Most artists spend their lives honing their techniques and striving to make a name for themselves.
Far fewer develop expertise in areas such as taxes, contracts and copyright law. But understanding such issues can help artists make a living, especially since so many are self-employed and don’t have corporate legal and accounting departments to rely on.
To help fill in the knowledge gaps, the Kansas City Artists Coalition (KCAC) held a “visual arts boot camp” on legal issues in late April. The event drew 45 attendees.
“Financial education is not really taught across the board in America,” said Janet Simpson, KCAC executive director. “How to balance your checkbook, how to manage your retirement, how to manage your taxes. It’s not just artists; there’s a huge swath of people who have very little information about accounting and financial practices that would be beneficial to them.”
The presenters included tax preparer Dean Vivian, who also is an actor and voice-over artist.
Vivian said home offices don’t attract as much IRS scrutiny as they used to. But he warned that “self-employed people often under-claim their income and overstate their deductions, inviting audits.”
Yet there are some expenses that artists may not realize are deductible. For example, Vivian said you can deduct anything you buy during a pitch to a client or potential client, even if it’s food or coffee for yourself.
Most artists know that they can deduct the expense of buying supplies for their work. But Vivian said they also can deduct the mileage they drive to pick up those supplies.
Vivian outlined some highlights of tax rules in a printed summary, including rules for home-based businesses. If you run a business from your home, the IRS allows you to deduct a portion of mortgage interest or rent, home utilities, insurance, repairs, maintenance, trash removal, cleaning supplies and general upkeep. If you meet clients at home you can even deduct expenses for lawn care.
But IRS rules to qualify as a home-based business are very strict, and you have to be able to prove that your home is your principal place of business. And a home-based office or artist’s studio must be a separately identifiable space, used regularly and exclusively for your business.
Vivian stressed the importance of keeping good records of your business expenses and logging such expenses within two weeks.
And if the IRS hits you with an audit, be sure to tell the truth. “Once they catch you in one lie, they’ll come at you with everything they’ve got,” he said.
Attorney Danielle Merrick, executive director of Kansas City Volunteer Lawyers & Accountants for the Arts (KCVLAA), said contracts and consignment agreements need to be specific. Consignment agreements must be in writing.
Your signature is evidence that you have accepted the contract, so artists should make sure they know what they’re signing. “You never have to take a contract that’s placed in front of you and just sign it,” Merrick said. “If someone tells you (that) you have to sign this right now, you should go home. Take time to read it, and get an explanation of anything you don’t understand.”
Merrick said that before signing a consignment agreement, artists should consider acquiring artwork insurance through entities such as Fractured Atlas, a New York-based nonprofit organization that supports artistic entrepreneurship.
Attorney Rebecca Stroder, past president of KCVLAA, said, “copyright infringement is a strict liability offense. Reproduction doesn’t have to be knowing or willful.”
Stroder said artists who want to post an image they did not create can Google the image and find every place it has been displayed. Doing so can reveal if the image is under copyright protection.
Artists can protect their work through means such as watermarks, Stroder said. And posting images of your work in low resolution makes it harder for others to reproduce those images.
But business partners sometimes start out as copyright infringers, Stroder said. “Someone may put your photo on their website without your permission, due to an oversight. Contact them and you may be able to work out a deal.”
Attendee Ruth Scherrer, a painter, said the boot camp provided the kind of information she needs to run her art business. “There’s so much to absorb. It’s nice to be at a workshop where you’re listening to another person’s input. Plus, the questions from the other attendees bring up things that maybe I haven’t thought of.”
Scherrer said she includes “don’t move it” clauses in agreements for her work to be displayed in an office, especially if the work is large. “If you want to move it to a different wall in your office, call me and let me move it. If they move it without my permission and they damage it, then they’re going to buy it.”
Terri Wheeler, a painter and KCAC board member, said the boot camp enabled her to learn new things about contracts and copyright law. “It helps with the business of our art, and how to continue with our careers and go forward.”