Paying Taxes
Paying taxes is a normal part of doing business. As a businessperson, you'll be required to familiarize yourself with applicable tax laws and to keep accurate records of any transactions you're involved in. The better prepared you are for tax season, the less likely you'll be to pay too much.
Sales Tax
Merchandising is a great way to generate additional income from your cartooning. Readers often buy coffee mugs and T-shirts emblazoned with their favorite cartoon characters. If you operate a Web site, you can reach a large number of potential customers and facilitate the ordering process quickly and easily.
Be sure to operate within the limits of the laws in your area. If you sell more than a certain dollar value, you will be required to report that income. You may be also required to charge sales tax for the goods you sell and remit that money to the state.
There is a bright side, however. If you're collecting sales tax, you need to register as a vendor. You will be issued a resale number that allows you to make tax-free purchases on those materials used in producing your goods.
Record Keeping
Be sure to keep accurate records of all of your purchases and sales. Keep the receipt from every purchase of cartoon-related merchandise. Write a brief description of the item and its usefulness to your cartooning at the top of each receipt. Issue a numbered sales slip or invoice with every sale, and retain a copy for your records.
File these documents in a fireproof lockbox. Try to keep your files in a neat, organized manner. If you end up getting audited, the last thing you'll need is to try to organize a box full of loose receipts under pressure.
Hiring a CPA
Becoming a professional cartoonist is much like launching a small business. As such, it's a good idea to have someone on your side to help you navigate the foreign terrain. Try to find a CPA who has experience dealing with freelance artists. Ask colleagues for referrals.
A CPA can help you in several ways. If you're selling merchandise, your CPA can get you registered as a vendor in the state and explain all of the local requirements. Furthermore, your CPA can help you find the deductions necessary to keep your small business running. If it is used for cartooning, some of the cost of a new computer may be deductible. Here are some other possible deductions:
Your art supplies — pens, ink, illustration board, and so forth — may be deductible.
If you've completely set aside a room in your house as a studio, a portion of your mortgage or rent payment may be tax deductible.
If it is used to help produce your final work, the cost of a new computer or computer equipment may be at least partially deductible.
Any travel you incur in promoting your cartooning may be at least partially deductible.
Certainly, a good CPA isn't cheap. But the money you'll save and the guidance you'll receive are well worth the expense. Besides, you can deduct your CPA's fees on next year's taxes.
