EEECK - it's that time of year again! After getting through the mad rush of 4th quarter holiday sales, it's time to start getting your arts and crafts accounting records in order for your 4th quarter tax deposit and tax return preparation next year. If you've been using some sort of accounting software during the year, your work is probably limited to taking inventory and figuring out which of your fixed assets need to be depreciated.However, if you've just been shoe boxing your expense invoices and customer receipts all year, don't despair! Follow along with my paint-by-numbers way to get your arts and crafts accounting records organized.
Consider Using Boxed Accounting Software for Your Arts and Crafts Business
You would think that since I am a CPA I organize my arts and crafts business records using off-the-shelf computerized accounting software like QuickBooks. Well, you'd be wrong! Most of my arts and crafts income and expense transactions are electronic so it's easier for me to keep track of my records using an Excel spreadsheet. Plus,it's just too time consuming to keep track of my numerous arts and crafts raw materials and components using a off-the-shelf accounting software program.
However, many arts and crafts businesses can simplify their accounting life by using software. If you haven't done so already, download the 30-day free trial of QuickBooks to see if it will do the trick for your business. You can buy QuickBooks 2013 on Amazon for under $200. Most of the bad reviews seem to be users who didn't see the value of upgrading from the 2012 version. At a fraction of the price, you may also want to try Quicken. Once again, the poor reviews on Amazon for Quicken appear to be mostly for the 2013 upgrade.
If you are interested in using software to keep your accounting records, I've written tutorials on topics such as creating your chart of accounts and avoiding common data entry mistates.
Divide Your Arts and Crafts Expense Records and Conquer!
Not going to use an off-the-shelf accounting software program? Then check out my old-school method for organizing my arts and crafts business records.Each year I set up a new spreadsheet (I use Excel but any spreadsheet program will work. Open Office is a free, well respected open-source office software suite for word processing, spreadsheets, presentations, graphics, databases.)
Setting Up Your Spreadsheet Expense Columns
I set up three mains columns in my spreadsheet for the date, vendor,and amount. I keep it simple by using my arts and crafts business credit card for my arts and crafts business related purchases - and for nothing else. During the year I also usually have a very deminimis number of cash purchases.
Every time I make a purchase, I file the receipt in a folder for the appropriate month. Then when I receive my credit card statement, I compare the receipts to the statement and enter each transaction into my spreadsheet into the appropriate expense column.
For my arts and crafts business, I have nine: inventory, arts and crafts supplies, shipping, office supplies, fixed asset purchases, education, M&E, travel and misc.
As an aside, I also have a folder set up for frequently used art and craft supply vendors. My order confirmations go in these folders so I can check the confirmation against the order when received so that I can make sure that I wasn't short-shipped. Also, it's a good way to keep track of who I ordered what from and the price per unit when last ordered.
When placing a new order, I always check to see if and by how much the price per unit has increased. My cost of goods sold is my highest expense. Sometimes I need to vendor shop to keep costs in-line with the retail price of my handcrafted items.
The next page in this series of articles shows an example of a spreadsheet and defines the column headings - for example - what's the difference between inventory and arts and crafts supplies.