Tag Archive for: business of art

Best Legal Structures for an Art Business

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Art Business Legal structure was likely not taught in art school. This short post is a quick overview of the topic. 

We are NOT lawyers! This is not legal advice, but may help you converse with your future lawyer, possibly a volunteer lawyer for the arts.

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If you’re an artist, photographer, writer, or any other type of self-employed creative worker, you are required to register as a business.This will actually help you in the long run. Registering a business entitles you to a number of protections and benefits, including (but not limited to):

  • Reducing your personal liability in case of a lawsuit
  • Potentially reducing your tax burden
  • Access to public grants and funding (PPP during pandemic required registration)

 

Although there are a variety of legal structures possible, some of them are a better fit for a creative business than others. Let’s take a brief look at the three most popular ones and discuss the advantages and disadvantages of each.

 

Sole-proprietorship

This is the simplest business structure and is a good place to start for artists just beginning to sell their work. A sole-proprietorship treats the artist and the business as a single entity.  The government (both state and federal) utilizes your social security number as your “identity.” With this basic type of business, you can deduct business-related expenses such as your materials, travel costs to work-related events, studio rent, subcontractors etc. 

That said, because you and your business are considered a single entity, you are personally liable for all business debts or damages should someone bring a lawsuit against you and win. Additionally, all business income is considered personal income and will be taxed at your personal income tax rate, including Federal Insurance Contributions Act (FICA) taxes, i.e. social security and medicare contributions. This may end up increasing what you owe in taxes, though it will depend on how much you make. 

 

Limited Liability Corporation (LLC)

An LLC is the next step up from sole-proprietorship, though depending on the type of LLC you choose, it can be very similar. LLCs are generally very flexible when it comes to how they are taxed and grant you additional liability protection in case of business debt or lawsuits. To date, there have been very few cases where liability has penetrated the LLC, but usually this is the result of abuse of the structure. 

Another advantage is that an LLC enables you to hire employees, which a sole-proprietorship doesn’t allow. Both a sole-proprietor and an LLC can hire subcontractors. There are very particular laws on the difference between the two and it is worth getting familiar with the nuance between a contractor and an employee to ensure you are operating within the law. You can also deduct business expenses from your taxable income under an LLC.

LLCs can be considered single member, meaning you’re the only owner, or multi-member, meaning you have partners. Like a sole-proprietorship, income is only taxed at the individual member level as personal income for each member, regardless of the number of partners involved. Income under an LLC is treated as personal income, and as such, you are required to also pay a self-employment tax that goes towards things like social security, Medicare, etc. 

LLC’s cost money to register and maintain depending on the state in which they reside. Filing taxes is also slightly more complicated than sole-proprietorship.

 

S Corporation 

S corporations (S corps for short) are significantly different than the previous two structures in that they are a tax classification rather than a business structure. To receive this classification, you need to register as an LLC first. 

Once you obtain S-Corp status, business income is treated separately from your personal income. That is, anything the business earns is taxed as a business, while you will pay taxes on your personal income separately. Owners of S corps who operate or run their business pay themselves a salary as an employee even if they are the only person in the business.

Like LLCs, S corps shield personal assets from liability in case of business debt or lawsuit. Additionally, S corps can hire employees, deduct business expenses, and they enjoy all the benefits of an LLC and greater liability protection for the owners of the company.

Generally speaking, and very much a back of the envelope calculation, it’s a good idea to switch over to an S corp if your take home income from your business is greater than $100,000. This will help lower your personal tax rate, any additional income beyond your salary is taxed at the corporate rate which is lower than higher level personal income tax rates. Yes, that last sentence was complicated, but if your business is at this point it is probably a good idea to hire an accountant and possibly a lawyer to ensure you are making the most prudent business decisions.

S-Corps have registration fees as well as annual maintenance fees (depending on the state of residence, and expectations for corporate governance like meetings of shareholders and board members. Filing taxes is more complicated as more forms must be filled out to appease government agencies. 

 

Choosing the right business structure is crucial to your success. It’s a good idea to consult with an accountant or tax lawyer before you file any paperwork with federal or state governments. 

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Join a future coworking session where we often engage in topics like business structure, finances, and taxes.

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Art Business Marketing: Goals and Measurement

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Art Business Marketing is not a mystery. Growing your audience in ways that are true to you can be easy and enjoyable. Let us show you how.

This post is Part 2 of a multi-part series. Subscribe to our Business of Art newsletter to receive notification when additional posts are published. 

 

In the first part of this series, we discussed the basic parts your marketing plan needs to have. In this, and a few future posts, we will go into more detail about what goes into each part of art business marketing and how to put them all together. Think about it like drawing a roadmap with a clear destination, a pathway to get there, and measurable milestones that you can track to determine if the plan is succeeding. 

In this part, we’re going to talk about goals, the clear destination, and measurement, the milestones along the way. If you haven’t already, I highly recommend you go back and read Part 1 before reading this.

Let’s dive in! 

Goals

As we mentioned in Part 1, goals need to be specific and measurable. This is where you want to think about the big picture of what you want to accomplish. 

Some examples of goals could be:

  • Increase sales by 10 percent.
  • Hold 2 gallery openings in a year. 
  • Secure 3 commissions. 
  • Earn $50,000 total revenue. 

Spend some time thinking critically about what you specifically want to accomplish. For example, let’s say you want to sell commissions. Who do you want to sell them to? Do they need to be a certain type? A certain dollar amount? A certain size?

A key part of developing goals is making them realistic. If you’re just starting out and you’ve never sold a single piece in your life, then going from $0 to $100,000 is very unrealistic. Instead, focus on what you honestly believe you can achieve. 

Although these goals may not look like marketing goals, they will significantly influence how you approach your art business marketing. These specific destinations will help you define the audience and customers that you will need to engage during the year. To reach these goals you will need to think about: what galleries you want to show your work in, who will commission you, and who are the customers that will buy your work to generate your revenue. These details are important to your roadmap (marketing plan) for success.

 

Measurement 

 

Your goals will determine what you need to measure. In our map example it is helpful to measure the miles you have traveled towards your destination, it is probably much less helpful to keep track of the number of cows you pass.

For example, if your goal is increasing sales by 10 percent over the previous year, it’s easy to measure whether you’re on track to meet that goal or not. If last year you generate $20,000 of revenue in your art business, this year you want to increase thatto $22,000. Another way to see that is about $200 extra of revenue generation each month. This might mean one more customer or 4 more print sales.

The trick here is to make sure you’re measuring things that are actually important to meeting your goals. We call these “metrics.” So if your goal is to increase sales, you may not find it useful to measure and track things like social media engagement—unless they correlate to closing sales.

An easy way to do this is to document your process. You can choose any tool/place to do this. For instance you could set up a spreadsheet where you can add monthly stats such as sales figures, website traffic, social media followers, etc. At first, it might seem like busy work. And you may start by tracking things that only seem tangentially relevant to your goals. But over time, patterns will start to emerge. Over time, the more data you track, the more you’ll be able to judge whether they contribute to your success. Using social media followers as an example, you might find that whenever your Instagram follower count grows by 5 percent, you get more sales. 

Keep in mind that metrics are finicky. What works today might not work tomorrow. That’s one reason why it’s a good idea to review your marketing plan—and any results you achieved—on a regular basis, which initially may be quarterly but as your business grows you may find it helpful to check where you are at more frequently. 

 

Need help putting this all together? I’m here to help! Check out my Coworking with Creatives workshops or contact me to discuss how I can help you market your art. 

 

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How to Build a Marketing Plan for Your Art Business (Part 1/x)

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This post is Part 1 of a multi-part series about marketing. Subscribe to our Business of Art newsletter to receive notification when additional posts are published. 

One of the most common questions I hear is “How can I sell my art?” And while that’s an important question that every artist needs to find a way to answer, I find the more appropriate place to start is, “How should I market my art?” 

“Marketing” is a nebulous topic that frequently isn’t taught in school. And while some may be naturally gifted at drawing attention to their work on social media channels, those activities don’t always equate to actually marketing their work. In fact, being good at social media is just one aspect of marketing and sometimes may not even lead to sales.

In order to successfully sell your art, you need to approach marketing strategically. 

What does that mean?  Marketing requires critical thinking about who your audience is, the best ways to reach them, and all the steps they will go through to become customers. Good marketing is a series of activities that are part of the pathway to transaction.

Let’s take a closer look at the framework that  supports an effective marketing plan. In future posts, we will look at actionable steps to implement a marketing plan. 

 

A MARKETING PLAN FRAMEWORK:

GOALS

Audience

Message

Channel

Market conditions

Strategy

Tactics

Measurement 

 

Before we get into “how to build a marketing plan,” it’s important to understand the parts that make up a marketing strategy. While there are many different approaches to building a marketing strategy, here are the critical pieces that I’ve found are invaluable for artists to include. 

Goals: What are you trying to accomplish? 

Yes, you want to sell more art. And that’s a fine goal to have. But it’s not enough for a marketing strategy. Goals should be both specific about what you want and measurable. 

To define goals, think both about the steps needed to achieve those sales (drive more traffic to your website, have X number of gallery showings, etc.).

As you see above, there is a link that flows from your goals all the way to your action and outcome (more sales). 

 

Audience:  Who is your artwork for? 

Often when I ask an artist this question, many  will gleefully respond, “Everybody!”

Yes, artwork can be enjoyed by all people, but not everyone will value it. Nor do you want everyone to value it, as that likely means it is too average and does not transcend as great art. 

Furthermore, it is impossible to market to everyone. There is no message that will speak to every person the globe over, and there is no place–physical or digital–that could put your work in front of the entire world population. Your audience is a group of people who recognize the value of your work. 

More particularly your customers are those who value it AND are willing to pay for it. Keep in mind that some audiences may not be direct buyers, but rather people who can help you get in front of buyers, such as galleries. 

When defining your audiences, include things like age, gender, geographical location (if applicable), other artists they like, and other activities they enjoy. Income level is also good to include when building audience profiles, particularly if you have a desired price point for your work in mind.  With clarity on who your audience is, the rest of marketing becomes easier.

Messaging:  What do you want to say and how do  you want to say it to your audience? There are key things your audience wants to know about your artwork. There is context you can you provide to your audience that invites their engagement with your work. What details about materials, process and your philosophies add value to the experience of your work? Messaging is where you can, and frankly where you will need to differentiate yourself from other artists. 

Channels:  Where do your audiences hang out, both literally and figuratively? 

Hint: Social media is not the right answer. That is akin to saying my audience hangs out in the ocean, and if I start swimming I will probably find them. 

Channels need to be tangible places to connect with your audience. What social media platforms do they prefer? What hashtags do they follow?  Do they visit any particular art venues on a regular basis? What publications do they read? Where am I likely to personally, in physical or digital form, encounter my audience?

Market Conditions: What are people who are purchasing artistic experiences looking for? 

This can include information about what type(s) of art your ideal customers like, but it should also include general market conditions that may affect your ability to sell art. For example, when there is an economic downtown, art purchases tend to drop. You don’t have to be an economist, but a general awareness of market conditions will help you to properly communicate with your audience. 

Strategies: How will you reach your audience?

Marketing strategies define your approaches to growing your audience and increasing your sales. This includes things like developing a stronger online presence, building relationships with more galleries, participating in online art forums, developing an email list, creating stronger visual assets to communicate your values (brand) etc. Strategies, although large in scope, should be very specific and should directly support your goals. 

Tactics: What work do you need to do today to move towards your goal?

Often confused with Strategies, tactics are the specific steps you need to take to put your strategies into place. That might be “Create a daily Instagram post” or “Send a monthly newsletter.” 

Measurement: How do you know if you are getting closer to your goals? 

Good goals are measurable, but you also need to know what to measure. For example, if I’m driving from Baltimore to San Francisco, I know the route is going to be about 3,000 miles. Throughout my journey, I can easily glance at a number of mile markers, but that will only tell me how far I’ve gone on a specific highway. 

A better method would be to note down my odometer’s starting point and estimate the number it will be when I arrive in San Francisco. That way I know how far I’ve traveled at any time and can estimate how much further I have to go.

Measuring your marketing is similar. You need to know what you want to measure and how you will measure it. For example, if one of your goals is to grow online sales by X percent, you will need a way to track all your online sales, AND to measure its growth over time. Good analysis doesn’t cause paralysis, good analysis enables good growth.

This is the framework for any good marketing plan. Check out future posts for an overview of how to put these together to form a single, cohesive plan that gets results! 

 

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How to sell your artwork: Know Your Value

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Cute English Bulldog in Hat

Charlie is more than a dog. She is constant love and creator of joy.

 

People ask regularly how I ended up in the arts with my background from rural Minnesota and two engineering degrees. I will spare the details of the journey for another post, but my vocation in the arts is due to my recognition that art is the most valuable creation of humankind. 

 

Art is hoarded by people in positions of influence across history and frankly, it is what endures from every civilization. As much as we revere science and technology today, they will always be a part of the process, never the destination. 1000 years from today our data and the findings gleaned will make us look like flatearthers and I have no doubt the iPhone 12 will overwhelmingly end up in the heap of refuse.

 

What is it about art that makes it so valuable?

 

To the creators, their artwork is an opportunity to be fully seen. Art is the tool we use to express ourselves. It brings the deepest parts of our being into the world. The word on paper, the paint on canvas, the harmony of stroked keys, the movement through space and the images captured on film are the manifestations of our thinking, our feeling and our intuitions. The work we create is the essence of who we are. It allows us to understand ourselves and just as important it allows others to understand us as well.

 

To other individuals, artwork is an opportunity to also be seen as well as expand the resources that are available to them. An artist allows their audience to say things that they could never put into words themselves. But more powerfully, the artist and their work allows the audience to think, to feel, and to sense the world in ways beyond their own faculties. Artworks allow the audience to gain knowledge, to build new relationships and to navigate the world in new ways. Through art, the audience is able to open up new opportunities.

 

When the audience becomes more than another individual the artwork is amplified. Society operating with a collective idea, feeling or sensation is a powerful tool for world changing activity. Art is often the catalyst that bends the universe towards love, justice and all the good things we aspire to. And yes, I should note it can also be used for detriment in the wrong hands.

 

Art has incredible power, for the creator, the audience and society and as such it is incredibly valuable! 

 

My vocation is to help artists harness the value of their artwork so they can impact the world, and simultaneously help the audience harness the power of art to enrich their own lives and the world around them.

 

THIS IS THE FIRST PART IN A MULTIPART SERIES ON SELLING ART

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Do I need an agent… or any expert

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Last week my accountant emailed me with the out come of our tax return. He suggested that if I move some cash into retirement savings I could reduce my burden by 2x what I am paying him for this year’s service. He has paid for himself with a simple suggestion. It is the second time in as many meetings he has added depth to my knowledge and numbers to my bank account.

He is a valuable resource to have. It is interesting though, that the value of the accountant seems to go up as our net-worth goes up. When there is little to account for there is little opportunity to recoup the cost of counting. Yet, I have utmost confidence that had a professional financial guide been at my side in the beginning we would be in an even better position today.

When resources are scarce one of the hardest things for us to pay for is knowledge. Yet it is precisely knowledge that we need when we have little else to work with. We need to work smarter in tandem with working hard, because often times we are working harder due to lack of efficiency, or rather, lack of knowledge..

The benefit of efficiency is a curious thing, it has drastic impact at the start and overtime it compounds.

One of the most evident signs of our need for knowledge is with our most precious resource: time. When we first start a business, we are constantly busy. We are terrible at time management because we can not assess what is important. Assessment is about awareness. We lack knowledge of the right questions to ask to gather the right information to guide our actions. Is the product more important or finding my audience? Should I work on a partnership or focus on a sale? Is that gig worth it? Furthermore, when we lack time because we are busy, the last thing we prioritize is sitting to think. Thinking seems like doing nothing and how can we afford to DO nothing.

Unfortunately doing nothing is likely one of the most valuable things you could do to not only win back time, but also win the life you want to lead.

If you are unable to think, who will for you?

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