ELY – Art in the North Country enhances more than just the area’s quality of life— it’s also an increasingly significant economic driver for the region.

And artists here at the end of the road recently considered the entrepreneurial nature of their craft when they gathered to learn from a local certified public accountant about the business side of being an artist.

CPA Chuck Zeugner explained that artists may be creative solely for their own enjoyment, or they may want to make a profit so that they can support themselves. “Artists wanting to earn money from their art need to recognize that their art is a business,” he said.

According to Zeugner, the first step in organizing the business side of art is to separate the business from the personal. “If possible, open a business bank account, keep records of income and expenses, and if you have a creative space in your home, keep it separate from your living space,” he said. “Being businesslike does not diminish the creative process. However, in the eyes of the IRS (Internal Revenue Service), if you are not trying to operate like a business, then you are operating like a hobby.”

Operating like a business will help artists keep tabs on expenses. Business expenses are the costs of carrying on a trade or business.

Artists generally have two types of expenses. The first is the cost of producing their art. “A painter might have expenses such as canvas or paint. Artists purchase some of these materials in large quantities and then turn them into their finished art,” he said. “This means that some of those items are kept in inventory.”

The second type of expense includes the general and administrative costs of running a business. These expenses could include rent or auto expenses, utilities, telephone, supplies, and more. Many artists also have equipment costs. “Some artists, especially those who are transitioning toward art as business, do not account for these expenses,” Zeugner said. “This might be especially important when it comes time to prepare tax returns.”

Another important consideration for artists is pricing their work. Artists make money by selling their creations. “Buyers will purchase a piece of art because of how it looks or makes them feel. They may also purchase it because of what they think it says about them to own or display it,” he said.

Because of that, the price of a piece of art is based on the skill and even reputation of the artist. “Artists, however, must understand that the components of price include the materials and labor used to produce the work, plus some amount that represents the talent and skill of the artist,” Zeugner added. “This is important because many artists forget to include the materials and labor costs when they sell their work.”

He offered two examples— framing and making note cards. Even simple frames are expensive, and the cost of printing cards can be surprisingly high. “Nevertheless, many artists forget these extra expenses when they sell their work, and they sell their work for little more than it costs to produce,” he said.

Artists also produce income by sharing their gifts and teaching others how to be creative. While most artists have some understanding of the value of their time while teaching, they often neglect the materials cost of classes.

“Teachers often assume that the cost of materials for a class is simply the cost of the raw materials,” Zeugner said. “Doing this ignores the cost of the time required to prepare the materials for use. For example, a jewelry maker may use precious metals and stones or beads and wires and cord in a class where students make earrings and necklaces. The instructor doesn’t just pile the items on a table at the beginning of class. Instead, the instructor takes the time to assemble kits of materials and in some cases even does some of the preparation work in advance. The true materials cost is the cost of the raw materials plus the time to assemble the kits and even the packaging material. Not counting all of these other costs means that teachers may not be charging enough for materials when they teach classes.”

Artists hoping to earn money with their art should understand the business components of their work. “This includes keeping their business finances separate from their personal finances, keeping records, understanding expenses, and pricing their work properly. Then again, art is not always easy for accountants,” he said.