The “Art” of Choosing the Right Form of Business
Many artists and art lovers embrace the idea of the “starving artist,” such as the early career artist who hasn’t yet sold much of her art or whose art hasn’t yet been “discovered,” the artist who sacrifices lifestyle, living in a cheap apartment in a poor neighborhood, scraping by with barely enough to eat, pouring every dollar at their disposal into his art, or the artist who makes do by working other jobs, such as a waiter or waitress, to pay the rent so he can work on his art in his free time.
As an artist and businessperson, however, you’d rather not be a “starving artist.” Of course, it takes time to master your art, display your work, and build a following, but is it necessary if you’re successful as an artist to also be a bad businessperson?
The challenge with your art, bronze sculptures, however, is what comes first, the chicken or the egg, in other words, success as an artist or financial success? With the cost of materials, foundry time to pour and shape your creations, and the help of technicians or specialty artists, it can cost thousands of dollars, sometimes tens of thousands, per piece. But without financial success, you lack the capital needed to work. And, without your work to sell to art lovers, you don’t have the capital you need to create work. Yes, indeed, chicken or egg?
Since you’re a better artist than businessperson, you’re working with a lawyer and accountant who have advised you to establish a company and choose a business form that helps you succeed as an artist. They’ve given you some preliminary information on sole proprietorships, C corporations, S corporations, partnerships, and limited liability companies. You don’t know about any of that, but you know that you want to shield yourself from lawsuits, minimize taxes, have the ability to bring on different financial backers over time (in the art world, financial backers start by backing projects and then as their confidence grows in the artist, they eventually back the artist overall and not just specific projects), and give yourself as much flexibility as possible.
Answer questions based on the case study above.
What business form would shield this artist from lawsuits and minimize taxes?
What business form would give the artist the greatest ability to bring on different financial backers over time?
What business form would give the artist the greatest amount of flexibility over time?