Are your art activities a business or a hobby, and why it matters.
It’s Tax Time Once Again
It’s that time of year again, tax time. I often hear people talking about their hobbies. Hobbies bring us joy and relaxation, and sometimes… they can become a side hustle. One never knows where their hobbies may take them. I’m the kind of person that I like to see how things play out. It makes life more interesting.
When it comes to art, it’s no different. Art means different things to different people. Even the subject of art can be up for interpretation. It could be as simple as doodling. Or spending years on getting a Master of Fine Arts Degree. And there are many possibilities in between.
I hope that if this describes you in any way, it brings you joy. If there’s no joy, I advise that you find something else as a hobby or course of study.
I am an artist that falls in there somewhere. I seriously took up painting again in 2015. (I will have to tell that story in another post). I had not painted anything at all since I was a senior in high school. My career focused on real estate investors, personal and business credit, and legal but creative financing. I also scripted videos and became a color analyst. I was creative each day, just not as an artist or a painter.
It all began when I went to Michaels and purchased brushes, canvases, and acrylic paint. I used one of my reference photos from a trip to Montezuma’s Castle for my birthday. I started painting, watching the colors flow on the canvas. I was really mesmerized by both the visual flow and the way it felt to create with paint. Since that day, I haven’t looked back. I’ve been painting ever since. Studying, practicing, and exploring.
What Is Your “Why”
Before I share more on clarifying your art activities, as an artist, why should you care whether your art is a business or a hobby? Does it really matter? I believe the answer lies in what your purposes and goals are. If you enjoy making art for yourself, your family, and your friends just because it brings you joy to do so. If your sole purpose is because it makes you happy, it’s a hobby. And, that’s not a bad thing.
I was in this position years ago. But over time, once I saw what I could do and how it made me feel, I started to transition to taking it seriously. I wanted more. As I got better at painting and I saw my potential, I started going to local galleries. I saw work from local artists, attended a few events, and decided that I wanted that life focus, too. I was invited to join a local gallery. I was beyond excited about this new path. I was just getting a taste of being a true artist when life happened.
It was at this point in my personal journey that I realized my husband was ill. Throughout his illness and as it became clear that he was terminally ill, I used art as my therapy. Being a full-time caregiver for your spouse, knowing that each day will be the best day as things will only worsen, art was my escape.
I waited one year after my husband transitioned at home to clear my head and find myself. This timing wasn’t planned; I allowed my healing and grieving to evolve naturally.
It Was Time To Create My Business
I accepted an opportunity to have a solo exhibition at a nearby library. That’s when I officially started a business in Michigan. I have an EIN and everything. I’m an official business.
This decision is one not to be taken lightly. As for me, I started honing my craft and put survival and my husband’s needs first. I wasn’t able to focus on a business at that time. So, I did what I could. I worked to improve my skills whenever I had the opportunity. I was in survival mode, but looking forward to having a life again where I could start an art business.
You Need To Choose Where You Are Trying To Go
There are many options. You do not need to be a business, but you do need clarity. Are you a hobbyist or a business? Unless you have a clear vision of what you are doing and where you want to go, no one else will be able to understand what you are doing either. This does matter if you are confused about what you’re doing and how you present yourself. If you want to reach your goals, whatever they are, it all has to be clear in your mind. Having clarity about the path that you’ve chosen can save you a great deal of time, money, and emotional energy. How do you determine what to do? All of your family and friends keep saying, “You should sell your artwork!”
Do you find yourself daydreaming about staying home all day painting, being outside in nature, with the wind blowing through your hair? If you struggle daily with how to make a living as an artist by producing art, there are some things to consider to see if this career is right for you.
Ask Yourself These Questions
I suggest you set aside some time to ask yourself a few serious questions.
Are you prepared to do whatever it takes to run a business as an artist? Every career path has challenges. Is your work ready to be represented by a gallery or two? Are you ready for constructive criticism, or rejection? Do you even want to be represented by galleries? If you do want to be in a gallery, are you prepared to follow their guidelines? It will require that you share your commission (most want at least 40% to represent you). You will have to increase your prices accordingly. What market do you want to sell it to? Who is your target market? Will your prices put off new collectors? Do you need a gallery representation to market and negotiate on your behalf or are you ready to take on those roles yourself? Are you prepared to work by yourself predominately? Or, do you need daily social interactivity to be happy? Are you physically able to load and unload your inventory to go to art events? Do you have family or friends that can help out from time to time? Do you have the funds to travel, pay booth fees or jury fees to enter events? What if you are commissioned to do a painting and there are complications with the people who hired you and they don’t like your work?
Any new endeavor takes time. You have to lay a solid foundation and build upon it. There are no shortcuts. You are a unique individual. It is imperative that you be honest with yourself about your skillset, experience, and what makes you happy. Know yourself. This truly is a career where you, the artist, are self-employed.
Once we are honest with ourselves and have reviewed where we are strong and where we are weak, wherever we need help, we have to find solutions. Do you have a supportive friend or partner that can help you with the things you cannot do yourself? If that’s not available, then you have to outsource these things. Maybe hire an assistant or a professional service provider. This means you will have to figure these costs into your business. If you want to earn a living from your art, you have to run your art business as a business. You have to have this mindset right from the beginning if you want to be successful. Learn how to run a small business and how to market it, or hire those that can help you do it.
Here are some of the questions the IRS will have you review to see if you can determine whether or not your art activities are a hobby or a business:
Is your art activity expressed in a businesslike manner? Do you keep complete and accurate records of your purchases and expenses?
Do you intend to make your activities profitable?
Do you depend on this income for your livelihood?
Are any losses from your art activities due to circumstances beyond your control? Or are they normal for the startup phase of an art business?
Do you strategize how to keep more money from your art activities?
Do you have the knowledge to operate a profitable venture? Do you have qualified advisors to turn to?
Do you have prior experience operating a profitable and successful art business?
Has your art activity generated a profit in years past? Is it still profitable now?
Can you expect appreciation for the assets related to your art activity?
If you want to drill down even deeper, here are more questions you may want to consider.
There are benefits to being a small business owner versus a hobbyist.
While it is true that you may see more loss than profit in the first years of your business, (as with any other startup), despite actively trying to earn a profit, there are benefits and rewards. All of the successes and failures are yours. You get to take full responsibility for your journey. If you are a take-charge individual and enjoy creating your own path and are up for the challenges, this might be a good choice for you.
Some benefits you might enjoy as a small business:
Take doing something you love and create a significant profit
At tax time, you can deduct small business-related expenses
You will have the opportunity to see if you are eligible for sba loans or grants
You get to take charge, be your own boss, manage your own schedule and workload
Each day is your day doing whatever you feel needs to be done
There is much more to be said on this topic that I cannot delve into in a blog post. I hope this information makes it easier to define your daily art activities and helps you decide for yourself whether you want to be a hobbyist or an art small business owner.
Regardless, may you enjoy the journey and create your art.
Be well, be blessed.
