If you are an artist in the U.S., take these for steps for turning your hobby into a legal art business.
1. Obtain your Federal Employer Identification Number.
a.k.a. FEIN, EIN, FIN
Don't scatter your Social Security Number around! Get this free ID number from the Federal government for your art business.
The Federal EIN Application takes 5 minutes and is FREE. Beware of sites that want to charge you for this service! (Updated at 8:44am MT: Previous link that charged a fee was incorrect.)
2. Register your business with your state.
Regardless of the business structure you choose (sole proprietorship, LLC, S-Corp), you must register with your state in order to be a legal entity.
In Colorado, I register my businesses with our Department of State. I also take an extra step to register my D.B.A. (Doing Business As) names, which fall under the umbrella of my S-Corporation.
3. Apply for a sales tax license with your state and city or county.
If you are selling art directly to buyers, you must have a sales tax license and collect sales taxes. Check your Department of Revenue to obtain this and to find out what additional local licenses you need.
I recommend to all of my clients that they take sales tax classes. Most states and municipalities offer these free of charge and they are well worth the time.
4. Open business accounts.
You must separate your business and personal accounts. This small step will lead to peace of mind and save you from possible future headaches (migraines!).
To obtain a business account at your bank, you will be asked for your business registration documents (see #2 above).
BONUS Step #5
Get serious about making money from your art business.
The Art Biz Lift Off Self-Study takes you through the steps to create your official art Business.
Click here to read all about it. Why delay your success?
22 thoughts on “Make It Legal – 4 Steps to an Official Art Business”
The link you provided for the FEIN charges $150? Is that normal?
So sorry, Allie! I had an incorrect link and it’s fixed now. No, as I said above, it should be 100% free. Glad you didn’t pay.
Quick question… what business category just an artist fit under? Manufacturing, wholesale?
Allie: Really? Those are the only choices?
In IRS Schedule C directions the codes are listed at the end .Some artists use 711510 – for independent artists
Performing Arts, Spectator Sports, & Related Industries
711410 – Agents & managers for artists, athletes, entertainers, & other public figures
711510 – Independent artists, writers, & performers
711100 – Performing arts companies
Great summary of what needs to be done in order to get your business up and running.
Currently in the State of Colorado there is a fee holiday at the Secretary of State where all registration and renewals are $1. There may be some other states who are doing the same to help promote business.
Neil: Yep. There are also fees for the sales tax license and filing semi-annual reports.
Reports are for corporations.
Are there other reasons for obtaining an EIN for a sole proprietor besides not wanting to use one’s Social Security number?
I have found sales tax to be pretty easy: Collect the tax, file and submit the tax. On time. Just be aware of your state’s (or whichever ones you collect) specific rules. For example, in CT we presently have two tiers for sales of goods and services depending on price. Another example: in CT we can include the tax in the price. When I lived in MD, on the other hand, this was not allowed.
Wow, that WAS easy. And the lady on the phone was very nice. Thanks, Alyson.
I am an artist and military wife currently living overseas, next destination(s) unknown. I want to sell my work, but where do you recommend I register my business in light of my frequent moves? How does sales tax apply when you are selling outside the state/country?
Claire: I think that might be a better question for an attorney or CPA. I’m sorry I can’t help you with that.
Similar situation to here in Australia; and if you aren’t registered you can’t claim things on tax anyway.
so I cannot just take an account and make it business correct. thank you I will call bank. who do I call to register? I am disabled but working that is what they call it in mass. Does anybody know who I call or who can assist me with paper work like this. I know it sounds stupid but I have difficulty do to disability I also need tax number, at this time I have only sold 3 prints but having show in Feb. maybe something than so I need to be set up. Thank you for this information. Any help would be helpful. i have trouble writing and reading but have a masters degree from before i got sick. It is humiliating to look illiterate and maybe even be that but I can read and write and I am not stupid, Thank you for this valuable information.
Janice: I think you’re asking about a business bank account. Just call your bank. They will ask you for verification that you are a legally registered business, which is why you do the other stuff first.
I would definitely contact a small business development center in your area for more hands-on assistance.
Where do we register for bootcamp?
Leslie: Thanks for asking!
I sure have been teasing you all with the Bootcamp, but I probably won’t have registration and details until after January 1. I hope you come back at that time.
Although there are companies/attoneys you can pay to set up your entity, I found it is really not necessary. DIY is simple.
The site for Florida’s business entity registration is SunBiz.org. In FL though the turn around time is a little slow. It helps to call after your app is sent in to ensure no problems have occurred.
Thanks for all artist support, Alyson.
I always wondered if as a Tarot reader, and shamanic practitioner you are some sort of artist. Would you know? Lealh
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Thanks for all the time updations, God bless you………..