Just because you’ve started selling your art doesn’t mean you have a legitimate business. You have to get some things in order.
Here’s a list of the basic legal entities you should be set up with. The names and titles of your state’s departments may vary from those below, so I’ve showed you how to search for them. The good news is that almost every piece of information you need will be online.
Your state’s department of state
For: registering your art business
Google this phrase: register business [your state] to find more
See also: Selecting the Legal Structure for Your Business
a resource from the Small Business Administration
Your state’s department of revenue
For: Sales tax registration and filings.
And: Business tax and estimated tax filings.
Google this phrase: sales tax license [your state]
Or: business tax filings [your state]
Your city and/or county department of revenue
For: Local tax, including sales tax, filings.
Google this phrase: sales tax license [your town]
Internal Revenue Service
For: Federal business and personal tax filings.
And: Federal Employer Identification Number (FEIN)
Use for your business in place of your Social Security number.
While most everything is online, I have found that in-person training is well worth the effort.
I have attended free sales tax classes at both the state and the local level. Sales tax is one of the most confusing parts of my business. Attending the classes didn’t clarify things completely, but it got me started and also gave me contact names for when I had questions. (I'm envious of those of you who live in places with no sales tax!)
Locate and then search the above sites. Take advantage of any free training they offer.
10 thoughts on “Legal Resources for Starting an Art Business in the U.S.”
A useful resource, have retweeted!
Also for UK based artists we wrote a similar article earlier this year:
Sales taxes; we not only collect them we pay them. A lot of people don’t seem to understand that retail sellers are acting as agents for their state (or province or whatever designation is appropriate) when we collect sales tax. Not only that, but there are some variations on that “collecting sales tax” as well. For example, when I lived in Maryland it was not allowed to include the sales tax in the price. When I moved to Connecticut, I found that it was allowed and a great many sellers do this.
Another variation in Sales Tax is the condition of not having to pay sales tax for components of our work that will be resold (including things that aren’t part of the piece such as gift bags and boxes). Maryland, at one point had a lower limit on this. One had to make a purchase of greater or equal to $500.00 in order to qualify for this exemption. Patently unfair, it has, I believe, (though I am not certain), been changed so that amount is not a relevant factor.
When I went to the local Sales Tax licensing office upon moving to CT, I was given a rather substantial booklet covering much information I would need as a small business (in my case sole proprietor) operator. Taxes are never a good thing to be ignorant about!
See? Confusing! I really recommend the classes, but it’s so important to know that it differs greatly from state to state.
One thing I found is very useful if you a) want to make taxes easier come April, or b) keep better track of your expenses, is a separate bank account for your business as an artist.
In some states you don’t have to register a sole proprietorship, but to do business as anything other than your legal name (IE: “(Your last name here) Art Studios”) you do have to file a fictitious name statement with the county clerk’s office. This is useful for a few reasons, aside from the obvious legal issues:
1) It helps prove to yourself you’re serious about your art career.
2) It shows your collectors and potential galleries you are serious.
3) It assists in the trademark progress if you ever decide to go that route. Being able to prove you’ve used your business name since x date makes it a LOT easier.
Ysmay: We have to file business names with our department of state. What state do you live in where you do it with the county clerk?
An important post, Alyson!
Here in Texas, one has to do the sales tax through the State, but they very helpfully collect the portion due to the municipalities too. And we can do it all online, which I love.
If one wants to be any form of business besides a sole proprietorship, one needs to file with the State of Texas, and to use any other name besides one’s own, a DBA (“Doing Business As”) license needs to be filed with the County Clerk. Although a business that has registered with the State doesn’t need a business license from the County, in most, but not all, instances.
It really does get very confusing, yet it behooves us to make sure we’ve done everything properly to avoid even more headaches down the road.
If you don’t have and don’t plan to have employees, do you still need the FEIN? This is the sort of question I would have asked my dad, the former IRS guy, but he passed away a few years ago.
This is so useful – thanks. I’m wondering – where is the line between just “selling your art” and becoming a business? I’m finding it hard to tell at what point I need to start doing all of these very official things…would love some advice.
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