“Making money is art and working is art and good business is the best art.,” Many people reading this quote would believe a businessperson said this, it may surprise you to know that the person quoted was a 20th Century artist by the name of Andy Warhol.
Warhol ,a well-known artist of the late 20th Century, really understood the business side of art. What he created made him one of the most well known artists of the late 20th century, but he also enjoyed a rich lifestyle until his death unlike many artists who only become famous after they die. Warhol was able to enjoy his success because he also understood the business side of art.
It's always best to think of collecting art as a hobby for pleasure than the investment. After all, what you purchase today maybe in your collection for years before its value increases enough for you to make a profit.
However, it's clear that collecting art can have considerable financial rewards. Investing in art can be a long-term investment or a quick short-term fix depending on your investment strategy. Just remember art is not usually a get rich quick investment.
There are many benefits in creating a small business enterprises to support and finance your art collecting. A major benefit of treating your art collection as a business is the tax benefits you will receive. By using your hobby of collecting as a registered small business, the government will allow you a slew of business tax deductions. For example: the 1995 Tax Act allows you to donate to any IRS-approved charity works of art at their fair market value, not at their cost basis. Just remember to check with your tax accountant for the most up to date tax advice since the tax laws do change.
Now that you have decided to start an art collection, how do you begin? You certainly want to collect fine art, but you also want it to be a good investment.
Art, like anything else, is marketed. As a society, we are conditioned to want the popular artist's work and we can be influenced to believe we want it through good marketing. For this reason, basing your collection solely on the art you love is not a good investment strategy. Educate yourself before you start collecting!
Take advantage of art magazines, museums, galleries, auction houses, and schools. Books are another way of educating yourself on the business side of art collecting and investing. The Intrepid Art Collector: The Beginner's Guide to Finding, Buying, and Appreciating Art on a Budget by Lisa Hunter shows you how to start a fine art collection without spending a fortune.
Another great book ,by Ron Davis Art, that includes the economics of collecting is called Art Dealer's Field Guide: How to Profit in Art, Buying, and Selling Valuable Paintings. This book is good place to start in learning how to make money investing in art.
Finding organizations that support and encourage up and coming artists is a good way to find new artists. Remember, for investment and collecting purposes, a mixed collection is important and getting a good education on the basics of art collecting is essential to the success of your collection.
Here are some of the areas you should know prior to starting your collection:
- How to determine if a piece of art is fairly priced.
- What techniques do you need to know in order to predict if an artist's work will go up in value.
- What are some of the techniques for negotiating prices.
- What is artistic taste and how do you develop it.
- How do you preserve the art once it is in your home.
- How do you find a buyer and sell your art.
By creating a business plan, you answer these and many other questions including profitability and cost. Once you define what your investment goals, research the artists. By learning how to do your research, you can find new artists for your collection and benefit from their future success.
Collecting art is one of the few rewarding things in life that can satisfy you both spiritually and financially and offer you a life long experience in discovery. Who knows you may even discover the next Picasso, Thomas Kinkade, or Rembrandt and earn your place in history as a great patron of the arts.
