Art Festival Newsletter | March 2023



ARTISTS AS A BUSINESS ENTITY


Which business entity works best for your art business? You have a number of choices - Sole Proprietorship, Partnership, LLC or S-Corp. This is an overview of these structures with the goal of helping you decide which works for you.

Sole Proprietorship

Most artists operate as sole-proprietors. A sole proprietorship is a business run by one person—you. This is the most popular structure because it’s the simplest to set up and run.


In this type of business structure, there’s no legal separation between you as a person and your business. In the eyes of the law, your business funds and your personal funds are all intermingled, and anything that happens to your business also happens to you personally (not to scare you, but if you get sued, for example, you’d be held personally liable).


You actually don’t have to file ANY formal paperwork or take any steps to start your sole proprietorship. You just have to start doing business. That being said, you DO need to make sure you’re registered for the proper permits as necessary (sales tax permit, for example). You will likely have to pay self-employment taxes and estimated quarterly taxes. In addition to your annual return, you will need to file quarterly. You will likely use a Schedule C and 1040 return but always consult with a personal accountant to make sure you are in compliance.


If you’re going to be doing business under a name that’s different from your own, you need to register a DBA (‘doing business as’) for that name. Check with your county registrar to make sure the name isn’t currently being used, and then follow your local guidelines to file. You may want to go the extra mile to trademark your name to ensue you’re completely safe to use it.


If you want to hire employees, you absolutely can! But you do need to have an EIN (employee identification number) to do so, which you can register for on the IRS website. You must also follow all state, local, and federal laws regarding those hires.


PROS:

  • Inexpensive to create 
  • No federal government requirements
  • No legal documents to file
  • No one else to split profits with
  • Taxes are uncomplicated 
  • Can hire employees
  • Easy to discontinue 


CONS:

  • Owner is liable for business debt
  • Limited access to capital (no partner)


Partnership

If you have a collaborator in your art business or you are an art collective where more than one artist owns part of the business, you may want to look into a partnership.


There are a few ways you can do this. You can establish a general partnership (where everything is divided equally), a limited partnership, or a limited liability partnership.


While a partnership is not technically a taxable entity, you will still need to file an annual return—but you will each be taxed on the income through your individual tax returns. There are some benefits to the partnership model, like sharing the financial burden of a new business and not paying income taxes on that partnership. However, you are personally liable for the other’s debt and have to trust your partners in paying their portion.


LLC (Limited Liability Company)

In a limited liability company, the owner(s) are not personally responsible for debts and obligations; your personal assets are protected. That means that if you’re sued, unlike with a sole proprietorship, your personal savings, house, car, etc… aren’t on the line, because they’re considered totally separate from your business assets. This “limited liability” is the main reason people choose to register as an LLC over a sole proprietorship. They also need less maintenance than full-fledged corps.


To start an LLC, you need to register with your state and pay a fee. Some states require annual fees to maintain your LLC status. Depending on your state, you may have to have certain paperwork to file in addition—you’ll have to look into what your state requires. You can fill out the paperwork yourself, hire a lawyer or in many states your accountant can set up the LLC.


You’ll need to be super diligent about keeping your personal funds separate from your business funds and tracking everything, since intermingling your personal and business money in an LLC could result in you losing your limited liability protection.


Regarding taxes, “depending on elections made by the LLC and the number of members (owners), the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return” –IRS.gov. That’s a tad confusing, but basically it means that an LLC may use different forms and regulations for filing taxes depending on which of those options (corporation, partnership, or individual/sole prop) you choose. A CPA can help you make the choice.


Like a sole proprietorship, an LLC can also hire employees as long as it follows all guidelines and laws.


PROS:

  • Protection of personal assets
  • Ease of setup: Most LLC forms are only a single page for single member LLCs
  • Taxes are fairly easy to file
  • Can hire employees
  • May appear more “trustworthy” or “established”
  • Can include multiple owners


CONS:

  • Registration fees and annual fees may apply (more expensive than a sole prop)
  • Requires more documentation and paperwork to file


S Corp

S Corps, a midpoint between LLCs and regular corps, offer potential savings for artists making substantial money each year.


The difference is that in an S corp, owners pay themselves salaries plus receive dividends from any additional profits the corporation may earn, while an LLC is a "pass-through entity," which means that all the income and expenses from the business get reported on the LLC operator's personal income tax return


PROS:

  • The key advantage of an S corp is that it offers tax benefits when it comes to excess profits, known as distributions.
  • The S corp pays its employees a "reasonable" salary, which means it should be tied to industry norms, while also deducting payroll expenses like federal taxes and FICA. Then, any remaining profits from the company can be distributed to the owners as dividends, which are taxed at a lower rate than income


CONS:

S corps have more strict guidelines than LLCs. You must meet the following standards to create an S corp:

  • Must be a U.S. citizen or resident
  • Cannot have more than 100 shareholders (a spouse is considered a separate shareholder for the purpose of this rule)
  • Corporation can only have one class of stock
  • Profits and losses must be distributed to the shareholders in proportion to the shareholder's interest. For example, you can't have disproportionate distributions of dividends or losses. If a shareholder owns 10 percent of the S corp, he or she must receive 10 percent of the profits or losses
  • It costs more to form an S corp
  • Shareholders must adhere to the requirements at all times. If they don't, they risk disallowing the S corp election, and the corporation would be treated as a C corp with its corresponding restrictions.
  • Passive income limitation: You can't have more than 25 percent of gross receipts from passive activities, such as real estate investment
  • There can be additional state taxes for S corps
  • Shareholders should pay attention to paying themselves a "reasonable" salary for the work they perform for the S corp, since the IRS is increasingly scrutinizing S corps for this


You can also always change your business structure. It’s very easy to start out as a sole prop and register later to become an LLC or S Corp.


As always, check with your lawyer and/or accountant. This is an informational article, not legal or financial advice.

Last Chance to APPLY: Click logo for more information!

Art on the Commons

Kettering, Ohio

August 13, 2023

Application Deadline 3/31/23

Hinsdale Fine Arts Festival

Hinsdale, Illinois

June 3-4, 2023

Application Deadline 3/31/23

Change Your Jury Images


If you are asking should I change my jury images each year - the unequivocal answer is YES. As a director of 7 shows, with many artists that come back year after year, keeping your portfolio fresh, showcasing new work, and demonstrating your evolving skills and style is critical. Your work is much more likely to to be showcased on the show's social media and marketing efforts if the image is presented well.

Light is EVERYTHING! Bad images stand out and not for the right reasons. Jury photographs that are poorly illuminated, slightly fuzzy and have distractions in the background make it easy for the jury to dismiss the artist applying to the show and if invited these images will not likely be used for show marketing. One of the most important concepts when considering lighting is to shoot in the same direction as the light, not against it. Ensure the art is front lit to illuminate details.To read more about photographing your work I found a great article by Justine Chapel in CAFE.

 

Square your image: Most shows are taking your images and using

them for multiple purposes - show website, print media, social advertising and

media packets. Your image will be manipulated in size depending on what it is

being used for. A clean centered image that is square in format works

best to meet all these needs. The black border lines are no longer necessary for ZAPP and are distracting when using the image for other purposes.

 

Background color: Many images have traditionally been a gray

gradient that has now become the norm. The issue is that these images are harder to use for both digital and print show marketing. White is hands down the most popular background for social marketing. It's clean and free of distractions and allows a high contrast for your work to pop.

 

Frame or no frame? The answer is no frame unless the frame is integral

to the work. If you are using a frame, make sure that all the work presented to

the jury is framed.

Artist Statment - Present Yourself to the Jury

An artist statement (sometimes called artistic statement) is as important as an artist's work. Simply put, the artist statement is a brief description (usually 100-150 words) of your art that shapes the viewers' (jury) perspective when they are looking at your images.


Think of it as your substitute when you are not present to answer questions related to your art. Art is subjective. People will look at your art and evaluate it. So, it helps if you communicate your story to the viewer. Jurors often have questions about the art they are looking at. An effective artist statement answers those questions while you are not there. These statements are read by the jury and often used on show websites to introduce the artist.

Your artist statement is about YOU. So you must make it personal. Writing an artist statement is also an exercise for you to clarify your ideas about your work. 


Do’s - Best practices to create a successful artist statement

  • Keep your artist statement short
  • Be specific
  • Focus on your statement to the artwork
  • Write about 'Why' you created the artwork
  • Use precise details such as your medium and style of work
  • Use active voice
  • Always write in the first person. Use "I" instead of "you" in your sentences. This helps in writing a statement that is easily readable by the viewer.


Dont's to remember while writing your artist statement:

  • Don't be pompous. It shouldn't just highlight your accomplishments.
  • Do not generalize or romanticize
  • It should not be too long 
  • Avoid grammatical errors
  • Don't use unnecessary references or things unrelated to your work
  • Do not use passive voice
  • It should not read like a cliched vision statement
  • Don't include biographical information or CV in your artist statement


Check out examples of famous artists statements at Art Guide. For more details on how to write an artist read - Artist Statements: Capture Your Speaking Voice.

Contact Robin Markowitz at Robin@Art-Linx.com

The Art-Linx website has the most current Call to Artist information

www.Art-Linx.com