Small business october 31, 2012
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The document provides information for creative professionals on starting and running a small business. It discusses the importance of having a business plan and proper business formalities like legal entity structure and tax IDs. It covers topics like accounting, taxes, legal considerations, intellectual property including copyrights and trademarks, and strategies for small business development and creative cooperatives. The goal is to help creative individuals understand how to formalize and grow their creative work into a sustainable business.
![Copyright
Protect Your Creations
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
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Small business october 31, 2012
- 1. Small Business Development for Creative-Types Growing your creative business
- 2. Making Your Art Work For You What We Will Discuss... Business Plans Business Formalities Business Accounting Tax and your business Legal considerations Basics of Copyrights and Trademarks Small Business Development Creative Cooperatives
- 3. Why Be a Business? Five Reasons to “Step Up” the Business Side of Your Art 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
- 4. When Should You „Become‟ a Business? When Can You Quit Your “Day Job?” 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)
- 5. Getting Started Start-up Basics Top 10 Start-Up Steps Trial Run, Ease In, or Dive In? 50% of Small Biz fail in the first 5 years. Top 7 Reasons Why Poor Businesses Fail Are you ready to be both Art and Business?
- 6. Business Plan What is it, and why do I need one? 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?) Why Should An Artist Have a Business Plan – Article
- 7. Business Plan Why do I need one? 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 Top 10 Business Plan Tips
- 8. Business Formalities Paperwork = Credibility 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
- 9. Business Formalities What Kind of Business Are You? Sole Proprietor – Easiest entity - least protection Corporation – Formal entity - greatest protection Limited Liability Company (LLC) - greatest flexibility, least understood Consult a professional!
- 10. Small Business Finances Tracking the $$ 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
- 11. Small Business and Taxes Protecting your business 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!
- 12. Small Business Taxes Taxes You Pay - Taxes You Collect 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? 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
- 13. Small Business Taxes Deductions, Deductions, We Love Deductions! Home Office/Studio – dedicated space Utilities (heat, light, phone) – pro-rata share Insurance – business insurance, pro-rata share of casualty insurance on home Automobile – travel to/from events, exhibits 2012 IRS Mileage Rate = 55.5¢ 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 = depreciate What Do You Want to Deduct?
- 14. Small Business Tax Traps The IRS is watching you... Remember: Top 10 Audit Triggers State Tax Traps Keep records! 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
- 15. Small Business LAW Legal Risks 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
- 16. Basics of Intellectual Property Copyright - Trademarks – Patents – Creative Commons What is IP? Copyright - Creative Expressions fixed in form Trademarks - identification of goods and services Patents – invention that is useful, novel, and non-obvious Creative Commons – Deliberately making your work available for use by others.
- 17. Copyright Creative Works 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)
- 18. Copyright Public Domain - Free to use in any form 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
- 19. Copyright Fair Use and “Not” Fair Use “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
- 20. Copyright How to “Get Around” Copyright Law Obtain permission from the owner Use Public Domain works Public Domain by passage of time Public Domain by Government works Public Domain by design Create your own source materials Top 10 Copyright Myths
- 21. Copyright Protect Your Creations 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 = ©
- 22. Other commentary about Copyright Swennseemel.com – Art Careers Without Copyright – “Crowd Marketing” Theabundantartist.com – “How YouTube sees Copyright” (From TED TV) Mariabrophy.com – “What we can learn from a bikini model.”
- 23. Creative Commons Allowing defined types of licenses for your creative works Creativecommons.org FREE Types of Licenses: Attribution – No Derivative – Non Commercial – Share alike
- 25. Trademarks Industry Identification Trademarks (also Service Marks) Commercial methods to identify and distinguish goods and services from competitors
- 26. Fun Facts About Trademarks From: FastCoDesign.com
- 27. Patents Inventions and Processes Patent – exclusive rights to an invention in exchange for public disclosure Must be new, inventive, useful, industrially applicable Good for 20 years
- 28. Small Business Development Planning to Grow Your Small Business 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)
- 29. 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
- 30. Creative Cooperatives Art Teams that Succeed 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?
- 31. Creative Cooperatives Art Teams that Succeed 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!
- 32. Employees Do I Need Employees? What Do I do with Them? Employees increase business complications Employment taxes and rules Full time and part time Over time and benefits Training Employees to read your mind Can 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?
- 33. How to Succeed at (Art) Business Plan, Work, Time, and Art Make a Plan - stick with the plan Formalize Your Business - act like a business, not a hobby or “for fun” Keep up with the paperwork Keep up with taxes (and keep receipts!) Watch and protect your rights Enter partnerships with eyes wide open Don‟t forget to MAKE ART!
- 34. Other resources for artists Swennseemel.com – a professional (“makes a living as”) artist who has a lot of great ideas about promoting yourself. Look for the sample sales agreement and model release on her website. Theabundantartist.com – Lots of great business development info, including building a website and developing a business plan Mariabrophy.com –Maria is an artist consultant with business tips about selling and marketing your artwork.
- 35. Resources for Small Business Finding Help for what you need US Small Business Administration www.sba.gov Hoosier Heartland Small Business Development Center http://www.hhsbdc.org/ Susan Davis - West Lafayette See Handout for more resources!
- 36. Thank you for your attention! Questions? Answers?