It's not so easy to drop what I'm doing to write a column for ED. But it is important to me, especially since I'm juggling TV and theatre projects while preparing for my annual tax return, and business (those darned taxes included) is in the forefront of my mind. As designers (and I'm talking to all designers: that's right, any and all designers of any possible media — visual, tactile, olfactory, whatever, not simply those masters of waveform manipulation, a.k.a. lighting and audio folks), we are far too often solitary and individualistic creatures, which is wonderful in securing jobs and maintaining clientele but can be harmful to us in being the best businesspeople we are capable of being.

We are used to doing things by ourselves, either as individuals, sole proprietorships, small partnerships or tiny companies. My own business constantly flexes in size to accommodate additional designers, assistants, production engineers, techs, apprentices, an intern, and some regular day laborers. I'm sure every individual designer approaches their work similarly — when you take on bigger projects, you bring in additional staffers on day, week, or project rates, and when the work is complete, the firm can shrink back down to single-serving size. Some folks need two or three full-time assistants no matter what the season, others hire assistants and specialists only as required, then attack the work as a full staff, while juggling a score of events in various stages of development or decay, all the while shopping new projects to generate future income. And because we're always selling ourselves, taking on new shows and pet projects, we're painfully aware that on the street, your reputation with producers and general managers is still only as good as your last hit or flop.

We all know that we're busy, busy, busy. Thousands of independent designers and artists are working like crazy on all kinds of events. But doing our actual design work is only a part of doing business. What percentage of your life is wasted on jobs that don't pan out, reading scripts you turn down, or taking phone calls to tell people how sorry you are that you are already booked when they want you to design the entire Wagner Ring Cycle down in Sydney? In my master classes, I am fond of saying that design is only one quarter of my actual work, while nearly half of every job is dealing with people, personalities, and politics. And how true it is! Each independent designer is actually running a tiny-yet-humongous business where the sole proprietor is responsible for each role you might find in a Fortune 500 company: from CEO to mail room clerk, from IT supervisor to PR executive.

Too few independents have the time to explore their businesses from the outside in, as opposed to inside out. But it is imperative to take some time on your next plane, train, or subway ride and view your business from the outside. Visualize your mini-corporation to find the weaknesses and soft spots in your armor, and determine if you can make the needed adjustments to develop your operation with prosperity.

So what are the things you need to do to make sure you are running a solid operation? Shake off your ego and take a hard look at your business as an entity. Do you have a business model? Do you have any assets? Do you have regular income to offset any existing debt or regular expenses? Consider your own day-to-day operation in the scope of a regular business. Could another designer use your own business model and assets and survive? How successful are you — do you make a profit and keep your clients happy? Deciding how many shows you can really devote your attention to each year or season is imperative, as is how you staff your projects.

Many designers share resources, from assistants to office space to high-speed Internet access. Make a business model to calculate what your appropriate market is, what your expected resource allocation is and your potential income, against proposed salary, and existing and projected expenses. Consider if you might benefit by forming the appropriate business entity (sole proprietorship, limited partnership, corporation) that would open opportunities for small businesses like loans and American Express discounts for small-business owners. I know two firms, one in London and one in NYC, where individual designers expanded a sole proprietorship to a three-person partnership, which allowed them to take on several major projects simultaneously and divide responsibilities successfully, cornering a large portion of their design marketplace.

Once you have created a business model and determined your marketplace, make sure you have the right support structure in place. We're not talking pipe and drape here folks; you need solid concrete for a good foundation. Our industry requires a similar “invisible” support in the realm of on-call, per-need business services. In the same way we designers want regular contracts with a slew of various Broadway producers, opera companies, several TV networks, and some warm-weather regional theatres for the winter seasons, as small businesses we should develop relationships with a variety of key support businesses: a reputable bank, an attorney, an accountant, and an insurance agent are the minimum.

You might be reluctant to spend your well-earned dollars on support, especially if you have been good at taking care of one or two elements, such as negotiating contracts or doing your own taxes. Calculate how much time you might spend annually working on these parts of your business and examine that cost in lost work hours versus the expense of hiring out the services of a professional CPA or lawyer. In the long run, the long-term relationship you establish with a good lawyer and accountant will be incredibly valuable when you need a few questions answered either on the cheap or pro bono, from a collection letter to filing 1099s. Their advice is invaluable when helping you make hard decisions: whether you should take a job, buy a commercial vehicle, pay off the mortgage on your home or office, ditch a certain client, expand your office, or change your business model.

Whether you have an agent, manager, or lawyer for contract negotiation, you need a lawyer available to read the fine print with certain clientele and to generally watch your back. Most importantly, having a hired gun as your negotiator reduces your personal liability with management (they can love your work and hate your lawyer for driving hard bargains) and reduces your stress and time management until projects are green-lit with contracts and first payment checks. My lawyer has saved me time and money on countless occasions — most obvious to us both when he represents several designers on the same production and he and the GM sit down once to make all of our deals.

Proper insurance is imperative for any good business, be it health insurance for your staff; damage and disaster coverage for office equipment, studio gear, or whatever physical support your business requires; or liability insurance to make sure you are protected on the job. Worker's compensation and disability are additional small expenses that need to be considered, depending on the type of business you do and the workers you employ. Being properly prepared and insured may seem like an unwarranted expense, until you need it and it's too late. Better to be safe than sorry!

Establishing a relationship with a lending institution is important for any business, and hard for a new businessperson. An easy approach is to open a checking account and link a credit card to the account to build a line of credit under your business name. By the same token, by building a face-to-face relationship at a local institution, you can make a quick phone call to your banker if you have emergencies, such as a letter guaranteeing funds when you purchase new gear at auction, or a regular short-term credit line for those times you're waiting for the huge down-payment check to arrive on your next corporate industrial.

We have all heard the simple phrase, “Two things in life are certain: death and taxes.” I think it's easier to deal with taxes, as you can be better prepared and improve your process annually. Taxes don't have to be painful if you make simple rules and live by them. I learned that when I met Edward Manowitz, a New York CPA who specializes in accounting for artists, designers, actors and musicians. A former IRS employee, he has an excellent grasp of how a taxpayer and the IRS can work together in harmony, and provided suggestions for ways to look at business, budgeting, and tax models. He provided me with a list of expenses to keep track of, which resulted in significant deductions in my tax return. When I partnered a new business his input was invaluable, and coordinating my multiple business returns with my personal tax return was easy. His IRS experience allowed us to improve areas on my return to reduce red flags the IRS recognizes, such as home office deductions.

I also started taking deductions I had missed for years, such as backstage gratuities, opening night cards & gifts, promotional tickets, professional research, out-of-town dry cleaning, even my piano tuning. Ed had me keep a log book of small daily business expenses under $25 that I would never have been able to deduct for lack of receipts, and which totaled a significant amount at tax time. Each personal vehicle also got a mileage and toll logbook to record business-related travel, and my personal calendar of jobs, events, travel, meetings, and locations provided me with deductions for local inter-business fares and other small day-to-day expenses that really add up at the end of the year.

Most importantly, I learned to religiously keep a record of all personal and business transactions. If the IRS decides to audit your finances, any check deposited in your account will be viewed as income, so do not rely on the post office's delivery of 1099 or W9 forms to be correct and complete! This year I have a deadbeat client who not only owes me money, but did not pay the payroll companies bills and ergo, did not report my income or send me the appropriate 1099 forms for last year. The IRS considers your income taxes your personal responsibility, so be aware and play safe.

A designer who was audited recently had this sobering advice to any independent businessperson: “Keep a record of all income, report everything, and deduct aggressively. If the IRS decides to audit you, your deductions are simple and pretty insignificant financial negotiations, whereas not reporting income is fraud, punishable by both back fines and jail time.” Finally, if you are audited, the accountant who prepares your return will be the one who deals directly with the IRS, which lets you sleep at night, dreaming of Wotan's beautifully designed arias.

[Note: Special thanks to Edward L. Manowitz, CPA, for his assistance in the preparation of this article. For more information on his work, Manowitz has offices in Manhattan and Garden City NY. He can be reached at 212-541-7037 or 516-741-4334, or email CPAED326@aol.com]

Jim van Bergen's engineering and designs have traveled from Broadway across the USA and five continents; his works for live television have been viewed by millions worldwide. He has taught master classes in sound design at Yale Drama, North Carolina School of the Arts, Vassar, as well as LDI, AES, and USITT conventions. He can be reached at Jvb781@aol.com.