I spent the week whining to myself about how hard it is for U.S. artists to legally sell their work. I'm not wrong. It’s true, many administrative hurdles block artists from starting small businesses, but maybe my whining is overly dramatic. Other entrepreneurial wannabes have to stumble over the same hurdles. Just about anyone who wants to start a small business in the U.S. has to do a few things if they are going to operate above the radar, and when I say “radar” I mean the IRS radar. The IRS thinks you are running a business if you have at least $400 in net profit when you file your annual tax return. Sell a couple paintings, lead a couple workshops, and there you go, bam, you might owe somebody some taxes.
And don’t get me started about the confounding world of sales taxes. The topic irks me so much that I’ve cut off my hair, literally whacked it back to an inch, so I am not tempted to yank it out by the roots. I’ve even toyed with the idea of moving back to Oregon, which has no sales tax, just to avoid the whole headachy mess of charging sales tax.
I'm freaking out on behalf of all U.S. artists. It's my way of being of service. You're welcome. It’s not like I sell my art. I’m not even making art these days, at least, nothing anyone can put their finger on. Earlier this year, I was selling some 99-cent templates to dissertators on my website, until I realized, hey, I should probably be charging sales tax to customers who live in Arizona. Considering the likely number of Arizona-based dissertators (few, I'm guessing), the odds that I would owe more than a dollar are slim to none, but rather than find out the hard way, I now give the templates away for free. I do not want to rouse the wrath of the State of Arizona. In any case, I never collected mailing addresses, so I have no idea where my buyers live.
All that got me thinking about what artists must go through to be sales-tax compliant. If they sell any tangible art at all, and if they live in a state that has sales tax, then the artist is supposed to collect sales tax from buyers in their state and remit it to the state. I’m not even going to mention the regulations affecting artists who sell digital art remotely into other states. Let’s just keep it simple.
Forty-five of the fifty U.S. states have a state-level sales tax. If you live in one of those states, and sell art to buyers who live in or visit that state, then you should be collecting sales taxes.
It sounds so simple, doesn’t it? Until you factor in the artist’s brain.
Think about what artists are being asked to do. To collect sales tax from buyers means artists must keep track of sales and money. What are the odds of that happening? Artists don’t use Quickbooks. They don’t even use Excel. Artists use napkins and sticky notes, notebook paper, and handmade journals with cats on the covers. Ask artists to produce an income statement or a balance sheet and their eyes will roll back in their heads as if someone had asked them to do math. Right.
Second, to remit those funds to the State means artists must register with their State (unless they live in one of the five states with no state sales tax). One look at the web form would make most artists run screaming into the night. It won’t take long for them to realize if they register to collect sales tax, they will need to apply for a business license. Then it’s one slippery misstep toward opening a business bank account, hiring an accountant, and discovering they owe income taxes. The next thing they know, all the joy and creativity they derived from their artmaking is gone, and now they are running a business. Bummer.
Third, the artists must remit the funds to the State. Dream on. All the artists I know will be using those sales tax funds (supposedly held in trust for the State) to pay their rent and buy their Frappuccinos. This is how I got into debt. Back in the 1980s, I found out too late, from the accountant I hired too late, that I should have been collecting sales tax on the clothing I made and remitting it quarterly to the State of California. Darn it, now you tell me.
Fast forward to now. I could have registered with Arizona. But I know the limitations of my artist brain. I balked after I found out the terrifying fact that even if I had no sales, I still must report to the State or be fined $100. That means $100 in fines for each missed sales report. It's like checking in with a probation officer. No check in, uh-oh, warrant for your arrest. In the face of financial terror, my brain goes gunnysack. Art becomes a burden, and all outcomes favor the State.
Lawmakers don’t get it. They think artists will prepare business plans, hire lawyers and accountants, install and learn Quickbooks and Taxjar, and file their tax reports with the State on time. As if! Maybe on another planet in a galaxy far far away, where artists are the lawmakers and lawmakers are the whiners. What would a world run by artists look like?
I'm freaking out on behalf of all U.S. artists. It's my way of being of service. You're welcome. It’s not like I sell my art. I’m not even making art these days, at least, nothing anyone can put their finger on. Earlier this year, I was selling some 99-cent templates to dissertators on my website, until I realized, hey, I should probably be charging sales tax to customers who live in Arizona. Considering the likely number of Arizona-based dissertators (few, I'm guessing), the odds that I would owe more than a dollar are slim to none, but rather than find out the hard way, I now give the templates away for free. I do not want to rouse the wrath of the State of Arizona. In any case, I never collected mailing addresses, so I have no idea where my buyers live.
All that got me thinking about what artists must go through to be sales-tax compliant. If they sell any tangible art at all, and if they live in a state that has sales tax, then the artist is supposed to collect sales tax from buyers in their state and remit it to the state. I’m not even going to mention the regulations affecting artists who sell digital art remotely into other states. Let’s just keep it simple.
Forty-five of the fifty U.S. states have a state-level sales tax. If you live in one of those states, and sell art to buyers who live in or visit that state, then you should be collecting sales taxes.
It sounds so simple, doesn’t it? Until you factor in the artist’s brain.
Think about what artists are being asked to do. To collect sales tax from buyers means artists must keep track of sales and money. What are the odds of that happening? Artists don’t use Quickbooks. They don’t even use Excel. Artists use napkins and sticky notes, notebook paper, and handmade journals with cats on the covers. Ask artists to produce an income statement or a balance sheet and their eyes will roll back in their heads as if someone had asked them to do math. Right.
Second, to remit those funds to the State means artists must register with their State (unless they live in one of the five states with no state sales tax). One look at the web form would make most artists run screaming into the night. It won’t take long for them to realize if they register to collect sales tax, they will need to apply for a business license. Then it’s one slippery misstep toward opening a business bank account, hiring an accountant, and discovering they owe income taxes. The next thing they know, all the joy and creativity they derived from their artmaking is gone, and now they are running a business. Bummer.
Third, the artists must remit the funds to the State. Dream on. All the artists I know will be using those sales tax funds (supposedly held in trust for the State) to pay their rent and buy their Frappuccinos. This is how I got into debt. Back in the 1980s, I found out too late, from the accountant I hired too late, that I should have been collecting sales tax on the clothing I made and remitting it quarterly to the State of California. Darn it, now you tell me.
Fast forward to now. I could have registered with Arizona. But I know the limitations of my artist brain. I balked after I found out the terrifying fact that even if I had no sales, I still must report to the State or be fined $100. That means $100 in fines for each missed sales report. It's like checking in with a probation officer. No check in, uh-oh, warrant for your arrest. In the face of financial terror, my brain goes gunnysack. Art becomes a burden, and all outcomes favor the State.
Lawmakers don’t get it. They think artists will prepare business plans, hire lawyers and accountants, install and learn Quickbooks and Taxjar, and file their tax reports with the State on time. As if! Maybe on another planet in a galaxy far far away, where artists are the lawmakers and lawmakers are the whiners. What would a world run by artists look like?
My artist brain is not the brightest crayon in the box but it knows when the system is rigged against it. If you are one of those rare artists whose left brain works as well as your right brain, apologies for lumping you in the crayon box with me and all the other ratty, worn-down crayons. I hope you will run for office. I would definitely vote for you.
