Tax time is already onerous – there’s a reason why the word ‘taxing’ means wearisome or challenging. And submitting a tax return is even more demanding when you’re juggling the paperwork required for JobSeeker or JobKeeper while also trying to maintain an arts practice.
Whether you keep invoices in shoeboxes or track them with an app, no matter your artform or income, as the sector begins to slowly emerge from the chaos of COVID-19, staying on top of your finances is now more important than ever.
Here, four specialised arts accountants respond to the question: What’s the best financial advice you can give for difficult times?
EDUCATION IS POWER
‘Your business finances should be managed all of the time, not just at tax time. The best antidote to fear is competence. So empower yourself with education and accountability,’ said Electra Frost from Electra Frost Advisory.
‘If you’ve only been doing your accounts yearly or quarterly, now is the time to make a monthly commitment. If the nightmare of accessing JobKeeper has taught us anything, it’s that monthly reporting and forecasting is no longer optional. This way, you learn to know how much tax you’ll owe as you go along so the annual tax panic becomes a thing of the past,’ she added.
Read: Important lessons COVID-19 has taught us about tax returns
BE PREPARED
Tom Harris, Managing Director of White Sky – one of Australia’s leading accounting firms specialising in music and arts businesses, with offices in Sydney and Melbourne – said: ‘What we’re all living through at the moment results in a lot of uncertainty, so I think the best advice is to stay on top of your accounts.’
Harris also emphasised the importance of routinely looking at finance. ‘Regularly review where things are at so you can predict where things are going and factor in all possible scenarios. The best financial advice I can give right now is to be best prepared for whatever unknown situation occurs next.’
Read: Translating business jargon so artists can focus on making great art
DEVELOP CONTINGENCIES
‘This is a one-hundred-year event that has just happened to us. It’s the most extreme thing I think that will ever happen to any of us. And it’s a good example of just having contingencies. It’s about planning ahead,’ said Michael Fox, the Principal of Michael Fox Arts Accountant & Valuer.
‘There’s an anthropologist who uses the term: constructive paranoia. And I think that’s really what’s come out of this is I think we need to be constructive paranoids.
And it doesn’t mean you’re not an optimist, you just need to know, or have in the back of your mind that something could possibly not go the way you think it’s going to go, and then how do you respond to that if it happened to you.’
Read: Skin in the game: why artists need to take control of their finances
HAVE DOCUMENTATION
Matthew Tucker, Principal, Creative Crunchers told ArtsHub: ‘We think being on top of the business, being up to date with everything, helps. Often clients are playing catch-up with these things. Approaching end of this financial year with a clear picture, you will be in a better position.
‘If a client ever goes through an ATO audit they know they are not pleasant, and it’s because of an enormous amount of record keeping – this is what you are required under the law to provide.
‘The reason that they lose [under an audit appeal] is that time and time again is the lack of documentation. You have got to play a role,’ he said.
Working with an accountant who knows your industry is enormously valuable, Tucker added.
‘The more that practitioners are steered toward an accountant, specific to an industry, the more scope they will have in those conversations, and more aware they will be of the provisions available to them.
‘When a relationship works best is when they can latch on to an accountant and not be scared off. We try to educate them along the way and impress on them that these things are important,’ he concluded.
