Legal Advice for Business - Paper Example

Introduction

It is essential to ensure that one's business is legally sound for it to succeed. One can get legal advice from a solicitor or a registered law firm. Getting advice in the initial stages of a business allows one to sort out legal issues which can become later and much more expensive to settle then. If one is fully aware of the laws and regulations set within their venture, they build a strong foundation for success. Legal advice can help one deal with disputes, protect one's intellectual and copyright information, according to (Smarta, 2010) understanding legal requirements for one's insurance needs, legalities in a specific contract for a particular piece of work and much more. Solicitors can act and advise one when involved in a legal dispute when one has to go to court or give advice on financial matters. In this paper, tax, contract negotiation, copyright and trademark laws and art licensing legal matters are going to be critically discussed in a clear and cogent manner.

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Tax

An artist must pay taxes on the income they receive from selling their work. All the necessary and ordinary expenses incurred about one's business are deductible. Suppose one is doing artwork as a hobby rather than a career, the deductions they take are only to offset income from the hobby. Potential deductions are trade association dues, copyright registrations, legal and accounting fees, agents' commissions or online sellers and employees' salaries (if any) according to (Staff, 2015). If art is done as a hobby, related expenses can only be deducted if itemized and only to the extent that they exceed 2% of one's gross income. To do this as smoothly as possible, receipts and records must be well kept. To do this most efficiently, the artist can consider having a professional accountant or tax specialist to do their taxes. These professionals advice one on the deductions to expect and ensure the tax returns are error-free as errors are subject to charges and penalties (Staff, 2015). It is important to note that artworks given as presents or passed down as an inheritance in the United States above a certain threshold are subject to federal taxation. For instance, if an individual donates artwork worth more than $5,250,000, according to (Editors, 2015) it is subject to taxation.

Art Licensing

Art licensing is when one has the contracts necessary to do business with a company or corporation, and they give the artist the green light. Here, one can represent the company and use their trademark in one's works. Each piece of work the artist does is approved by the company's attorneys. For each bit of work one sells, they give a certain percentage to the corporation. However, licensing is expensive. Associated costs include the license fee, a legal representative that can be contacted about the contract negotiations, business insurance according to (Hammond, 2017) and an attorney that as specialized in the art field. The latter, however, is not a requirement if one does exceptionally well and with no disagreements with their corporation.

There are different licensing bodies in different countries that help artists manage their licenses. For instance, in the United Kingdom, they have the DACS agency. These agencies promote one's work and receive a small percentage of the income generated by the agreement (Hammond, 2017). They may also run the schemes in which distribute money owed to artists by a collective of other licensing schemes. If one may prefer to manage their licenses, they can negotiate an individual agreement for the works they are interested in licensing.

When negotiating, one should consider the type of product involved and the best license type for the product, the quantities expected to sell and one's popularity in helping to sell those products (Brandt, 2012, p. 24). A license can operate in many ways regarding income. First, flat fee licenses are simple. They provide a one-off payment for a specific use of work. However, one may miss out on a lot of income if a multiple mass products make a lot of sales. Secondly, there can be a royalty payment which can be negotiated per unit sale and should always be calculated on the gross income. Thirdly, there are the advances. They are paid to an artist earlier and later deducted from the royalty payments. If the royalty payments cannot cover the advance payment the artist received, then they will have to pay all of that back themselves.

A license can be exclusive or non-exclusive according to (Lydiate, 1976). An exclusive license allows one to create other licensing agreements - for different purposes of one's work to be used in or in different territories. Non-exclusive permits only permit one to work strictly under an agreement for the defined purpose. Non-exclusive licenses are not recommended since they limit one to using their works in ways that they may desire. Artists make some common licensing mistakes that may prove costly. Firstly, some assign artwork instead of copyrighting (Brandt, 2012, p. 26). When one assigns their work, it means that they have sold their copyright. This means that the purchaser can do what they want with the work without asking for permission from the seller. Under no circumstance should one sell their copyright as it entitles the purchaser to all the income that may be gotten from its exploitation.

Secondly, some artists forget to set time limits in their agreements. After a specific duration, a license should expire, so that if the licensee is not doing an excellent job with one's work, one can end the partnership or if they are doing well, one can ask for a higher royalty when setting the next agreement according to (Lydiate, 1976). Thirdly, contracts can be verbal or written although the best type of deal is the written one not only because it may include more details but also because it is difficult to enforce a verbal agreement if this goes wrong.

Fourth, Many people often do not ensure they have understood the terms and conditions well. It is necessary to have a lawyer to explain to them if they are not well understood. One is legally obliged to obey the terms and conditions once they have signed the agreement (Lydiate, 1976); it is therefore highly recommended to understand this before putting pen to paper. Finally, suppose a corporation wants to use one's artwork but they price the license too low, or trying to convince one to sell their license, one should just walk away; if they want to work with the artist so much, then they will find a way of agreeing to one's conditions (Lydiate, 1976).

Contract Negotiation

One crucial piece of advice that artists need is in contract negotiation. When an artist tries to bring their work into the wider world, it can be very stressing especially when they have to face a team of corporate of lawyers. In most instances, the artists lack enough money to hire their legal time to fight for their interests in the negotiation (Schlackman, 2014). Because of this, the corporate lawyers eventually end up the victors in the agreement. An excellent example of contract breach would be the case of Juli Adams vs. Angry Birds. Juli Adams had a series of drawings of funny birds, which Hartz Mountains of Rovio entertainment wanted to use for his new line of pet toys. Hartz entered a 5-year agreement with an option of renewing. The contract limited Hartz from enforcing the trademark of Angry Birds. The ownership of the Angry Birds intellectual property would remain with Adams. Hartz applied for Angry Birds trademark in 2007 according to (Schlackman, 2014). Two years later, Angry Birds became a hit in the market. Rovio entertainment received trademark protection for various products but could not do the same for Angry Birds. Hartz and Rovio agreed without informing Adams. Hartz even stopped paying Adams as the contract required. Hartz continued to receive millions. Adams Hartz for breach of contract and trademark violations.

An artist can, however, compete against corporate attorneys. If hiring attorneys are too expensive for the artist, they should consider hiring one only for contract review (Schlackman, 2014) other than being part of the negotiations. After the initial talks, the attorney reviews the first draft, suggests changes and appropriate changes are made. They can now recommend a possible negotiation strategy for the artist. This contract negotiation makes one's attorney know that the artist has legal representation and that anything should not be added too one-sided. There are also non-profit making organizations like the Volunteer Lawyers for Arts. They provide services to businesses and individuals for free and can help in the negotiations too.

When creating commissioned pieces, the details of the piece of work should not be left out. For instance, the orientation of the painting (portrait or landscape), size and dimensions, purchase price, amount of deposits, amount due upon completion, type of material to be used (could be stretched canvas, suede board, and many other materials), completion date and signatures. One may also insert revision clauses in the contract according to (Hammond, 2017). For instance, the artist can choose the number of revisions they can do if the work is complete and the client does not like it. Otherwise, the artist can keep the art and the deposit and decide what to do with it. It is advisable to keep three copies of the contract. One for the client, another for the artist and the other for tax.

Copyright and Trademarks Laws

A copyright is a legal right by a country that gives the creator of a particular piece of work exclusive rights for its usage and distribution. Copyright is represented by a . People often violate copyright laws without knowing. For instance, pictures and drawings of famous artists and celebrities are sold are sold without their legal permission. Most people do not know that everybody owns their likeness (Hammond, 2017). Credit must be given to the owner. In the United States, authorship is protected for seventy years after the authors. Section 106 of the 1976 copyright Act allows an actor to reproduce their work in copies, prepare derivative work based upon the work and distribute copies of the work in public by the sale of transferring the ownership (McKenzie, 2016). When an artist makes a piece of original art, automatically it becomes their copyright, and they own the piece. The piece must, however, be unique. One cannot copyright somebody else's work by just reproducing it. Should somebody copy one's art and use it for commercial purposes, they will have broken the copyright laws. If one has an attorney, usually a "cease and desist" letter is sent to them. If they refuse to adhere, then legal action can be taken against them. A trademark is a word, phrase or logo that is registered for use as a representation by a company or organization. Copyrighting is not only about letting other people use one's work as theirs but also creates value and portrays a specific image according to (Prakash, 2016), to the public about the creator as people like to buy purposeful pieces of art. Trademarks are represented by a TM or . These symbols show that an organization or corporation uses the logo as their trademark and that is it illegal to express or use the symbol in any way without special permission, according to (Hammond, 2017). In both cases, the owner has to exclude others from using their work without permission. People commonly mistake the two terms even though a trademark requires a registration for protection while a copyright is automatic once one creates their work and avail it to the public.

References

Smarta. (2010). Why your business will need legal advice. Retrieved from http://www.smarta.com/advice/legal/business-law/why-your-business-will-need-legal-advice/Brandt, S. (2012). Licensing-...