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Small business october 23, 2013

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Small business development for creative businesses - basic information for artists of all types. Includes very brief overview of copyright issues in art.
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Small Business Development for Creative-Types Growing your creative business Presenter: Miriam Robeson, Attorney October 23, 2013
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Page 1: Small business october 23, 2013

Small Business Development for Creative-TypesGrowing your creative business

Presenter:

Miriam Robeson, Attorney

October 23, 2013

Page 2: Small business october 23, 2013

Making Your Art Work For You

Business PlansBusiness FormalitiesBusiness AccountingTax and your businessLegal considerationsBasics of Copyrights and TrademarksSmall Business DevelopmentCreative Cooperatives

What We Will Discuss...

Page 3: Small business october 23, 2013

Why Be a Business?

It will help you make money

It will help you focus

It will help you comply with legal and tax regulations

It will give you more credibility

It will show you weaknesses in your business

Five Reasons to “Step Up” the Business Side of Your Art

Page 4: Small business october 23, 2013

When Should You ‘Become’ a Business?

Desire and Determination◦You enjoy your art and can spend all day (every

day) developing products and skills◦You are willing to treat your art activities “like a

business.”Dollars and Sense (Cents)

◦You can create enough art (and sell at a price) to support yourself (and family)

◦You can sell your art for more than it costs (time and supplies)

Art Takes Over◦You spend all your time in search of “more--

better--bigger” ways to create and display your art◦You find public venues for your art (display and

sell)

When Can You Quit Your “Day Job?”

Page 5: Small business october 23, 2013

Getting Started

Top 10 Start-Up StepsTrial Run, Ease In, or Dive In?50% of Small Biz fail in the first

5 years.Top 7 Reasons Why Poor

Businesses FailAre you ready to be both Art

and Business?

Start-up Basics

Page 6: Small business october 23, 2013

Business Plan

A Business Plan is...◦The important elements of your business

Vision Statement (Who You Are)The Players (Customers)Business Concept (What’s the Point?)Finances and feasibility (What does it cost to get

where I want to go?)

What is it, and why do I need one?

Why Should An Artist Have a Business Plan – Article

Page 7: Small business october 23, 2013

Business Plan

You need a Business Plan if...◦You are running a business (not a hobby)◦You are applying for a loan (lenders require

it)◦You are looking for investors (investors want

it)◦You are working with partners (so everyone

knows)◦If you run into trouble (legal, financial, etc.)◦“Helpful Business Links for Artists” for link to

template

Why do I need one?

Top 10 Business Plan Tips

Page 8: Small business october 23, 2013

Business Formalities

Protect yourself and your business◦Business Entity (Corp, LLC, formal

partnership)◦Tax ID number (NOT your SS#!!)◦State and Federal paperwork

Existence, taxes, creative protection

◦Business Relationships Paperwork Contracts for lease of space, use of

equipment, display of art (gallery space), sub- contracted work

Paperwork = Credibility

Page 9: Small business october 23, 2013

Business Formalities

Sole Proprietor – Easiest entity - least

protection

Corporation – Formal entity - greatest

protection

Limited Liability Company (LLC) - greatest

flexibility

Consult a professional!

What Kind of Business Are You?

Page 10: Small business october 23, 2013

Small Business Finances

Keep business income and expenses separate from personal◦Separate checking, credit card account◦Separate vendor / customer accounts

Keep stuff!◦Receipts, invoices, contracts (scanner is OK)

Computer Book Keeping program◦Quicken – Quickbooks – Excel Spreadsheet◦Enter ALL income and expenses

Tracking the $$

Page 11: Small business october 23, 2013

Small Business and Taxes

Type of business formality determines tax return

Things you can deduct◦Supplies (creative and administrative)◦Insurance (business and health)

Things you can’t deduct◦Personal / Living expenses

Watch Hobby Loss Rules!◦More than three years of loss - the IRS calls you a

“hobby,” and you cannot deduct expenses!

Protecting your business

Page 12: Small business october 23, 2013

Small Business Taxes

Sales Tax Paid to the State– what is it, when do you collect?◦7% - more than 30 days - “in the business of”

Sales Tax You Pay for Purchases – what’s exempt? – “Direct production of”

Employment Tax – when do you have “employees”?

Income Tax – Estimated Payments required◦110% of current income tax obligation◦100% of previous year’s tax obligation

Taxes You Pay - Taxes You Collect

Page 13: Small business october 23, 2013

Small Business Taxes

Home Office/Studio – dedicated spaceUtilities (heat, light, phone) – pro-rata

shareInsurance – business insurance, pro-rata

share of casualty insurance on homeAutomobile – travel to/from events,

exhibits◦2013 IRS Mileage Rate = 56.5¢ per mile *or*

actual expenses

◦Meals and Entertainment – 50% rule for meals - actual costs for lodging, travel

Art Supplies and Equipment◦“Consumables” = immediately deductible◦Equipment with useful life = depreciateWhat Do You Want to Deduct?

Deductions, Deductions, We Love Deductions!

Page 14: Small business october 23, 2013

Small Business Tax Traps

Top 9 Audit TriggersState Tax Traps

◦Failing to file sales tax returns◦Failing to file employment tax returns◦Failing to file Secretary of State

documents

What to do if you have trouble◦Memory Devices◦Hire a professional

The IRS is watching you...Remember:

Keep records!

Page 15: Small business october 23, 2013

Small Business LAW

Personal Risks◦Personal assets at risk from business

practices Financial Issues Liability Issues

Business Risks◦What is your business worth?◦Protect your business reputation

Work Product – See Intellectual Property

Legal Risks

Page 16: Small business october 23, 2013

What is IP (Intellectual Property)?◦ Patents – InventionInvention that is useful, novel, and non-obvious ◦ Trademarks - NameIdentification of goods and services ◦ Copyright - CreativeCreative Expressions fixed in form ◦ Creative Commons – Deliberately

making your work available for use by others.

Patents - Trademarks – Copyright – Creative Commons

Basics of Intellectual Property

Page 17: Small business october 23, 2013

Patents

Patent – exclusive rights to an invention in exchange for public disclosure

◦Must be new, inventive, useful, industrially applicable

◦Good for 20 years

Inventions and Processes

Page 18: Small business october 23, 2013

Trademarks

Trademarks (also Service Marks)◦Commercial methods to identify and distinguish

goods and services from competitors

Industry Identification

Page 19: Small business october 23, 2013

Fun Facts About Trademarks

From: FastCoDesign.com

Page 20: Small business october 23, 2013

Copyright

Copyright◦“Original creative expressions”◦Form, not content◦Duration - Life + 70 (Mickey Mouse

Life)◦Infringement if copy is “substantially

similar”◦Derivative works◦DMCA (Digital Medium Copyright Act)

Creative Works ©

Page 21: Small business october 23, 2013

Copyright

◦Published before December 31, 1922, or◦Expires 70 years after the death of the

creator, or◦Specifically placed in the public domain

(freeware, shareware, etc.), or◦Government works.◦However, new arrangements or versions of a

public domain work are copyrighted to the extent of the arrangement or version

Public Domain - Free to use in any form

Page 22: Small business october 23, 2013

Copyright

“Fair Use” is an exception to copyright protection◦ Examples:

Excerpts for review or critique Parody News reporting Educational Use

◦ Balance test – how much is too much?Copyright Use and Fair Use

Fair Use and “Not” Fair Use

FAIRUSE

Page 23: Small business october 23, 2013

“Grumpy Cat” was the #1 Meme for 2012

Click icon to add picture

Memes are good examples of how difficult it may be to (1) protect a

copyright and (2) correctly use a

copyrighted work.

Page 24: Small business october 23, 2013

Copyright

Copyright Protection◦ Protected at Creation (fixed in form)◦ Notice © + year + name◦ Registration to recover costs and fees for

claims www.copyright.gov/register for online

registration $35 filing fee (online) $50-65 filing fee (hard

copy)

◦ Failure to protect rights may mean you lose rights

◦ Fair Use – See handout◦ [alt] 169 = ©

Protect Your Creations

©©©

Page 25: Small business october 23, 2013

Copyright

Obtain permission from the ownerUse Public Domain works

◦ Public Domain by passage of time ◦ Public Domain by Government works◦ Public Domain by design

Create your own source materialsTop 10 Copyright Myths

How to “Get Around” Copyright Law

Page 26: Small business october 23, 2013

Work For Hire“Work For Hire” is owned by the

hiring agent under three conditions:◦(1) Meet “Commissioned Works” definition in

the law: Contribution to a larger work, such as a magazine A part of a motion picture or audiovisual work A compilation of existing works Instructional texts or graphic works A translation of an existing work A test Answers for a test Supplementary works, such as a graph for a book An atlas

Handout: Sample Work for Hire Agreement

Page 27: Small business october 23, 2013

Work for Hire (continued)Work For Hire belongs entirely to

hiring agent:◦(2) If the creator is an employee and

the work was created on company time or with company resources;

◦(3) If the creator specifically relinquishes all rights prior to commencement of work.

Handout: Sample License Agreement

Page 28: Small business october 23, 2013

Releases – Use of private likeness

Types of Releases◦Model Release◦Minor Release◦Property Release

When do you need a release?◦If the subject is recognizable◦If the subject is used for commercial

purposes

Handout: Sample Model Release

Page 29: Small business october 23, 2013

Releases – When Not NeededPublic Places

◦Images taken from the street of publically visible property

◦Public buildings (visible to the public, located in public)

When is a release not needed?◦Educational purposes◦Editorial illustration◦Non-commercial purposes

Page 30: Small business october 23, 2013

Creative CommonsAllowing defined types of licenses

for your creative works◦Creativecommons.org◦FREE

Types of Licenses:

Attribution – No Derivative – Non Commercial – Share alike

Page 31: Small business october 23, 2013
Page 32: Small business october 23, 2013

So… What is this Presentation?

Page 33: Small business october 23, 2013

Small Business Development

Financing growth – know why you need $$$

◦Investors - want to see profit◦Patrons - want to see your art◦Business (loans) - want $$ + interest

What is your time worth?◦When is it worth hiring it done?◦Administrative details◦Gal/Guy “Friday”◦Share administration with a partner (artist or

business)

Planning to Grow Your Small Business

Page 34: Small business october 23, 2013

Small Business Practices

8 things you must do when selling a piece of art

10 Principles of Success for Artists Top 10 Tips to Grow Your Art Business

Page 35: Small business october 23, 2013

Creative Cooperatives

Sharing a business - increase profitability◦ Like Kind of Art◦ Compatible Kind of Art◦ Diverse Kind of Art◦ Mixing Art and “Other”

Investment Limits – when is enough, too much?

Art Teams that Succeed

Page 36: Small business october 23, 2013

Creative Cooperatives

Tips For Partners◦ Discuss expectations - then write them

down◦ Written agreement for sharing costs and

income Sharing store space, studio space, equipment Sharing costs and sharing time What happens if it doesn’t work out?

◦ Feeling of Fairness - MOST Important!◦ Not for friends or the faint of heart!

Art Teams that Succeed

Page 37: Small business october 23, 2013

Employees

Employees increase business complications◦ Employment taxes and rules

Full time and part time Over time and benefits

◦ Training Employees to read your mindCan you succeed without help?

◦ Employees allow you to be in two places at once

◦ Employees can be hired for business management

◦ What is the “marginal benefit” of an employee?

Do I Need Employees? What Do I do with Them?

Page 38: Small business october 23, 2013

How to Succeed at (Art) Business

Make a Plan - stick with the plan

Formalize Your Business - act like a business,

not a hobby

Keep up with the paperwork

Keep up with taxes (and keep receipts!)

Watch and protect your rights

Watch copyright issues

Enter partnerships with eyes wide open

Don’t forget to MAKE ART!

Plan, Work, Time, and Art

Page 39: Small business october 23, 2013

Resources for Small Business

US Small Business Administration◦ www.sba.gov

Hoosier Heartland Small Business Development Center◦ http://www.hhsbdc.org/◦ West Lafayette

See Handout for more resources!

Finding Help for what you need

Page 40: Small business october 23, 2013

Thank you for your attention!Questions? Answers?

You can find this presentationAt blog.lawlatte.com

Under “2013 Workshops”

You can find Miriam at:[email protected]


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