If you want to sell your art, music or hottest gadget you just invented, you’re going to have to move your mindset from being an artist, maker or creator to being a business-person for a long-term sustainable career in the creative economy.
You have to take ownership of every aspect of your business including the following:
1. Finances: Whether you want to or not, you are going to have to dig in and understand your finances yourself. That doesn’t mean going to your CPA and bookkeeper and having them do the work for you. It means developing a monthly budget and completing it monthly so you can understand the amount of cash coming into your accounts and what is gong out.
2. Licensing for Business: In order to operate a business in your city, there are certain ordinances and requirements you need to follow; and this varies in price per city. One is a basic business licence and this is dependent on the amount of money you earn in your business annually. Some cities offer vendors licences, peddler’s permits and seasonal ones for temporary events such as art and craft shows. You will have to get a business licence and pay sales tax in each city you show, sell and collect taxes.
The second major license is with your state department of revenue. This is helpful if you are selling wholesale and will enable you to skip paying taxes on merchandise that you are reselling. If you are a sculptor, this might include clay and glazing or pedestals. Once the final piece is created, the sales tax is then passed on to the customer to pay and ensures you are not being double taxed.
3. Taxes: Nobody likes doing them, but it is the sole way to determine if you are operating at a loss or a profit. This is the reason the bank wants 2 years tax returns to see if your business is performing and whether you are worthy of a loan. It’s all about the bottom line and understanding your business is critical to success. Ask your CPA or accountant to explain what each line means. It doesn’t mean you need to do your own taxes, you just need to understand what you are signing off on each year.
4. Insurance: Unfortunately, every business, like every home or car owner needs some type of insurance. If you do outside shows or gigs where vandals might cut your tent or damage your art or jump on stage and damage your instruments, be sure to protect yourself. There are businesses dedicated to offering short-term insurance specific to your business. Ask your art peers who they use. If you are selling art out of your home, studio or brick and mortar building you will want to be sure you are insured there as well to limit your liability in our litigious society.
5. Incorporation in your state: When it comes to liability, this is one of the most important aspects to protecting yourself and your family. For example, if you own your home and a rental property as well as a business, make sure you are protecting all of your assets. If your business is renting properties, make sure each home has an L.L.C. If you are a business owner and own rental properties, have an L.L.C. for each of those business separately. Usually it’s a one-time filing for each business which is done through your Secretary of State. The form is simple to complete and you can do it for around $100 yourself.
If you have a business partner or multiple partners you will need to see if an L.L.C. is best for you or if you need a C-Corp or S-Corp. Consult your C.P.A, Secretary of State or the I.R.S to determine what is right for your business. A d.b.a or doing business as account leaves you open to liability. Protect yourself and your business.
