Who Does Your Taxes?

Who Does Your Taxes?
CPA, Chris O'Keefe, recently spoke at an AIGA Richmond coffee talk to a group of local creatives.

“So the 7 little dwarves had a limited partnership in a small mining operation. And one day a beautiful princess came to live with them. And they bartered housekeeping services for room and board, which was a real good deal for them because they didn’t have to withhold social security or income tax or nothin’, which you’re really not supposed to do, you see, but for the purpose of the story, I think it’s okay. ” —Louis Tully, Ghostbusters (1984)

I recently attended an AIGA Richmond Coffee Talk presenting Chris O’Keefe, CPA on tax preparation for creatives. Handling the business side of things is less than glamorous. In fact, I rather loathe it. Fortunately, I am already very organized to the point of being anal retentive. (I would so love to get my hands on some NZT) But organizing and/or scanning receipts just doesn’t do it for me. However, in order to keep a business happy and healthy, it must be done.

Here’s a run down on some of Chris’ main points:

  1. Document every thing
    • Mileage ($0.55/mile): this includes driving to events, activities, client meetings, etc.
    • Meals: 50% of the meal cost is deductible but 100% of the tip is deductible
    • Receipts and deposit slips
    • Keep records for the last six years
    • Document any medical and dental expenses including mileage
  2. Get into a routine
    • Once a week sit down and enter receipts, document mileage
    • Scanning is best and you can shred the paper
  3. Categorize
    • Categorize your receipts but don’t over categorize
  4. Deductions
    • Ordinary and reasonable expenses
  5. Employees
    • Hire a payroll company to handle it
  6. Turbo Tax
    • Set up a mock return with your current data to gauge tax implications
  7. Sales tax
    • Whether or not you need to pay sales tax depends on how your contract is written
    • What are you delivering at the end of the day? A service or a product?
  8. Donated services
    • Only tangibles are tax deductible
  9. Need to amend a return?
    • You can always go back and file an amended return if you’ve forgotten something
  10. LLC or Sub-S?
    • This is a question for a lawyer not an accountant. A lawyer will help you determine the best fit for you and your long term goals.

Need to know more? It helps to work with an accountant and attorney who are familiar with creative organizations and freelancers. Many will provide a free consultation so you can decide with whom you’d like to work.

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Kim Spencer is a designer, artist and college professor. She currently serves as vice president on the board of AIGA Richmond and previously served as chapter president and new media coordinator. Kim is the founder and resident creative of Protozoa Design. Kim's background originates in fine arts earning a BFA in Crafts from Virginia Commonwealth University in 1997. In 1999, she returned and earned a second BFA in Communication Design. In addition, Kim holds a Master of Liberal Arts degree in Film Studies from the University of Richmond. Kim spent the last seven years with an in-house team in higher education but as the work became more repetitious and considerably less creative she decided to strike out on her own. With over a year in planning, Protozoa Design opened its doors in January 2011. The creativity has over flowed into identity, print collateral and exhibition design. Now coming full circle, she’s found her way back to furniture design. Kim also teaches in the respective graphic design departments at Virginia State University and Virginia Commonwealth University. She resides in The Fan with her husband, son, four cats and extensive Star Wars Lego collection.
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