Those Darned Expenses!

Let’s talk quilting business expenses today, shall we?

If you have a quilting business, then legitimate expenses are a HUGE part of it. To turn a profit, your expenses need to be less than your income, but in the very beginning of your business, the expenses may outweigh the income until you get established.

While that’s a bit scary, it’s also nothing to get too upset about, as long as you can turn that around within a reasonable amount of time.

Don’t be afraid to count up your business expenses. If you keep yourself aware of where your money is going, you can better determine if what you’re spending is really necessary, needs to be altered somehow, or if you still have money to spare to use for buying more things you might need for your business.

This involves keeping careful records, and saving all your receipts. This is on my mind this morning, because it’s Monday, and it’s also the end of the month. I set aside Monday mornings as Desk Time, to gather up all my paperwork, make sure I’ve made enough notes about everything that I can keep it straight AND explain it coherently to my accountant, and that I’m not forgetting anything. I do this on a bit larger scale on the first day of each month, in order to wrap up the month just ended, and plan ahead for the month that is beginning.

I wasn’t always this organized about keeping track of my paperwork, but having an accountant has really helped. She has made me more aware of what I need to be keeping track of, what they need to have from me in order to be able to do my bookwork, and what counts and what doesn’t. And she makes me stay current — I can no longer put off doing January’s paperwork until December!

You may want to have more or fewer or different categories than I’ve shown, but that’s the beauty of being able to tailor it all to your own particular situation.

When I was first starting out, here are a few expenses that I wasn’t aware I could actually count:

• • Dues to professional organizations (such as AQS membership, or guild dues)
• • Magazine subscriptions (for magazines related to quilting)
• • Entry fees into quilt shows (both if you enter a quilt into the show for a fee, or if you are paying to gain admittance to a show)
• • Fees for classes and workshops that you take to further your own knowledge

Then there are expenses such as travel . . .

If you travel for a quilting event by a means other than your own vehicle, such as a plane, bus, or train, you can count those expenses, as well as some of your meals, and any lodging expenses you incur.

If you use your own vehicle to travel to quilting events, then you must keep careful records of your mileage, but here’s a goodie: You can also count the UN-obvious trips, such as going to the post office or bank, delivering/picking up customer quilts, meeting with customers, and even trips to the quilt shop for supplies.

If you have a dedicated studio space, you can count that space for tax purposes, along with some of the expenses related to that space, so be sure and check into that, too.

There’s a lot to think about, isn’t there? Never fear, tho, just keep good records. There are many ways to do this, and you have to find the method that works best for you. As you can see, Becky keeps her receipts in a punch bowl in her studio. I have a cubby in a divided organizer where all mine go until time to send them in.

I have finally learned how to keep better expense records, but it took me several years to get it right. I probably cheated myself out of some good deductions in the early years of my business, but I think my accountant has me on the right path now!

Hiring an accountant has been some of the best money I’ve spent on my business. Altho I couldn’t afford that at the beginning, it’s been a blessing since I hired her. If you can’t afford one starting out, at least be thinking about it for the future when you get established, if you need to. I know several quilters who ARE themselves accountants — wouldn’t that be the ideal combination??

There’s more info in my book, Quilting for Hire, related to this topic. You can get your signed copy HERE.

For all the articles that supplement the book, click HERE.