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5.2 Accounting and Finance

Accounting and Finance

Marketplace 101 -  Small Business Accounting & Finance Made Easy (Market to Market)

Activity: Create and Manage A Budget

  1. Enter your budget and track actual income and expenses using the worksheet below. It may seem intimidating. Take it one number at a time. The totals will automatically calculate as you enter each number. The first column, Fiscal Year Budget is what you think you will earn and spend in each category from January 1 - December 31. Once you enter your budget, you won't typically edit it until next year. 
  2. At the end of every 3 months, type in what you actually earn and spent that quarter in each category.

The last column is the total amount you spent over the year. You can compare this to what you thought you would spend in the first column.

At the very bottom, you will see a profit $ or loss ($). Your goal is obviously to make a profit, but this is a difficult feet, especially starting out, and will often vary from season to season in any artistic discipline. If you are starting a nonprofit organization, change the "profit/loss" to "surplus/deficit". The goal is still to maintain a surplus of income that you can feed back into the organization. Nonprofits may be trickier in that if you don't spend funds from some foundations or other supporters, you are asked to give the money back.

Reflection Questions

1. Are there certain expenses that increase as you sell more work? Which ones?

2. Are there times of year when your expenses are relatively high and relatively low? Based on this information, what strategies can you employ to plan for times of year when your profits are lower or higher than average?

3. Build a sales spreadsheet. Consider including additional information, such as basic information regarding where the customer resides, how they found out about your work, how long the purchase occurred after their initial contact with you, whether they have made a purchase from you in the past and where they made the current purchase.

  • How can this information inform the market research work you began?
  • Are there any trends regarding what work sells the best, where and to whom?
  • Is there additional information you would like to gather about your sales to inform your market research?

4. Because of the sometimes complicated nature of accounting and finance, we recommend consulting with a Certified Public Accountant on such issues. Are there any challenges or questions you have regarding your accounting and finance? For instance, are there any items that you are unsure how to categorize as an expense, or are you unclear as to when you should record a sale? How could an accountant assist you with these issues?

  • Which accounting and bookkeeping functions do you feel comfortable addressing yourself? 
  • Given your budget, and the scope of your business, which accounting functions are you most concerned about having addressed by a trained accountant?

Resources

Creative Compass Guide, Managing Your Money 

Arts Council of New Orleans, Understanding Finance, Fresh Money Webinar

Artist Trust Article, Trade and Barter

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