This is really valuable information, Carolyn, and may save lots of artists a big headache. Several years ago, the city of Chicago "busted" about 40 people in the arts building where I have my studio. They ranged from voice teachers to artists to musicians. All had to appear in court and pay a $400.00 fine THEN get their business license on top of that. The inspectors simply went from door to door and asked to see the license. I had one, (displayed on the wall) and agree that the first time feels like a hassle but now I am able to renew online every 2 years. In our state, one must first get an Illinois Business Tax ID number, then the license. As a sole proprietor, my business tax is now due once a year so it does mean keeping good records. Thanks for this article!

I know that many artists avoid the tax issue -- but it is one of those things that you don't want tapping you on your shoulder later down the road.

There are so many myths about taxes within the larger art community. Some will tell you that you don't have to pay taxes until you earn $10,000 a year while others will tell you that you don't have to pay taxes on creative works. Both suggestions are wrong and can land you in deep water.

I know in Illinois artists can file some of the same forms that independent contractors do tax-wise. Technically you don't need a business license in that sense -- but when in doubt I'd go the direction that Debra mentioned... and with what this article suggests -- especially if you are involved with art fairs and the like OR have your own shopfront.

It's true that states have varying regulations but so do banks that operate within those states. If you want to create a business account to keep business and personal funds separate (recommended by most tax attorneys), you'll probably need a DBA (Doing Business As) through the city or county in order for the bank to set up a business account. This is not the same as a sales tax number that comes from the state. Many cities have an Accountants and Lawyers for the Arts group that does reduced rate or pro bono work for artists. They are a good source of information. Some arts organizations do business workshops for artists, so keep an eye out.

Thank you for the clear instructions.

Great article! We artists need MORE information on this type of subject. With galleries now taking 50 percent, a lot of us are considering opening our own studios. That's my goal for 2012 -- and I'd like to do it legally.

You may only need a license if you are using commercial money i.e. Federal Reserve Notes, i do not I use silver and gold coins and refuse to enter into any commercial transaction. I don't pay any taxes because gold and silver isn't income.

First of all I would like to say Mahalo nui loa (thank you very much) Suzan for you nice compliments.

Referring to my adventurousness and boldness however I would have to respectfully decent from that opinion; in fact it is you investors who are using commercial money aka federal reserve notes on a day to day basis that are the adventurous ones, my hats off to you for that, I could not maintain that kind of lifestyle with all the risk.

I Think it's rather bold putting all of ones financial eggs in one financial basket. Should the "dollar" by this I mean the federal reserve note dollar, go the way of the British pound and loose its world reserve status it will most likely be replaced with some form of Amero like the Euro or a basket of currencies under a super national monetary issuing agency that creates limiting financial instruments called SDRs (Special Drawing Rights) and surely you and everyone else who gambled on the federal reserve note as an investment would loose all but a few pennies on the dollar in the wake of that inevitable collapse that is presently happening in slow motion.

No I am not bold I seek stability, reason, and peace in my life, and fiat systems just aren't stable, rational, or peaceful. They are the primary protagonist for instability, irrationality and wars. And even if the "federal reserve note dollar" remains the world reserve currency the 100 year trend is a downward one with no signs of turning around as measured by the purchasing power of savings in that currency.

No I am not bold or adventurous I am rather boring and old fashioned. But I have a very comfortable living, a lifestyle most rich people only dream of and I jealously guard this freedom with a mountain of legal books from which I have exhaustively studied from and memorized the relevant maxims of law.

But if you were referring to the safety of my shipping methods as BOLD I do offer three methods that are very safe by anyone's standards.

The first and most secure method of payment is via goldmoney.com their transactions are above and beyond the industry standard,their storage fees on my end of the deal are reasonably priced and the company is inside and out 100 percent legitimate with 99.99 percent pure deliverable metal

The second is via my local gold and silver coin dealer, after your painting is reserved by phone or email I send a contract for a purchase order contract for you to sign and fax back to me, my signature is also on the document, and in the event of a breech of contract I assure you a swarm of IRS FBI and State Police would make a big seen of it and make an example of me. They are just waiting for a slip up, I fully intend not to give them that chance. Then with all the legal stuff taken care of I request you contact one of the many local dealers in honolulu that are all licensed established tax-paying businesses, they accept your payment via credit, bank wire, or check or "some kind of commercial money" then you would tell them to hold the payment for me to pick up but only after delivery confirmation tracking is verified and the painting is in route. Then in 7-10 business days the painting will make its way from the middle of the pacific ocean to your address and you can track it all the way, the painting will be insured against loss or damage and theft for its full value and you will be required to sign to accept the package or pick it up at your post office if you miss the delivery truck. You will be required to show a valid govt. issued ID if you want to pick up your mail "the painting"

Lastly one can accept the painting from me in person, if your in the area in Nu'uanu valley on the island of Oahu you may have a tour of my studio where the art is made and perhaps a bit of wine and cheese to toast the painting and perhaps a healthy discussion about philosophy over a coconut shell filled with Kava and then trade for gold or silver coins in your possession for my art.

again mahalo and aloha
I may seem a bit unconventional by today's standards but only a hundred years ago the whole world did business my way, absent the internet of course.

Drew Manupupule
226 Kaimuohema place
Honolulu HI 96817

808 212 3275
FineHawaiianArt@gmail.com
FineHawaiianArt.com

It is true the IRS considers bartered goods income and even gold and silver as a taxable conveyance at its fair market value in fact any transfer of labor for labor is taxable at its fair market value.. Did you mow your neighbors lawn and did that little old lady bake you a pie in return, well that's taxable too! But it matters not what the IRS thinks, it only matters what the supreme court of the United States thinks here is a quote; Wickard v. Filbern 317 US 111 "It is hardly a lack of due process for the government to regulate that which it subsidizes"

Are you being subsidized by the government? YES

How? Your consensual involvement in Social Security, licenses, permits and "free" Municipal services etc.

Can you avoid such things? Yes

Will it be hard? At first the transition is but all good things require work.

Is it worth it? That is a decision you will have to make for yourself, if your an airplane pilot who makes 100K per year its probably not worth it, if your a farmer on the other hand I can assure you it's worth it.

Here is another quote from the Supreme Court of The United States;

HALE v. HENKEL, 201 U.S. 43

"The individual may stand upon his constitutional rights as a citizen. He is entitled to carry on his private business in his own way. His power to contract is unlimited. He owes no duty to the State or to his neighbors to divulge his business, or to open his doors to an investigation, so far as it may tend to criminate him. He owes no such duty to the State, since he receives nothing therefrom beyond the protection of his life and property. His rights are such as existed by the law of the land long antecedent to the organization of the State, and can only be taken from him by due process of law, and in accordance with the Constitution. Among his rights are a refusal to incriminate himself and the immunity of himself and his property from arrest or seizure except under a warrant of the law. He owes nothing to the public so long as he does not trespass upon their rights.
Upon the other hand, the corporation is a creature of the State. It is presumed to be incorporated for the benefit of the public. It receives certain special privileges and franchises, and holds them subject to the laws of the State and the limitations of its charter. Its powers are limited by law. It can make no contract not authorized by its charter. Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation. "

so you can see you have rights so long as you don't incorporate or receive benefits from the government other than the protection of your life and property.

Lastly as an artist you should know that a very important case was won by a fellow artist on the federal 9th circuit court of appeals

Steven C White "the artist" was trying to sell his artwork in a public park, the city said to him that he needed a vendors license, at this point when faced with the awesome power of the city government most people would just roll over and get the license but not Steven, he decided this right of his was more important than himself and took one for the team, even when there was nobody cheering him on, to the contrary most people told him to just get the cheap license and permits and be done with it. anyway the case worked its way up the court system and finally victory was his, now all artist have a constitutionally recognized right to sell our artwork in public spaces under the protection of the first amendment free speech provision.

for more reading on this case see here

http://caselaw.findlaw.com/us-9th-circuit/1300114.html

My personal feeling is for safety sake comply to the various ranks of Government and all their confusing forms. I have found different answers from the different levels of Government. So I choose to comply to the various forms, permits and licenses.. Now happy about it, but feel safer.

Erroll, it seems you are not an art venue from your post.

You need to check with the State of Utah's website to find the city of your planned venue. The city and state will tell you if you need a license.

Some comments are spurious and don't deserve the kind answer.