Selling and collecting antiques can become a profitable endeavor. Its important to keep track of the value you have on hand and the profits you have made. The easiest way to keep track would be to buy a popular bookkeeping solution called QuickBooks. Its really intuitive and you can keep track of all your purchases, sales, and other expenses very easily. Also, when it comes tax time, CPA firms are very familiar with the program so you can exchange data with your CPA very easily.
The two most important financial statements that you can produce if you use QuickBooks for your accounting is the income statement and balance sheet. The income statement lists all your antique sales and related expenses so you know how much profit you are bringing in. Sometimes you lose track of how much you spent on an item or how many costs it took to sell an item, so it is very important to keep track so you know if you are turning a profit or not. If you can use QuickBooks its easy to print out an income statement.
The balance sheet is very important, especially in an antique business to keep track of the value of your inventory. You list the initial purchase of the antiques at purchase price, but its important to make notes of actual fair market value. In some circles, marking to market is standard practice, where you list the assets on the balance sheet at market value and not historical costs. You most likely don’t have to submit your financial to the SEC and follow GAAP, so you can make the choice. Either way, knowing market value of the your antique’s should be a priority.
Once you have finalized your books and printed your financials, there some review procedures you can do to confirm accuracy, including:
• Horizontal analysis. Print reports that show the income statement and balance sheet for the past twelve months on a rolling basis. Track across each line item to see if there are any unusual declines or spikes in comparison to the results of prior periods, and investigate those items. This is the best review technique.
• Budget versus actual. Print an income statement that shows budgeted versus actual results, and investigate any larger variances. This is a less effective review technique, because it assumes that the budget is realistic, and also because a budget is not usually available for the balance sheet or statement of cash flows.
There will almost always be problems with the first iteration of the financial statements. Expect to investigate and correct several items before issuing a satisfactory set of financials for you antique business. To reduce the amount of time needed to review financial statement errors during the core closing period, consider doing so a few days prior to year-end; this may uncover a few errors, leaving a smaller number to investigate later on.
If you are serious about accounting for your antique business and are interested in learning about the QuickBooks program we mentioned above, there are online classes and tutorials to help. We suggest you buy the program and take it for a test run to see where you might need some assistance. There also is a very good QuickBooks Training Community that you can join for a small fee that is really good at supporting you as you learn the program. You can check them out here, http://www.quickbookstrainingcommunity.com
The valuation procedures for personal property for purposes of determining tax liability in gift and inheritance cases is generally the same as those used for charitable deduction purposes. However, in the case of antiques and works of fine arts, the issues of the buyer’s premium and blockage discount have to be taken into consideration. Typically, only art works with a value in excess of $20,000 need to be valued by a reputable appraiser. In such cases, the IRC stipulates that the donor or executor should provide the IRS with suitable documentation to support gifts or bequests made involving these works of art. IRS reviews of such appraisals tend to focus on six components: the state of the market for the property; the statement of comparable worth; photographs of the property; cost basis, date and manner of acquisition; provenance; and a detailed description of the property in question.
An “art advisory panel” was established by the IRS in 1968 in order to review submitted appraisals of property to determine if an intelligent assessment of fair market value has been placed upon works of art and antiques. Generally, only those items whose value exceeds $20,000 are reviewed by the panel. The Valuation Division of the IRS also maintains a staff of valuation technicians who review the balance of either contributed, gifted or estate property. They are assisted in this effort by individuals, under contract to the IRS. Once reviewed, a report is issued by either the panel or the Valuation Division. This report will include any changes (up or down) in value and the reasons for these changes.
IRC Sec. 7517 stipulates that the IRS must provide, upon the request of the donor or executor, a written statement explaining any changes in the value of the property suggested by the above reviewing bodies. This statement must be furnished within 45 days of the date of the request or the date of its determination, whichever is later. This was instituted in order to promote the resolution of valuation disputes at the earliest possible time and at the lowest possible level. IRC Sec. 7517 is effective for all transfers made after December 1976.
If no agreement can be reached at the lowest level, the donor or executor may ask for the matter to be reviewed by the Appeals Division. If no resolution at that level is possible the case may ultimately end up at the District Counsel level in preparation for a hearing in Federal Tax Court. Most valuation disputes are resolved well before the Federal Tax Court level as the costs and hazards of litigation become evident to both sides. To help prevent these issues from happening, you may want to check out online accounting services to help in your valuation and proper accounting of these transactions.
I found this article written by Harry Rinker and it is no where on the internet so I thought I would post parts below and you can check out the rest by visiting the link above. Also, you can see the citiation at the end of the article if you want to find the publication it was written for and read the entire article. As antique collecting becomes more popular, valueing these antiques is becoming more and more important. Even more important is not getting swindled or dealing with a seller that is unethical as Harry Rinker would agree. Read his article below and you can check out his website by clicking the link above. He is very experienced with antiques and collectibles.
Collectibles do not have a fixed value. Every object has multiple values, e.g., auction value, book value, wholesale value, etc. Each value is equally valid. Value is time and place specific.
At the recent Great Eastern U.S. Antique Book, Paper, Advertising & Collectibles Show, several sheet-music devotees and I were swapping war stories. In the course of our conversation, someone commented on the outrageously high values asked and, in more instances than he cared to remember, paid for some collectibles. The prices realized at Sotheby’s Jacqueline Kennedy Onassis auction added credence to his concerns.
As I considered his remarks, I suddenly realized that there is a value in the collectibles field that everyone knows exists but hardly ever discusses. Time to remedy the situation. The value in question is the “light-a-candle” value.
A light-a-candle value is that price at which a collectible is sold whereby the only honorable thing to do is to visit a church or synagogue and light a candle, thanking the deity for delivering the seller a gullible fool as a buyer. Assuming this value is real and my premise correct, the churches in New York should have been ablaze with light following the conclusion of the Onassis auction.
A light-a-candle value is an extremely high value, totally out of touch with reality. It bears absolutely no relationship to what an identical object would sell for at any other time and place. It is a freak. Chances of it happening again are between zero and nil.
A light-a-candle value does not move a collecting category’s pricing structure upward. In fact, its effect is more negative than positive. Light-a-candle values frequently are reported in public and trade media. Their size and ridiculous nature make them news. Tragically, media reports rarely put light-a-candle values into context. As a result, a public perception arises that these values do have real meaning relative to long-term pricing trends within the collecting category to which they apply. Nothing is further from the truth. A light-a-candle value is a once-in-a-lifetime value.
Alas, try convincing someone who owns an identical object and wants to sell it that he should expect far less than the light-a-candle value that he read or heard about. If anything, he usually thinks he deserves more. In truth, the only time a candle will be lit for his object is if it is in his coffin when he is buried.
There are more light-a-candle values in the collectibles field than we realize or wish to admit. Think for a minute. What are the circumstances that lead to light-a-candle values? Once you turn your mind to the question, you will be surprised at how many situations you can identify. Here are a few of my candidates.
Two heirs are involved in a bitter dispute over an object in an estate. Unable to resolve their differences, the piece is sent to auction. Each relative is determined that the other will never own the object in question. The bidding quickly escalates until the value of the object is two, five, and, ultimately, ten times book. Eventually one of the two parties concedes. Neither party talks to the other for decades.
Forget the two heirs. What happens when two collectors lock horns at an auction, both equally determined to prevent their rival from adding an object to his collection? Does the word “bloodbath” come to mind? I have seen plenty of blood spilled at auctions. Alas, on occasion the blood was mine.
Collectors covet. There are always one or more objects that they desire to own but do not. Their search already may have consumed years, even decades. The matter is made worse if their biggest rival already owns said object. Unfortunately, such individuals have difficulty keeping their desires private.
A dealer, fully aware of a collector’s burning need, finds the collectible the collector most covets. What price do you think the dealer is going to ask? Rest assured, it will not be a bargain one. The dealer goes for the jugular. The dealer’s only dilemma is deciding how high is too high. Whatever the final price, the dealer will have the funds to place a generous donation in the candle offering box in the house of worship of his choice.
Citation: RINKER, HARRY L. “The Light-a-Candle Value.” Rocks & Minerals (1997): 89.
For libraries whose patrons might spend countless hours in antique malls and collector’s markets searching for vintage jewelry, this videotape will provide a helpful introduction into the world of fine and fashion jewelry of the nineteenth and twentieth centuries. Host Christie Romero, a jewelry historian and instructor from California, takes viewers on what is described as a “fun-filled tour” through the decades of the nineteenth and twentieth centuries. Romero concentrates on jewelry that is affordable, accessible, and collectible. She likens the research of fine and vintage jewelry to that of a detective hunt (a familiar refrain for the reference librarian) and stresses that collectors must “read the clues.”
The video establishes guidelines and criteria for collecting, including craftsmanship, condition, color, quality of design, demand, and rarity. The various periods ranging from Victorian, Art Nouveau, Arts and Crafts, Edwardian, Art Deco, Retro, Postwar Modern, Bakelite, Designer Costume, Mexican, and Scandinavian Silver are covered, and numerous examples of jewelry are illustrated. A visual price guide concludes the program. Romero also provides information on manufacturing developments and their influence on jewelry design. Venture Entertainment Group is currently planning a series of videos that examines each period in depth. Hidden Treasures is designed for dealers and collectors and would be a welcome addition to most public libraries.
While the video does provide some design history insight, it is recommended only for academic libraries that might have fashion and jewelry programs. Librarians used to answering questions about the value of collectibles will be aware of the numerous reference price guides that document market value of fine and vintage jewelry. This program does not replace the need for such guides, but the video format is an entertaining medium for obtaining an introductory overview of this interesting and ever increasingly popular field, and at $24.95 it is a remarkably good value. This publication can be considered as a general reference tool that provides a basic understanding of a broad and diverse field. However, because of the format, the librarian will not be able to consult it for any ready reference queries but rather refer the patron to it for viewing and further study.
There are more than a million old-car collectors in the United States. Perhaps the most typical is the nostalgic, middle-aged fellow who began his collection with the car that struck his fancy when he first became aware of cars–probably about age 14. He was still too young to drive, and several dollars short of owning a car, but the attraction he felt then left a permanent yearning.
This is usually someone who enjoys owning, driving, and showing his car, and reminiscing about the old days. In many cases, he’s not much on spark plugs, carburetors, or spray paint, so he farms out his mechanical and restoration work.
That typical collector is flanked on one side by the “wrench turner,” a mechanically oriented car enthusiast who likes to tinker and restore, and on the other side by the straight investor, a business-minded type who sees good return-on-investment possibilities in old cars. The investor seldom touches or drives his assets, and doesn’t get emotionally attached to them.
But for most hobbyists, collecting is emotion-driven. “If you don’t have a personal reason to own a car,” Brownell asks, “why buy it? Buy stocks instead.”
The emotion factor causes segments of the old-car market to rise and fall in popularity, much as certain artwork goes in and out of favor. Cars that are currently popular include anything red and Italian (Ferraris, Maseratis, Alfa Romeos, Lamborghinis), late-1960s “muscle cars” (Pontiac GTOs, Plymouth Road Runners), and big 1930s Packards and Duesenbergs.
Japanese buyers have shown much interest in the “big fin” cars of the late 1950s recently. With no restoration facilities in Japan, however, they generally buy only cars in perfect condition. Whenever the dollar declines, Europeans tend to buy back their cars: The British buy British cars, the Germans buy German, etc. And, as the age-14 theory continues to prove itself, American men currently in their 40s and 50s buy U.S.-made cars from the mid-1960s back to the late 1940s.
In any case, the lure of owning a piece of history draws many people to old cars, particularly when the economy is healthy. And since the number of old Packards can’t go up, prices generally do.
Historic autos can be an expensive hobby, and a buyer must be careful not to let emotion draw him into a bad investment. “No matter how badly you want a car, don’t pay too much for it,” Brownell warns. “And don’t put too much into restoring it. Even if you intend to keep it forever, don’t buy a car you couldn’t sell and still get out whole.”
If you’re a prospective buyer, one of the first things to do is educate yourself. There are books on almost every car, so when you establish a budget for your first old-car purchase, you should earmark some money for an auto library. Classic Motorbooks (Box 1, Osceola, Wis. 54020, 800 826-6600) offers a catalog of thousands of books about old cars.
Books will tell you a car’s well-known weak points (all cars have at least a few), what it was worth new, its relative rarity, its market desirability, and more. And the photos will help you determine how complete a specific car is and how original.
The most important part of your education will be price awareness. “An informed buyer,” says Brownell, “is a formidable foe for a seller who’s misrepresenting his goods, and more than a match for a person who overvalues what he’s offering.”
You’ll need to budget for insurance too, though not nearly as much as you may think. As long as you own one non-collectible car for each driver in your family, register your collector car as a historic auto, and agree to limit its use, you can buy liability coverage for as little as $15 a year. Collision insurance will cost a good deal more, however, since it’s based on the value of the car. Three agencies that specialize in old-car coverage are Condon & Skelly, Maple Shade, N.J., (609) 234-3434; Heacock Insurance, Lakeland, Fla., (813) 646-6641; and J.C. Taylor Antique Auto Insurance Agency, Upper Darby, Pa., (215) 853-1300.
You should also hold back about 10 percent of your old-car budget for miscellaneous expenses. Every old car needs something, from hose clamps to major work, and you may not know what work yours requires until you get it home.
The rest of your funds can go for the car. What will $5,000 buy these days? A 1965 Corvair coupe, in excellent condition. It’s a car with a history, in that it made Ralph Nader a household name and helped force Detroit to pay attention to safety. For $10,000, you can own an early Mustang convertible, the car that established Lee Iacocca’s reputation. For $25,000, you should get an absolutely no-excuse perfect car, perhaps a 1930s LaSalle convertible or an early 1960s Mercedes 230SL or 250SL roadster. For $50,000? A wide range, including classic Rolls-Royces. Above that, the exotic and rare. Most activity in old cars is below $50,000.
Good places to start looking are at local car shows, meets, and vintage-car auctions–where you can see several cars up close, perhaps drive a few, and listen to car people talk (which is quite educational). Another interesting source (of both cars and education) is Brownell’s magazine, Hemmings Motor News, a monthly 800-page tome of classified ads for old cars, parts, and services ($23.95 per year; Box 100, Bennington, Vt. 05201). A few evenings of browsing will give you a sense of current prices, the market for any car-plus the availability of parts, restoration sources, etc.
In almost every case, you’ll find convertibles worth more than hard-top or sedan models of the same car, by 50 to 100 percent or more. They’ll cost you more to buy and to restore, but they’ll bring back much more afterward.
A car is also a better investment if all its parts are authentic. A LaSalle with its original engine (serial numbers on the chassis and engine match) will cost more than one with a Pontiac engine, say, but will also bring more when you sell.
When it comes to restoration, think hard before you buy a car that needs any. Expert restorers charge from $30 to $75 an hour, plus parts, plus storage time if they have to wait long periods for parts to arrive. Depending on the car, a top-to-bottom restoration can run from $20,000 to the low six figures. What’s worse, restorers seldom give firm estimates, since they usually can’t predict what they’ll find once the paint and cylinder heads come off.
So, unless you like to do this kind of work yourself, you’re probably better off buying a fully restored model. You’ll pay a good deal more at first, but the price may be less than the cost of restoration. And the hassles avoided will be priceless.
When you’ve bought a car in good shape, don’t just store it-enjoy it. Don’t forget maintenance, however. Once a car is restored, it begins unrestoring itself almost immediately. So garage it, clean and polish it often, tune it up when needed, and change the oil regularly.
But enjoying it also means driving it. A collector car from the mid-1930s or later can take your family for a comfortable Sunday drive, and should even be able to handle long trips. Older cars–vintage models and antiques–are oaky for the Fourth of July parade, but they’re usually too valuable to drive regularly and too slow for safety. Their brakes are a treat, too.
If you get this far in the old-car hobby, you’ll likely find yourself joining a car club, and attending the same meets and shows you began with, but now as an owner. You’ll notice novices moseying about, trying to hear what you have to say.