From Chapter 5: Expenses

Chart of Accounts

The information for your balance sheets and income statements comes from your Chart of Accounts (while asset, liability, equity, and income are a part of a Chart of Accounts, expenses takes up the majority of such a chart).

The major categories, also known as individual accounts, in a Chart of Accounts are assets, liabilities, equity, revenue, and expenses. Naturally, depending upon your business, each major category can be broken down into sub-categories.

Table 3 (below) goes into detail on the various accounts in the Chart of Accounts including Advertising, Bank, Inventory, Office Supplies, Travel, etc.; anything that pertains to your business. Each asset/liability/equity/income/expense can be assigned a code (identifier) which is used in various types of analyses.

Table 3. Typical expense categories for the artist
Account/ Category % Deductible What goes under this category...
    The itemization is intended to give a sense of what to put where...
ASSETS
(100-199)		   See “Terms for a Sole Proprietor” on page 9
Fixed Assets
Also known as,
Business Assets
See continued Depreciation / Amortization on page 27
 For most artists, these things are expensive relative to our income so they would need to be depreciated. If the purchase is low enough, it could be an expense.
    Air compressor
Air purifiers
Carts, Elfa baskets
Cash registers
Chair
Computers (must be used in your studio / place of business
Copier
Credit card terminal
Darkroom equipment
Delivery/Freight charges for business assets
Display fixtures
Fax machines
Furniture — chairs, tables,
 cabinets (filing, printer, tower, etc.), desks
Humidifiers
Microwave
Modem
Phones
Postage meters
Racks
Refrigerators
RugsScales
Sergers
Sewing machines
Shelves
Stereo system or television/ VCR system (if very expensive, may have to depreciate)
Typewriters
Vacuum cleaners
Window shades and blinds
LIABILITY
(200-299)		   See Terms for a Sole Proprietor on page 9

Paying off a loan (A loan is not income; not an expense and not deductible although interest paid is deductible (see Interest on page 31).
Mortgage for Building and/or Land (this includes a Home Office)
EQUITY
(300-399)		   See Terms for a Sole Proprietor on page 9
INCOME
(400-499)		   See Terms for a Sole Proprietor on page 9
EXPENSES
(500-599)		   See Terms for a Sole Proprietor on page 9
Advertising
100%
 Promotions
Flyers
Brochures
Catalogs
Photography
Portfolios
Show costs
Mailing list rentals and purchases		 Minor, routine and on- going design costs
Graphic and package design costs such as logos, letterhead (unless a lot of money is involved— then depreciate it)
Web pages
...and lots more