A Breakdown of Business Models for Artists
Although we all wish to stay in the studio and be in a bubble but to make sure that you're protected, you'll need to create the foundation.
We recommend that you seek professional legal counsel before making any legal decision for your art business, we have some basic steps to get you going.
You may have already opened an online store, started selling on Artwork Archive, or sold your work to family or your friends. The government may be reached at this time.
Considered a "sole proprietor", This means that you can continue to sell your products without needing to file for a formal business formation or risk legal consequences.
Protected from potential liabilities
Establishing a business name and forming a company is contingent on your requirements to protect yourself from liability, as well as the tax implications you see.
Artists typically use specific business structures to set up their art business. We will be discussing specific issues for artists.
The five structures mentioned above will be covered:
A lot of artists choose to use a business structure such as an LLC. This separates the personal assets of you from business assets. If you do not separate your personal assets,
If you are being sued by your company, such as a slip and fall accident in your studio, you'd be personally responsible. The property you own would be used to pay.
Artists - Sole Proprietorship
It is just you and your dreams. Technically speaking, you are likely to be a sole proprietor. This means that all of your personal assets as well as your business's assets are part of it.
They are both closely connected. The earnings you make from your work when tax time arrives is reported on personal filings. That means that you'll have to declare all earnings from your art on your tax return.
All potential liabilities are yours to assume.
If you are sole proprietor, there are tax implications. You are likely to will have to pay self-employment taxes.
The tax amount for this quarter is estimated. In addition to your annual tax return, you'll need quarterly tax returns. Most likely, you will submit the Schedule C or 1040 return however, you must file it at all times.
Consult with your personal accountant to make sure you are in compliance.
Artists may benefit from partnership models
It might be worthwhile considering collaboration with an artist or an art group with multiple owners, if you have a partner in your business.
Collaboration with your art business
There are a few options to accomplish this. You can form a general partner (where all is divided equally), or you can form a limited partnership.
While a partnership might not technically be an entity tax-exempt however, it must file an annual return. Each partner is subject to income tax.
Individual tax returns. Partnerships can provide advantages, such as sharing in the financial burden of starting a company and not having to pay income tax.
That partnership. But, each of the partners is accountable for the debt of the other and you have to be sure that they will pay their part.
LLCs are for artists
An LLC (limited liability corporation) is a well-known business entity for artists.
Ownership and the tax advantages of being partners. To establish an LLC, you will have to register in your particular state. Like the Partnership, LLC may be formed.
may have multiple owners, and "pass the gains (or losses) through" your LLC to the owners who will then file the cash on their own tax returns.
The business structures of an LLC are very common as they allow you to separate your personal and business assets. However, the LLC operates under a different legal structure.
DBA you don't have any separation, which means that if you are sued and your personal assets are at risk, they could be at risk.
DBA (Doing Company As) Alternatives For Artists
DBA is shorthand for "doing business as". DBA could be any business name registered you sell artwork under. DBA
It is not a legal business structure. This does not give you personal liability protection as an LLC.
business, a court could allocate your personal assets to pay damages.