Opening a fine art gallery in Victoria BC can be thrilling yet daunting, especially for those needing more business acumen. Creatives often need help with the entrepreneurial side of things, so many successful artists rely on dealers and other professionals to handle the business aspects. While a creative person can open a successful gallery, focusing on business is crucial and might be more than initially expected.
Table of Contents
Initial Costs
To open an art gallery, you need substantial savings. Art dealing is a business, and recognizing this from the start is essential. Creating a legal company and registering your business is the first step involving upfront licensing costs. Creating a small company requires at least 5,000 euros in places like Portugal. No money, no company, no gallery – it’s that simple.
Tax Considerations
Taxes can be a significant pitfall for many gallerists. Please calculate taxes and costs in advance to avoid unpleasant surprises. For instance, if you sell an artwork for 1,000 euros (before tax) with a 50-50 deal with the artist, you must consider VAT and company tax. In Portugal, this means adding 23% VAT, making the final price 1,230 euros. From the 500 euros you get as a gallerist, 21% (105 euros) goes to company tax, leaving you with 395 euros. Understanding the tax system in your region and hiring a good accountant is vital.
Staffing Needs
Hiring staff is a positive sign of business growth but comes with costs. Besides their salaries, there are taxes and other expenses to consider. In Portugal, for instance, paying an employee 1,000 euros means you must budget around 1,500 euros monthly before taxes. These costs include Social Security, Transportation Fees, and Insurance.
Renting a Space
A physical space to showcase your artists’ works is essential for gallerists. However, rent can be expensive, especially in cities like Lisbon or London. In Lisbon, expect to pay at least 2,000 to 3,000 euros a month; in London, the costs could be much higher.
Utility Costs
Galleries require substantial electricity usage, with lighting systems that run for extended hours. This could mean spending between 300-500 euros a month on electricity in Portugal.
Art Fair Fees
Art fairs are excellent opportunities to network and connect with collectors, but they also have significant risks and costs. A modest art fair fee could be around 10,000 euros, not including shipping and travel expenses. To cover these costs, you’ll need to sell over 30,000 euros worth of art in just a few days.
Exhibition Costs
Hosting exhibitions also involves expenses, such as catering. Even a small exhibition for 50 people can cost around 200 euros, which adds up to 2,400 euros a year if you host monthly events.
Legal Costs
Running a gallery means opening a company which requires an accountant. Not all accountants understand the art market, so it’s crucial to find one familiar with the industry. In Portugal, an accountant for a small gallery costs between 150 and 200 euros a month, plus VAT.
Total Costs
Let’s break down the total costs for opening a small gallery in Lisbon, with one salary, monthly exhibitions, and a yearly art fair:
● Company registration and initial capital: 5,500 euros
● Rent: 3,000 euros x 12 = 36,000 euros
● Salary: 1,551 euros x 12 = 18,000 euros
● Accountant: 150 euros x 12 = 1,800 euros
● Electricity: 300 euros x 12 = 3,600 euros
● Exhibitions: 200 euros x 12 = 2,400 euros
● Art Fair & Related Expenses: 15,000 euros
Total = 76,800 euros
To break even with a 50-50 deal with artists, you’ll need to sell around 200,000 euros in art annually.
Conclusion
Be realistic and organized. Calculate all expenses before investing in a business you can’t sustain. Stay informed about industry trends and invest in artists and artworks you can sell. Consider hiring staff, lawyers, accountants, or other professionals to help you navigate this challenging business.
