Artist Cooperatives: Structure - Legal Entity

There are three legal structures that an artist collaborative can take:

  • Partnership. In this structure, the individual artists are partners in the entity; each holds a personal tax responsibility. In one type of partnership structure, most of the partners are silent, making no business decisions; this is probably not a good structure for an artists cooperative.
  • Incorporation. A corporation is an entity recognized by the federal and state governments. Tax liabilities (to both governments) exist, but are born by the entity, not the individual shareholders.
  • Nonprofit. This type is also registered by federal and state governments, and though there are annual filing requirements, there are no tax liabilities on profits to the entity. The personal assets of the artists are not in jeopardy.

A group/club is not a legal entity and has no tax liability to either a government or to its members. However, the individual members could be held liable for accidents or other incidents in their space, as well as individual sales. Insurance is mandatory for a group/club, as it is with all of these four types.

In all cases, the proceeds of the sale of an artwork results in a tax liability to the artist.

Talk to legal counsel before settling on legal status and insurance issues. Many attorneys are willing to provide pro bono advice. Community-based, large corporations may offer assistance from their legal departments. And, the internet lists others that offer explanations and even filing completions. In Georgia Georgia Lawyers for the Arts is a nonprofit organization dedicated to providing legal assistance to artists and arts organizations.

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