There are two official/legal business documents I had to acquire, both through government agencies, and hence not always intuitive. But I got through it, and you will, too. Most important was a business license. I’m fortunate to live in an actual city, so this was relatively easy to find and navigate: A Santa Rosa business tax certificate. To find yours, just Google “business license” or “seller’s permit” etc. and your city and state. Your search engine will understand what you’re looking for and get you to the right place. Things are pricey in California, and yet a business license here is only $25, and gets renewed annually. There’s an add-on tax for your sales, but it’s not daunting, and it has a cap. And that $25 covers your taxes up to $25,000. (So for me, nothing to worry about. Dang. The plus side of not being a ‘financially successful artist’….)
The two open studio events I participate in requre a local permit to be prominently displayed. I mean, not in your display space, but somewhere people can easily see it. Just like your return policy and custom orders terms.
California also requires a business license from the California Board of Equalization. It’s a little more complicated but not fatal. The reason you need both is because both state and city collect sales taxes on purchases, so you need to report your sales to both. Again, if you forget where this link is, a simple Google search will get you where you need to go.
OR, just ask someone who’s in the same area, and/or in the same biz, or same kind of biz (self-employed, free-lancer, entrepeneur, etc.) for advice about how to get started.
What sales are taxed, and which ones aren’t, is still a puzzler for me, and anyone who has expertise on this, please share your suggestions in the comments. If they fit the bill and you are okay with this, I’ll edit this article to include your advice!
Basically, if my work is sold in a gallery or store, then the sales tax has already been collected. I only need to report that income as…well, taxable income.
In our studios, we need to add up every sale, of course. But one error I made early on was adding the TOTAL dollar amount paid. Later, I realized I was computing tax on the sales tax! In my area, I was adding a little less than 10% in sales tax, so a $200 purchase was actually rung up as $220. I was paying a tax of $22 on an item I’d added $20 tax to.
That $2 isn’t much. But if you’re selling artwork for $10,000, it’s a big difference!
I figured out that multiplying $220 x 91% got me close to the actual taxable amount of $200 again. But going forward, it’s a heckuva lot easier to keep a tally of the actual price of what was sold before adding tax. (Have I confused you? Join the club.)
Next, insurance. I discovered early on that our home insurance covered the studio in our hourse back in New Hampshire, and the same company’s rental insurance covers my studio outside my home. Check your policy, too. If it’s not covered, ask your mentor (for our two open studio tour events) or another artist in your area what they do.
Coincidentally, I found an email about this very issue from a craft business magazine (Handmade Business, formerly known as The Crafts Report) that I used to write for: Handmade Artisan Insurance The rate seems a little high, but it’s been awhile since I’ve needed extra insurance. Also, these policies cover an entire year, including off-site events (art and craft fairs, for example.) If you don’t intend to open your studio year round (say, by appointment) or don’t do shows, etc., then you might find affordable policies where you only pay for one event. Not my field of expertise, though, and again, the internet is your friend for finding information. Let me Google that for you
As I shared in a previous article about signage, to protect yourself from unethical customers, we must also post our terms of service: What we accept in payment (checks, cash, credit cards) and how we will process those payments (PayPal, Square, Venmo, etc.) We need a sign prominently displayed on the conditions of our layaway plan, custom orders, and our return policy.
Last, whether or not our studio space is legally “wheelchair accessible” can get confusing. When my studio was at South A Street in downtown Santa Rosa, I simply asked the owner of the coffee shop next to me if my space was accessible. There were no steps, and the door was wide enough for a wheelchair. But he said no, because the floor rugs could jam a wheel, and there was a slight bump in the doorway. Yes, most people could get through (and did!) but technically, I couldn’t claim it as legally accessible. That’s about all I know about this subject, so share your experience and research on this if you can, okay? It’s safer for us to share this if a prospective visitor checks in with us, than to raise their expectations, and then disappoint them if there are barriers we didn’t recognize.
Also, be aware that there are a handful of people who make it a full-time business to seek out businesses that are not technically compliant, and sue the pants off them. My understanding is, unless we have store hours, we don’t have to meet this demand. (Don’t take my word for it, this will take time to research!) But it makes it even more important that we stick to actual legal requirements in describing our accessability.
Whew, I’m done with this part! Fine print, legalities, none of this is my forte, and just researching this stuff enough to share it with you today has drained my batteries. But I hope it’s enough to get you started, and in time to get it all nailed down before your event.
Remember, ask your friends, your fellow artists, other people in your building (the ones who are artists/creatives) for more details.
And also remember, as cumbersome and confusing as some of these requirements might feel, once you get it done, renewing all these legal documents is easy-peasey.
Last, again, if you have strong experience with these topics, and/or professional experience, feel free to share that here! I will bow to your bigger experience and be grateful.
And a P.S. after the “last”…if you find these articles helpful, please pass on a link to them to anyone that mind find them useful, too. And sign up for my newsletter to make sure you don’t miss a single one!
Luann Udell 