Archives for November 2011

When there is more than one — a Partnership?

When there is more than one participant, you can’t be a sole proprietor.  That goes for husband and wife also, except in some special circumstances.  Like a sole proprietorship, a partnership is easy to form and without a lot of red tape.  You do need an agreement, which also makes good business sense!  The biggest downside is that you have unlimited liability not only for your actions, but for the actions of the other partners.

Partnerships are not taxed, but do have their own informational tax return — a form 1065.  The form 1065 reports the income and expenses for the partnership and divides the items among the partners based on the partnership agreement.  Each partner is given a K-1 with his/her share of the income/loss to be reported on various lines of their individual tax return.   The form 1065 can be quite complicated and should be prepared by a qualified tax preparer — another expense.  Partners pay self-employment tax on the income rather than being employees with a W-2.

Fringe benefits are generally not deductible for partners, and the options for fringe benefits and retirement plans are much the same as for sole-proprietors.

A partnership interest can be transferred and continue after the demise of a partner depending on the partnership agreement.  Also, if an LLC is comprised of more than one member, a partnership is the default entity if no other choice is made.  More about this when we get to LLCs.

What AEDM day is this?

I’ve been away for a couple of days.  But, I think I’ve been a tiny bit creative every day even though I don’t really have anything to show for it.  I’m working through a book called “You Can Draw in 30 Days” and I’m drawing and shading balls and boxes.  Hope to share something with you in the coming days.
I did take some pictures.  I pulled a few of them up in Photoshop Elements and played around with the  color hue and saturation, and with the balance of tint and temperature.   I see photographs where these values have been changed, and I’m just not quite sure if I like it.  Sometimes the color combinations are so vivid that I’m immediately drawn to them.  And then sometimes, I think it’s just too bizarre.  Take a look at these, and please let me know what you think.
A Different Shade of Sanibel

AEDM – Day 13 (missed some days)

I’ve been under the weather, well more like knocked flat out.  My first experience with food poisoning.  From guilt I’m thinking it might have been that cupcake with a cup of cream cheese frosting.  More realistically, it was the raw, unsalted Brazil nuts from a bin.  So, the past couple days have been more about enjoying art than making it myself.  I received my three ATCs (art trading cards — I wasn’t familiar with them myself until a few weeks ago) from a swap among our “Fly” group and hosted by Sally Rose .  And I received a painting that I purchased from a fellow flyer, Lori Leissner.  It’s called “Brave” and I’ve hung it in my home office to remind myself each day to be brave.

As I’ve been recovering, I have started on the little trading cards for our next swap.  No art to show as yet, so I thought I would share my studio with you.

Yep, that’s it.  A yard sale child’s table and chairs in the middle of our living area.  And I have to say that I do feel more comfortable (and I’m far, far from being petite!) working at that little table, a bit freer.  My daughter says it brings out the child in me.  Maybe so.  This is also where my five year old granddaughter, Lucy and I work when she’s here.  Here’s a painting she did a couple weeks ago.

She’s a natural and I’m so proud of her.  Hope to be back to my normal dabbling tomorrow.

Sole Proprietorship – Oldie but a Goodie

Sole proprietorship isn’t as popular as in the old days — those days before LLC’s.  But as the LLC newness has worn off, people are taking another look at sole proprietorship.  More about it when we discuss the LLC, but some states (including KY) have established annual reporting requirements and annual fees associated with LLCs, including the single member variety.

The number one advantage to a sole propietorship is the ease and low cost of establishing.  Other than state and local registrations (and an EIN if you have employees), you just start doing business.  Also, it has the lowest administrative costs.  The business income is taxed to the owner on his or her individual tax return on a schedule C or if a farm, a schedule F.  No separate return to prepare.  The business owner is not an employee, and pays self-employment tax as opposed to social security/medicare tax.

The major disadvantage to a sole proprietorship is the unlimited liability (including business and personal assets) for debts and any lawsuits brought against the business.  Some risk can be covered by insurance, but depending on your situation,  you might be wise to discuss with an attorney.

Other disadvantages include, as the same implies, it can ONLY be you.  If you have a partner, then you can not be a sole proprietor.  In addition, It is difficult to transfer interest of a business where the owner is a sole proprietor.  Fringe benefits for the owner are generally not deductible.

For low cost and minimum red tape, it’s the sole proprietorship.

AEDM day 9 – Experimenting

I’m on a dabbling roll.  The amount of stuff at an art/craft store is amazing!  What does one do with all of it?  Well, of course, most people don’t do something with “all” of it.  This is my month for experimenting with different mediums and techniques.  Some may work; some may not.  Those colored pencils didn’t work for me, but from comments I learned about other options with more vibrant colors.  Thanks for the feedback!

Yesterday I took a picture of all the bare trees in our backyard with the beautiful blue sky in the background.  Changed the hue of the photograph in Photoshop Elements and printed the picture on card stock paper with my inkjet printer.  Mixed Adirondark alcohol ink (Cranberry) about half and half with alcohol blending solution.  Wet the paper and then misted (with a mini mister) the trees with the ink mixture.  When it dried, I added a flying crow to the sky.  I’m sort of happy with how it turned out.

I truly appreciate all of the wonderful feedback from the AEDM group and from my Fly Tribe!