llc, coloradoI am in Colorado, USA. I have a few friends who produce art of a common variety, but do not want to try to sell it on their own. They have asked me to form a company and handle marketing/sales/legal/taxes so they can make their art and profit without worrying about those aspects. This will start with sale of pieces made by one artist to local businesses, and expand to conventions, and internet sales.
Capital is at a minimum, so I cannot afford to simply purchase the art, I will need to represent the artists, and sell for a commission. I want to keep my friends concerns of paperwork overhead in mind, what would be the best way for me to carry forward, in regards to corporate formation, and how the artists are treated (as partners, shareholders, employees, …?). I have looked into many guides describing the differences between LLC, SP, LLP, S-Corp, and C-Corp, as well as read some standard contracts for brokerage, but still feel very much lost.
Thanks for all help.
One way that I have seem something like this happen before in a brick and mortar store, but is not exclusive to this sort of setup, it a consignment contract. Essentially the artists agree to give you 30%-50% of the sale and you agree to sell the product for them. In this way they have a business agreement with you as independent parties.
They specify a price and a percentage and you both sign the document that lays out what you agree upon. This way, you don’t have to worry about them having any sort of license and they don’t have to go through the paperwork of being members or employees. I have no idea about the legal nature of this in other states like Colorado, but I’ve seen this happen in Washington State.
As for you, maybe think about getting an LLC account and having the artists sign agreements between themselves and the company. This might mitigate some personal liability and it comes with some good perks like opening a business account specifically for the business transactions. It also gives you some more legitimacy while you sell.
But, don’t let them force you into this unless its what you want to do. At the very least set a reasonable percentage for yourself because art isn’t as easy to sell as you might think. There will definitely be some start-up costs for you from all the work of selling the art to web-hosting and other challenges.
Here are a few resources for the consignment contracts: https://www.rocketlawyer.com/document/consignment-agreement.rl http://www.atyourbusiness.com/consignmentagreement.php http://www.vexedlv.com/consignment-contract-sample.html
One thing to keep in mind about these is that you might want to have a lawyer peek at them to make sure they hold up in your country/state.
As a disclaimer - I am not a lawyer and have absolutely no familiarity with Colorado law. You should always ask one about the specifics. I’m just speaking from personal experience.
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