I’m not that practical, so I had to come up with a guide to solving any practical problem. It consists of three steps. Feel free to go back and forth between the first two steps, before you actually solve the problem. The three steps are:
One of the most challenging things to me as an artist is doing the administration. That’s because it isn’t an art, it’s a task. There is no room for interpretation. Taxes wants you to do it in a particular way, so that’s just what you have to do.
It took me, seriously, until about five days before my thirty-eighth birthday to realize that I need to approach the problem of keeping an administration in the same way as I need to approach every other problem: I have to sit down and analyze it.
I’ve made plenty of mistakes keeping an administration, often with the best of intentions, but sometimes with fines as a result. I do have to point out that the fines were actually due to bad copywriting and communication by the government leading to double standards, of which only one was illustrated in the media.
Based on past experience, I’ve come up with a couple of do’s and don’ts. The most important do is to never be too proud to ask for help.
Go see taxes and ask them what’s going on and what they mean by whatever. If you can’t tell, that means you don’t know, and no matter how awesome it can be to not know, you first have to realize this for it to be awesome, because although most of the time you don’t have to know, sometimes you do.
The most important don’t is to set up a basic administration yourself using a spreadsheet program like Excel or Numbers. You’re going to end up with a difference of a couple of hundred euros or dollars at the end of the year, and that’s when you have a low income. When you have a yearly revenue in the millions of dollars, get ready for jail, because that’s what you are: jailbait.
You have to invest in professional bookkeeping software that allows you to import your bank statements and manually indicate the categories and such, also splitting bills into different categories. The double bookkeeping in itself needs to be handled automatically, because that’s where the money goes places you can’t find.
You do want to do everything yourself. Otherwise somewhere along the line some asshole is going to run off with all your money without working for it, or in some cases you think they do, because you don’t understand what your administration looks like.
Get binders with separators and file folders. Get three drawers to store incoming mail, outgoing mail, and “I don’t know what this is, but I have to store it somewhere.”
Once they summon you to fulfill your quest to pay taxes, the magic boon is a big flat empty table, emphasis on big, emphasis on empty, but don’t forget flat. What you’re going to learn is that it’s easier when you receive mail to immediately store it in a binder or file folder, rather than waiting for the tax form to drop.
When you haven’t done your administration in a year (or two) and you have a big stack of paper in the inbox, what you don’t want to do is just grab it and put everything in the right binder or file folder working your way down the stack from top to bottom. That’s inefficient because you constantly have to switch back and forth to the same places.
First you need to create a system and organize: categorize all of the incoming mail in stacks, sorting it beforehand, before you put it in a binder or file folder. Check with taxes what number of past years you need to record and don’t throw away legal documentation even beyond that point.
Special care should be put into the chronological order. Organize it from front to back: earliest date at the beginning, latest date to the back. The other way around may seem easier, because you don’t have to browse as much, but when a letter has five pages to it and another three, it’s more difficult to browse through your system when the last letter is up front and the earlier letters to the back.
Ironically, what’s also going to be challenging is that once you’ve organized one year, i.e. 2017, into one stack, you still need to be careful to put the next year, 2018, after it, and not accidentally in front of it.
As soon as you’ve organized everything in stacks, get your perforator and punch holes through everything if necessary, and put it into the binder or file folder where it’s supposed to be.
Next time, immediately put your incoming mail into the binder. Don’t wait a year or two: that’s untidy. What will people think when your house is such a mess? I don’t care, but they do, and they can be really annoying, so save yourself the nuisance. Create a system. Organize.