Hi, Just about to begin setting up my new business. I am a visual artist and sell my paintings. basically the sales are cash, PayPal, apple pay, or credit card. So I am wondering what is the best functional tab to use, customers, sales quotes, sales orders or sales invoices.
Any insights would be appreciated.
Gay
The best way is to folllow the guides. If straight selling to customers then you at least need to enable Bank and Cash accounts, Payments and Receipts. Also enable Customers and Suppliers. If you allow people to pay later for items you sell than you should enable Sales Invoices (otherwise entering receipts is enough). If you can buy supplies from someone and can pay later than also enable Purchase Invoices (otherwise entering a payment is enough).
Thanks for your reply. I had overlooked the payments and receipts tabs in my review of the guide. More often than not my customers will be a single purchase but then I would always have that info. Good to do.
Thanks again!
I would always register every customer under Customers tab. Just a question. Do you need to emit a regular invoice or just a payment receipt?
Interesting question Davide. I’m just starting out so at present it will be sales receipts. I could see needing invoices if say a corporation wanted to buy a piece but I don’t foresee that anytime soon. -Gay
So it will be enough Customers and Receipts module. Is you business on cash basis? Or accrural?
I had thought accrual, but am just reading about ‘modified cash basis’. A CPA’s article about sole proprietor artists. What got me on this rabbit hole is inventory.
So, do you need also to keep track of inventory items?
yes but it would be the substrates, matting and hardware, finished and unsold works and works in progress all at year end. Paint and all else are expenses. At least that is what my research is saying. Makes sense re: a tube of paint. That paint could be on any number of paintings (with the exception of installations and such, use two gallons of gesso on one piece it could be in COGS).
How would you allocate the COGS on a single paint? By surface?
@Gay_Jegers, I recommend you give serious thought to whether you should be keeping track of inventory at all. It is all too easy to become enamored of cost of goods, inventory on hand, production orders, etc. But where is the benefit, to you or the tax authorities?
The business of creative artistry is, in many ways, much like a service business. From an accounting viewpoint, you purchase consumable supplies. Please don’t take offense, but your paintings have very little inherent worth until one catches a buyer’s eye and they are willing to part with money to acquire it. That’s very much like a carpentry business, where no amount of skill accrues income until a homeowner wants a new cabinet in the utility room. Only when the carpenter’s skill meets the homeowner’s need does the labor expended generate value from an accounting standpoint. The carpenter’s time sitting around waiting for the phone to ring does not enter the picture.
Assuredly, the value of a painting is almost totally disconnected from how much the canvas or paints cost. And it doesn’t sound like you are maintaining framing stock to frame other people’s pictures, probably just your own. My point is that accrual accounting and inventory management seem pointless. Straight cash basis accounting should be ideal for you. Use payments and receipts for when you buy supplies and sell paintings. Sales and purchase invoices are probably useless, but could always be added later. You probably don’t need the Customers or Suppliers tabs. You need a bank account. You might need a credit card. If you are going to purchase things on behalf of the business, you should use Expense Claims.
Bottom line: your setup should be very simple. You’ll need to define one or more tax codes for your jurisdiction. But start small and simple. If your first income tax filing gets you to thinking you need better information, add capabilities then.
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Thank you! No offense given. In selling paintings the cost is the substrate and the frame. You don’t even count the paint! Seemed a lot of calculating for such a small amount of cost. It is the IRS schedule C that has me in the inventory rabbit hole…
Just the substrate and the frame and hanging hardware, that’s all!
Thank you! No offense given. In selling paintings the cost is the substrate and the frame. You don’t even count the paint! Seemed a lot of calculating for such a small amount of cost. It is the IRS schedule C that has me in the inventory rabbit hole…
This is why consulting with a qualified accountant as you design your accounting system and chart of accounts is vital. Yes, you will spend a couple hundred dollars. But you will save yourself many times that in aggravation later when your books match the tax forms. This definitely does not mean you have to pay an accountant to keep your books or file your taxes. Software you can can use yourself (Manager for the first and any of the reputable tax programs for the second) will take care of that. But an accountant’s knowledge during setup will keep you from making expensive mistakes that result in penalties. Whatever the accountant recommends can almost certainly be accomplished with Manager. (Be aware when you talk with the accountant that Manager only handles the perpetual moving average cost inventory valuation method.)
I suggest you to try to write down the easiest driver to do such a calculation with ease. Than we can see which solution under manager is best for you. I think that Inventory Kits, with a proper approximation, can be a module that can fit your needs.