One of the less-glamorous sides of being an artist is managing all the business stuff. You probably know what I’m talking about: paying income tax, invoicing properly, making sure you’re registered for GST. I’m falling asleep just typing that because it is excruciating to even think about.

But bear with me because this stuff, while annoying, is important. It’s never going to be fun, but by having a handle on a few of these things, you can make it a lot easier on yourself, so you can spend your time focussing on art rather than paperwork.

To get an inside view, I had a chat with Shona Roberts, Business and Finance Director for the Auckland Arts Festival. She mostly deals with performing artists, and she had some great stories for me that you can learn from to make everyone’s life a little bit easier.

Here’s the rule: if you’re an “entertainer,” (i.e.: an actor, singer, comedian, whatever), and you get hired to ply your trade, your employer is going to take some tax out of your fee, and pay it on your behalf. 

Sort your invoicing details

Shona started her conversation by telling me about the worst invoice she’d ever seen: “It looked like it’d been drawn by a child. It didn’t have a date, or contact details, and it was written in permanent marker.”

The permanent marker aspect is actually one of the less important aspects of your invoicing. More importantly, you need to make sure you get some specific details in there: the date, your contact details, your bank account number (very important!), an invoice number, and you need to write down what it’s for.

This might sound tedious, but the stakes are not low - if you don’t get this information right, you’re not going to be paid as quickly. Much easier to get it right the first time and get paid, rather than get it wrong and have to endlessly follow up.

Get those invoices to the right place

Once you do have your invoice information sorted, you can still have the wheels fall off the wagon if you don’t get some other details sorted. Namely: the person you send it to. Check your contract for this information - Shona told me that all of their contracts say that artists should send invoices to a specific accounts address. “But artists frequently just send them to the last person they dealt with.”

This seems harmless, except for one thing: a lot of those people are on short-term contracts. So artists send their invoice to a person who has left, and nobody sees it. Since nobody sees it, it doesn’t get paid - and eventually the artist has to ring asking about it. This is a major annoyance for everyone involved, particularly the artist who was literally banking on that money.

Buckle down for withholding tax

Here’s the rule: if you’re an “entertainer,” (i.e.: an actor, singer, comedian, whatever), and you get hired to ply your trade, your employer is going to take some tax out of your fee, and pay it on your behalf.

Brace yourself for this, because it’s going to mean that you get less money in your pocket than you agreed to in the first place. If you perform for $100, and the venue takes out 20% withholding tax, you’re only going to get $80 - sorry.

You could get around this by registering yourself as a company, but you still need to pay the tax later on in the year. You can’t actually avoid it . . . that’s how tax works. It’s a bummer, but it’s life. At least if you know it’s coming, you can prepare yourself for the financial hit.

GST & withholding tax

If you are registered for GST, don’t mistake it for income tax. You still need to pay it. And there’s another trick to withholding tax: which is that if you pay it, you need to complete an annual tax return: a couple of pages summarising your annual income. In fact, it’s in your best interest to do this.

First, it’s a legal obligation, and you may find IRD on your case if you don’t. Secondly, there may be money in it for you. That’s because withholding tax  is a sort of temporary deal, to make sure that people working gigs, who aren’t on a regular salary, still pay regular tax. But IRD calculate your tax from your annual income, not your individual gigs. So if your income fluctuates, you may get a tax rebate at the end of the financial year. Bonus!

By the same token, there's a chance that if you did not pay enough withholding tax, this will be apparent in your tax return and - as always - taxman wins. The best way to avoid this vile outcome is to ensure that all your gigs deduct your tax before paying you.

Keep an eye on your income, and put aside some tax money

Even if you have withholding tax taken out, you’re still going to have to file a tax return at the end of the year. One of the first questions that return will ask you is how much you made. Going back through an entire year to answer this question is a waking nightmare, so keep track as you go. This can be as simple as a spreadsheet - just make a note of what you earned, when, and from whom.

Shona’s last piece of advice was to get some advice.

While you do this, make sure you put aside some money to pay any tax bills you get. Your withholding tax may end up being too low, in which case you’ll have to top it up. And you might do some jobs that are exempt from the need to pay withholding tax.

Here’s a site I use: https://paye.net.nz/ . Just bang your income in there, and it’ll tell you how much tax you should be paying for the year. Then compare that to how much you’ve put aside. Boring, but also easy, important and valuable.

Get some advice

Shona’s last piece of advice was to get some advice. “Once you start doing paid work, you should pay for an accountant - even just as a one-off to help you put together a basic system for keeping track of your invoices, finances and tax.” This will help you further down the track, as you’ll have a system in place for keeping an eye on everything. That’s a hell of a lot easier than opening up a shoebox of receipts at the end of the year.

How are you keeping an eye on the business end of the arts?

Check out our story on Hnry, a New Zealand based software service helping artists keep track of revenue and expenses.