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Click to ExpandWhat is a small business? How do I denote small business for legal purposes?

According to the Small Business Act, a small business is independently owned and operated and is not a dominant player in its particular field. The Small Business Administration (SBA) also sets size standards for small businesses, which are generally stated either as the number of employees or the earnings of the business. You can determine whether or not your business qualifies as a “small business” using those standards found on the SBA website. You can use this internet tool to determine if you qualify: https://eweb1.sba.gov/naics/dsp_naicssearch2.cfm.

Click to ExpandHow do I start a small business, such as a talent agency?

The first step to starting a small business is coming up with a business plan. (For more information on different types of business plans, see http://en.wikipedia.org/wiki/Business_plan.) Then, it is important to estimate costs and determine how to finance your business. You will also need to name your business and choose a structure for your business. The business structure is how your organization is viewed from the perspective of the law. The type of structure that you pick will affect how much you pay in taxes, the amount of paperwork you’ll be required to do, and your personal liability. A small business owner may choose to operate a sole proprietorship, limited liability corporation, general partnership, C corporation, or Subchapter S corporation, as well as a number of other business structures, the availability of which may vary depending on the business’ location. There are advantages and disadvantages to each structure, and the most advantageous structure will vary from business to business, depending on a variety of factors. Finally, each small business must obtain the necessary and appropriate licenses, permits, and registrations. The types of licenses, permits, and registrations will vary depending on the type of business. For more information, see http://usinfo.state.gov/products/pubs/oecon/chap4.htm.

Click to ExpandCan I operate my business from home?

You can operate your small business from home as long as there are no zoning restrictions on home-based businesses. Look at your local zoning ordinances to determine if your city imposes such restrictions. If you decide to operate your small business from home, you still need to get the required licenses and registrations required by local and state law. Another consideration if you operate your business from home is homeowners’ insurance. Inquire with your insurance carrier about the consequences of operating a business from home on your insurance policy.

Click to ExpandWhat legal aspects do I need to consider when starting a small business?

Almost every decision you make when starting a business has legal implications that you should consider. The major legal aspects to consider when starting a small business are intellectual property, tax, liability, and employment. Consider intellectual property laws when naming your small business as well as when creating your business plan, as a name may already be trademarked and aspects of a business plan may be protected by trade secret laws. Consider tax laws when determining the structure of your small business, as each structure may have different tax consequences for you and your business. The structure that you choose may also affect your personal liability in respect to your business. Also, if you plan to have employees, consider employment laws in your relationship with employees. Finally, there are many federal, state, and local regulations pertaining to when, where, and how you can conduct business that you must be sure to follow.

Click to ExpandHow do I get a loan? Repay?

You can get a loan through a bank or, if you qualify, through the United States Small Business Administration (SBA). When applying for a loan, you must provide the lender with information they need to determine whether or not it will loan you money for your small business. You may need to provide the lender with information regarding personal credit history, personal income tax returns, financial statements (if the business is an existing one), and other relevant information. You may also be asked to secure the loan with collateral. When you are starting a small business, it is often necessary to put some of your own money into the business as equity in order to obtain a loan. Also, the lender will likely require that you personally guarantee the loan. The schedule and amounts of repayment are put forth in your loan agreement and may vary from loan to loan. If you do not meet these requirements put forth in your agreement, then you have defaulted on the loan, and the lender may look to collateral to collect repayment.

Click to ExpandCan I receive SBA assistance?

The SBA provides assistance to small businesses in a number of areas. Whether or not your business is eligible to receive assistance depends on the program. One common program offered by the SBA is a loan program, where the SBA acts as a guarantor of loans to small businesses. Generally, your business will be able to receive assistance under this program if it qualifies as a small business under the SBA’s definition. Another assistance program offered by the SBA is the 8(a) Business Development Program. In order to receive assistance under this program, the business must: (1) be a small business as defined by the SBA, (2) be owned by “one or more socially and economically disadvantaged individuals who are of good character”, and (3) “demonstrate a potential for success”.

Click to ExpandShould I obtain a partner?

Whether or not you should obtain a partner for your small business depends on the circumstances. A partnership is a business structure in which two or more people share ownership of a single business. You may want a partner or partners if you need additional funds to start your business or if you need a partner with specific skills or expertise that you may lack. However, it is important that you choose your partner(s) wisely, because you may be held liable for your partner’s actions. If you do choose to obtain a partner, you should have a partnership agreement that sets forth the rules of the partnership, although the law does not require a written agreement.

Click to ExpandHow do I select a lawyer?

When selecting a lawyer, the most important factor to consider is what you are selecting the lawyer to do. If you need an attorney to defend you in a lawsuit, you want to narrow your choices down to litigation attorneys, and if you need tax advice, you want to narrow your choices down to tax attorneys. You can search for attorneys using the Martindale-Hubbell Law Directory at http://www.martindale.com, which provides information such as educational background and practice areas. You can also ask other people if they know any attorneys who practice in a specific area. You can also contact your local/state bar association or the American Bar Association, and find a lawyer through their lawyer referral programs. You should consider various factors when selecting a lawyer. You may want to look at a list of representative clients to see if a lawyer has assisted businesses similar to yours in similar matters. Also, you may want an attorney with a specific skill, knowledge or background, depending on your needs and circumstances. For example, if you are a musician seeking assistance on a music-related matter, you may want an attorney who has a background in music.

Click to ExpandWhat are my responsibilities as a manager?

A manager for an artist has both professional and personal duties. The manager's primary professional duties include advising, counseling, and directing an artist’s career path in a way that generates the most amount of profit as possible. [1] The manager advises an artist on public appearances, promotion, and choice of material. In addition, the manager handles day-to-day activities for the artist. These can include arranging meetings with other personal representatives or acting as the artist's confidant in an artist's personal and professional life. [2] The idea is that by organizing both the artist's personal and professional life, the manager makes it possible for the artist to spend the bulk of his or her time being creatively productive and honing their craft. [3] One common misconception that people have is confusing a manager from a talent agent. An agent is responsible for solicitation of engagements, licensing of rights to creative works, and exploiting opportunities for talent. [4] In states like California (a hotbed for the entertainment industry), a manager cannot actually procure employment for the artist without facing legal consequences. [5] Penalties under the Talent Agency Act (TAA) include forfeiture of past and future fees and/or the rescission of the representation agreement. [6] Managers can earn up to twenty percent of an artist's gross income and can obtain production credit in an artist’s works. An agent cannot receive production credit, future fees from studios, or more than ten percent of an artist’s gross income from work generated by the agent. [7]If you are thinking of offering your services as a manager, consult an attorney familiar with your state’s Labor laws regarding the procurement of employment for artists. See if it is illegal to book gigs and appearances for your artist and be paid a percentage of the profits. Bear in mind both the professional and personal duties you have towards your artist and remember assistance may be in financial form if your artist needs money to get by.

Click to ExpandDo I need to keep accounting records? Why?

Yes, you need to keep accounting records in the form of financial statements, which include balance sheets and income statements. These are very important not only for legal purposes, but also for business purposes as well. Legally, you need to keep accounting records to validate your tax returns. Accounting records are also important to have if you want to obtain a loan, obtain investors or partners, or sell the business. Lenders, potential partners/investors, and potential buyers will want to look at your financial statements before making a decision. You should also review your accounting records as a tool for internal auditing. For example, reviewing your financial statements may help in preventing or exposing employee fraud.

Click to ExpandHow do I deal with employees? Reward? Reprimand? Fire?

A manager for an artist has both professional and personal duties. The manager's primary professional duties include advising, counseling, and directing an artist’s career path in a way that generates the most amount of profit as possible. [1] The manager advises an artist on public appearances, promotion, and choice of material. In addition, the manager handles day-to-day activities for the artist. These can include arranging meetings with other personal representatives or acting as the artist's confidant in an artist's personal and professional life. [2] The idea is that by organizing both the artist's personal and professional life, the manager makes it possible for the artist to spend the bulk of his or her time being creatively productive and honing their craft. [3] One common misconception that people have is confusing a manager from a talent agent. An agent is responsible for solicitation of engagements, licensing of rights to creative works, and exploiting opportunities for talent. [4] In states like California (a hotbed for the entertainment industry), a manager cannot actually procure employment for the artist without facing legal consequences. [5] Penalties under the Talent Agency Act (TAA) include forfeiture of past and future fees and/or the rescission of the representation agreement. [6] Managers can earn up to twenty percent of an artist's gross income and can obtain production credit in an artist’s works. An agent cannot receive production credit, future fees from studios, or more than ten percent of an artist’s gross income from work generated by the agent. [7]If you are thinking of offering your services as a manager, consult an attorney familiar with your state’s Labor laws regarding the procurement of employment for artists. See if it is illegal to book gigs and appearances for your artist and be paid a percentage of the profits. Bear in mind both the professional and personal duties you have towards your artist and remember assistance may be in financial form if your artist needs money to get by.

Click to ExpandWhat financial responsibilities do I need to consider if I have employees?

The first and most obvious financial responsibility if you have employees is payment of wages. There are federal, state and local regulations of wages, such as a minimum wage and overtime pay requirements, that you must follow. Also important to consider are employee benefit plans, such as health benefit plans and retirement plans. Generally, employers are not required by law to offer health benefit plans or retirement plans. However, there are many rules and regulations should you choose to offer such programs to your employees. Additional financial responsibilities may include workers’ compensation and tax withholding. Employers are generally required to withhold from employees’ pay various taxes.

Click to ExpandCan I sell an artist's work?

As a manager, it is not listed under the general duties to actually sell an artists work. Once again, the role of a manager is advising, counseling, and directing an artist’s career path in a way that will generate profits. [1] It is generally the work of an agent to solicit and license the rights to creative works, and for many artists this is how they generate their income. For example, a songwriter may license an original song to a production company to place the tune in a movie scene. When an artist creates a work, they become the author and owner of the copyright in the work, which includes a list of exclusive rights including the right to “distribute copies or phonorecords of [a] copyrighted work to the public by sale or other transfer of ownership, or by rental, lease of lending.” [2] The only way that a manager can exclusively sell an artist’s work is through a written agreement with the artist that conveys to the manager a transfer of copyright ownership. This allows the manager the exclusive right to sell an artist’s work without infringing the artist’s copyright. See the next question (#5) to see how to transfer copyright ownership. If the artist wishes only to convey to the manager a non-exclusive license to sell their works, the artist can do so while still maintaining the copyright. See the next question (#5) to see how to set up a non-exclusive license.

Click to ExpandDo I need to set up an agreement with the artist first, before selling their work?

license An agreement of some kind must be set up before selling an artist's work, yet the type of agreement depends on the amount of copyright ownership an artist whishes to convey to his or her manager. If an artist wishes to convey the exclusive right to sell his or her works, there must be a transfer of copyright ownership. A “transfer of copyright ownership'' is an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a nonexclusive license.” [1] The most important thing to remember about a transfer of copyright ownership is that they must be in writing. “A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner's duly authorized agent.” [2] A nonexclusive license is not a "transfer of copyright ownership." It is merely an agreement that the manager is authorized to sell the artist’s work on their behalf. Such a license is nonexclusive because the artist can still license their works to other parties beside their manager to sell their works. A nonexclusive right to sell an artist’s work need not be made in writing and may be granted orally or implied from conduct. If you are a manager who wishes to sell the artist’s work on their behalf, you most likely will be granted a non-exclusive license to sell the works. This allows the artist to maintain their copyright while the manager sells the works in hopes to generate more funds. Although it is not required by law, it is still advisable for a manager to get a written agreement to avoid any disputes that the nonexclusive right was granted orally or by conduct. The written agreement will serve as evidence that the artist did intend to convey to the manager a nonexclusive right to sell the works. The agreement also could have the terms of sale and the division of profits for the works as agreed upon by the manager and artist.

Click to ExpandShould I keep financial records for all the artists I manage or should they keep there own?

Managers should encourage their clients to keep track of their financial records, but it is the main responsibility of the managers to organize an artist’s personal and professional life to enable the artist to have more time to be creatively productive. [1] One major way to enable such creative freedom is to keep track of your artist’s finances. Managers typically are known for their role in shouldering and taking on the financial burdens of their artist, with hopes that an artist’s success will yield them financial benefits in the future. [2] As a manager, you should keep close tabs on your client’s financial records, encourage your client to keep their own records or double check your own accounting, and share your financial accounting with your client on a scheduled, periodic basis. This way your client will further entrust you with these matters and allow peace of mind to be creatively productive as you handle all aspects of their personal and professional life. An artist may wish to hire an accountant to keep track of the finances and have an attorney at hand to answer any and all questions and give legal advice on financial matters. [3] Hiring an attorney for advise on an artist’s financial matters in highly recommended.

Click to Expando I Owe Sales Tax on Custom-made Art?

Most states and cities throughout the U.S. do not require sales tax to be charged for the performance of services. Some artwork can be categorized as services rather than goods. Accordingly, commissioned, custom, one-of-a-kind artwork that is made to the particular requirements, which are communicated before the creation of the artwork, of a specific purchaser is not subject to sales tax in many states.

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