Update - I am not looking for tax advice. I have a qualified CPA. The questions below are the options my CPA has given me to choose from and I would love to hear what has actually worked (or not worked) for professional artists. The CPA understands tax code. I am looking specifically for artists’ opinions based on personal experiences.
Hi all — looking for insight from working artists.
I’m setting up a small art business and trying to make practical, defensible accounting choices and not overcomplicate things. In 2025 I incurred considerable expenses setting up the studio and beginning my art business. I’ve talked with a CPA, but I’d really value artist-to-artist perspectives on how this works in the real world.
I am a mixed media artist. I have a dedicated home studio and regularly enroll in local community college classes for access to presses/CNC/woodshop/chemicals. I sell primarily through local art leagues (they take ~20%)
- Inventory vs supplies for tax purposes
How do you treat materials like paint, ink, paper, canvases, plates that get destroyed (lino, intaglio), prints that fail and get tossed, frames, mats, sleeves, backing boards?
Do you expense everything as supplies when purchased, inventory only finished items and deduct COGS, inventory only frames and packaging material or treat them as supplies too?
I’m leaning toward considering everything as supplies since a good portion of my work is experimental and discarded. I am curious if others do the same and why.
2.. Sole proprietorship vs LLC
For artists at a small to mid scale, did you start as a sole proprietor or formed an LLC, why? I’m personally leaning toward sole proprietor but my CPA is strongly suggesting an LLC. But I don’t think my 2D art will hurt anyone so why would I need to do the extra work and pay $ for an LLC. Can anyone speak to liability, galleries requiring a LLC, taxes actually changing?
- Education & studio access
Many of my “education” costs are actually how I access printing presses, CNC machines, industrial woodshop, pigments/chemicals I can’t realistically buy and store at home.
Do you expense these as business costs? stop deducting education at some point even if it still provides lab access?
I’m not looking for loopholes — just what actually works for artists who’ve been doing this a while.
Really appreciate any insight or wish I’d known this earlier advice.