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In light of the complications that may
evolve, an astute manager would seek competent legal advice at
the outset of his career. Or, if he has been managing in ignorance
of the many laws that are applicable to his profession, getting
legal help now could save him many future hardships.
Please be aware, this discussion is not
written with the intent or purpose of offering legal advice. It
is only written to encourage all managers and aspiring managers
to seek a competent professional to get the facts straight before
they find themselves in trouble.
Here are the general (inexhaustive) definitions for the four capacities in which a manager may function:
1) Partner,
2) Employee,
3) Employer, and
4) Agent.
A partner is a co-owner of a business partnership.
A partnership is a business association that is not a corporation.
It is created through oral or written contractual agreement. The
agreement must be made between two or more persons that have the
capacity to enter into a contractual situation. If agreements
are not in writing, the law would usually declare that an association
is a partnership if the parties involved are sharing in profits
and management.
The associates are co-owners and combine
money, property, education, experience, skills, etc., to form
a profit oriented business. Each partner is an agent of the company
and assumes full personal liability for all debts and actions
of the organization and/or its partners.
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a) Partner's names,
b) Name of the firm,
c) Address of the business,
d) Kind of business engaged in,
e) Duration of partnership,
f) Duties of each partner,
g) Each partner's capital investment,
h) Percentage shares of profit (or loss),
i) Bookkeeping procedures, and
j) Termination provisions.
See Cross-links: CONTRACT,
CONTRACT-A CLOSER LOOK.
The ownership of property used in a partnership
would be established at the outset of the venture. Each member
of a partnership has an equal right to use property owned by the
partnership as long as it is used for purposes of that partnership.
This is true regardless of the percentage of investment held by
each partner.
Management control of the business is equal
for each partner regardless of the investment unless other contractual
agreements are made. Where the artist manager acts in the management
capacity but is not considered an equal partner, his responsibilities
would be defined by contract.
Partners usually receive draws against
expected business profits. This may, however, be arranged differently
through contractual agreement. Partnership profits and losses
are divided equally, in proportion to each partner's invested
share, or however defined by contract.
Partnerships must maintain accounting records. These records must be available for inspection by the IRS or other authority.
See Cross-links: PARTNERSHIP
under "General Partnership,"
Limited Partnership," and "Termination
of Partnership."
As an artist manager who is acting in partnership
with the artist he must be aware of his legal responsibilities
and liabilities.
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An employee is:
a) Any person employed under any contract
of hire,
b) A person, below the executive level, employed by an employer
and paid a salary or hourly wage, or
c) For tax purposes, any person who receives a salary or hourly
wage.
An employer is a person (or business) who
has one or more employees working for him.
An employer pays the employee a salary
or wage. He hires and fires employees. An employer must comply
with federal and state laws.
An employer must withhold from his employee's
wages, taxes levied on employees such as employee income tax and
social security tax, unemployment or disability insurance, and
other amounts where required by law.
Employers must pay these taxes to the proper
government agency, in the amounts and according to the time schedules
directed by law.
An employer must also pay the tax levied
on employers for social security to the proper government agency.
Employers must pay employers workmen's
compensation insurance.
Employers must pay unemployment tax levied
on the employer himself.
Employers must comply with federal and
state labor laws. They must maintain records on each employee
recording hours worked and wages paid.
An employer must keep tax records and file
the proper federal and state tax returns.
Employers must comply with an obscene number
of city, county, state, and federal laws that regulate businesses
in general.
It can go on seemingly forever! New laws
that regulate employers are enacted almost daily.
In short, an agent is a person who acts
for, or represents another (who is called the principal), by implied
or express permission. The principal is held liable for acts performed
by the authorized agent if the agent has not previously agreed
to accept certain liabilities or unless the agent is legally licensed
and by law is held liable himself.
Under tax law, an agent is…
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