The CIPP strikes again with a well-attended and informative seminar to assist all of us in Private Practice. This year the topics covered business structures, service agreements aka the contract and insurance with an overarching theme of Risk Management. We then had an interactive roll-play so we could see an example of how the pieces all work together.
Business structures are one component for risk management and are determined by state law. The details of a Sole-Proprietor, Limited Liability Company and Corporation were covered (I’ll add to the wiki soon). The main differences: Sole-proprietor can have their personal assets attached by a creditor. An LLC (not no liability, just limited) has the pass-through taxation benefits of a sole-proprietor, but is made up of members, who can be individuals, corporations or other LLCs. Corporations have shareholders with stock holdings as well as Officers, Directors, Committees and annual meetings. So while thinking about what structure is best for your business, one needs to consider all the intricacies that go with each structure, as well as your tolerance for risk and tolerance for paperwork. Check out the business links on the CIPP web-page: http://cool.conservation-us.org/coolaic/sg/cipp/blinks.html.
Taxes play a part in your business structure –Sole-proprietors are pass-through, so they go with your personal tax return. Corporations do it a little differently and so the IRS has come up with some options: S-corp and C-corp. And then there is an LLC, which can file using most of the tax options. I would recommend consulting with an accountant.
Ms. Darraby, in conjunction with CIPP and the AIC Board, produced a Professional Services Agreement in 2009 and it can be ordered from AIC: http://www.conservation-us.org/index.cfm?fuseaction=store.&prod_cat_ID=17. It is free to CIPP members and comes with guidelines for use. The template was reviewed by lawyers and insurers and uses language that will hold up in court. Because each state has its own special idiosyncrasies, it is important to adjust the template for your business and the state it is in. And here is where I would recommend consulting with an attorney, especially if a client asks to make changes in your service agreement. A balance is needed to make sure your business is protected and you are upholding best practices for the client and their art. Sometimes one must ‘just say no’, although I know that can be extremely difficult.
Next we had a panel discussion regarding insurance with representatives from DeWitt Stern and Claire Marmion, an adjuster from Haven Art Group. Insurance can be the survival of your business because it protects you and your assets. But, you must read all the fine print and consult with your broker to make sure you have the coverage you need.
A few key points:
-Superstorm Sandy has led to some changes, such as restricting water coverage and likely higher premiums going forward.
-Your homeowner’s policy probably does not cover your home business.
-General Liability insurance follows you as business owner – so you may have coverage while working on-site.
As an adjuster, Claire outlined some key things an insurance company would want from us if we come in as the conservator assessing a piece post-event:
- the treatment proposal needs to state categorically if the damage is reversible or not, i.e. will the client be pleased post-treatment.
- Include as much exact detail about the treatment steps as possible
- Be upfront about your fee to assess
- Commit to a cost – a range is ok
- Give a timeline for finishing the work; if you can expedite the treatment for an additional fee, add that in too.
If the insurance company is being too slow and you know leaving the piece in its’ current condition will be problematic the longer it goes untreated, be sure to have the client push the broker to push the claim through.
We had a few paintings conservators who had done assessments that took a very long time to go through the insurance process and the wait made the treatment more difficult and time-consuming.
The interactive element was fun. We were given a scenario and paired up to discuss what the different people should/could do. We then had four intrepid volunteers (Sue Blakney, Yuri Yanchyshyn, Gordon Lewis and Claire Marmion) enact the meeting between the parties to see what the solution might end up being and then discuss the outcome. Ms Darraby noted that the volunteers were just too nice!
Please add comments, especially if you feel I left out something!