You can’t be a talent representative—agent or manager—unless, of course, you have talent to represent. That’s an easy assumption. But if you want to embark on that career path, how exactly might you get started on the journey?
It should always be business first and whether you opt to launch your firm from rented space or from a home-based office, there are boxes you need to check to get up and running. Some of those boxes are legal-related and, although I’m not an attorney and I recommend that you seek qualified, professional advice as needed in this process, there are some easy-to-tackle to-dos that you should be able to handle yourself.
You should decide at the beginning of this process what kind of business entity you want to form. Will you start a company that is set up as a corporation, a limited liability company (LLC), or as a sole proprietor? Are you embarking on this adventure alone or do you have a partner or partners in it with you? How you organize, set-up, and label how your new business will be treated by the government (read: the IRS and your state’s taxing bureau) has nothing, for the most part, to do with how you will conduct business, but it has everything to do with your responsibilities as a business owner. If you’re setting off as a one-person band (and in this work-in-progress, pandemic landscape, along with the huge leaps forward in how technology aids us in conducting business, this is very doable) setting yourself up as a DBA might be the way to go. DBA or “doing business as” establishes you as a sole proprietor, fully and personally responsible for the tax obligations and the maintenance of the legal status of your company on your own. On paper, this reads “Your Name d/b/a (doing business as) Your Company Name.”
Different states have different requirements and different processes on how to do this. A Google search for “Establish DBA in (insert your state or county)” should get you headed in the right direction. While there are companies that offer to do this work for you for a fee, this is an easy enough process for most new business owners to handle on their own. In your online search, look for website resources from a local government agency. Here in California, and Los Angeles County to be specific, the go-to website for this is lacounty.gov. But you have to look past the few for-profit company entities ranked higher on your search results list to find this.
As a DBA, both your state and local taxes due each year are calculated from your reported income earned from your business (against your expenses incurred operating your business) on your personal (IRS Form 1040, Schedule C) tax return. I’m not a CPA and unless you are, you should absolutely seek the counsel of a tax professional as needed in this process. The small investment of a consult session often comes with tremendous added value that reveals itself later.
A legal partnership entity is a way to go if you’re starting a business with one or more other people. An LLC (Limited Liability Company) is a good option for most partnerships. It provides liability protection that a DBA does not, but it allows you and partner or partners to report your income and list your business deductions on your personal tax returns, rather than having to file a corporate tax return which most people have to engage a CPA to do for them. In short, partnerships are cheaper to maintain, administratively, than a corporation.
Lastly, there is the corporate structure to consider. This is a costly option that requires a level of transaction accountability that these other entities do not. But, for many businesses, the level of liability protection that is afforded to you personally by setting up a corporate structure for business is well worth the costs of maintaining that structure.
There are other hoops that new business owners have to jump through before they can legally engage in conducting business. Depending on where you live or from where your business will operate from, expect the requirement of needing a local business license (details are usually available on city and town websites) and the option of business insurance.
One other significant hoop for new talent agencies is, for example, here in California and in other states, the requirement to have a specific state talent agency license, in addition to your local business license, and the requirement of establishing a trust account to hold funds you receive on behalf of your clients that’s separate and apart from your business operating account. Agencies are not allowed to co-mingle funds. Agencies are also required to have and maintain an insurance bond to protect client funds received.
Talent management firms are exempt from these last three requirements. As of now, we’re not required to have a state-sanctioned license, we’re not required to have an insurance bond to cover client-earned funds received nor are we required to maintain a separate client trust account. However, regarding a client trust account specifically, you should have one. We have a fiduciary responsibility to protect the funds we receive for work a client has done.
Opening a business is serious business and growing and maintaining your business is hard work. But from hard work comes an earned, respected reputation and potential clients who will want you to represent them.
Your passion for being your own boss and for representing and developing talent needs to be solid. But long before you get to officially do that work, there’s other work to be done that doesn’t involve signing a single client or making a single submission. But, this is the business of acting and it should always be business first.
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and do not necessarily reflect the opinions of Backstage or its staff.