What's an A-Corp video + Q&A

Last week more than 100 people joined us for an hour-long conversation about Artist Corporations. The questions were great; the chat was lively. We love the community that's coming together through this work.

A lot of folks couldn't make it, so we're sharing two videos.

First, the twenty minute presentation given by A-Corp founder Yancey Strickler that walks through the project's origins, present day, and future goals. Watch that video here:

Second, we're sharing an additional recording of the Q&A, which went even longer than the talk. Watch that video here:

In addition to these, there were dozens of questions in the chat we were unable to answer in real-time. We saved those and answered them in written form below.

Thanks to everyone who joined. We'll do another one of these next month!

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MORE Q&A#

How are early conversations going with health insurers? What size group do you think we may need in order to have leverage with them?

YS: We're still in the early stages of connecting with insurers. Our plan is to present this as an opportunity to create a product for a historically less-insured workforce that's also rapidly growing in number. We feel good about the case we have to make, but haven't made it directly yet.

Will there be a registry of lawyers who can help guide entrepreneurs who want to found companies with the A-Corp structure? One of the things I’m having a hard time with is finding a lawyer who can assist setting up a complex A-Corp system (or something like it).

YS: We plan to offer a directory of resources for people to talk to for legal, accounting, and tax perspectives. There are already lawyers and accountants in the A-Corp DFOS who have been answering questions already based on the text of the law, and existing precedent.

What roadmap is there for out-of-Colorado artists to incorporate in the ACorp structure? I have an LLC in another state, that I'm assuming will have to be dissolved.

YS: Colorado allows businesses to register from out of state using "registered agents," which are services that offer you a mailing address in Colorado so you can register there. For some business types, like, for example, cooperatives, Colorado is a preferred place to incorporate because of their state laws, and doing this is standard.

The consideration to keep in mind, however, is that most countries and states have their own business and tax reporting rules for residents. Colorado, if you are registered there, would have the same. So there is potential for double the paperwork and bureaucracy in some cases.

I would advise patience on converting initially. We'll also know more about the timeline and implications as we get closer.

I understand A-Corp’s are built on LLC structure and include those protections, but does it allow for being able to pay a salary to one’s self like an S-Corp does?

YS: Yes, you can elect to be structured and taxed as an S-Corp as an A-Corp. This has lots of other implications, so definitely something to talk to a tax expert about first.

I’d love to understand how this could work for filmmakers who tend to create LLCs for different projects. Is this something to consider for an upcoming title that I’m just starting to progress forward?

YS: Definitely. In film people start new LLCs to handle all the funding and business organization that comes with making a film. An A-Corp can work the exactly the same way. What we expect to be typical is for someone to have their overall studio practice A-Corp — say the overall business of what they do — while spinning up other A-Corps owned or partially owned by the main business and hold standalone projects. This allows you to have different equity and investment structures for different projects and vehicles, while preserving your core economic and intellectual property rights.

What types of investor are you all thinking about — institutional investors and funds? Every day people who could crowdsource a project or something in-between?

YS: All of the above. One path involves getting bigger investors comfortable with the idea of funding creative and artistic endeavors. For people who already fund culture at a large scale, this will be relatively straightforward. Another path involves getting philanthropists and people who currently support through grants to become comfortable with directly funding A-Corps. Yet another involves equity crowdfunding and direct audience support. All will be needed to make the healthy funding environment we want to see.

Will A-Corps establish a vetting process for potential investors (e.g. not taking money from companies it deems immoral, and blocking corporate ownership as part of an investment)? If so, who will make those decisions, and will there be public transparency there?

YS: We heard from a couple notable artists who went through hell because of something like this. We dug into some options around being able to force an investor out if certain behaviors or breaches happened, but we were also advised that these are things that can have unintended consequences that may make funding harder to secure. We left out of the draft we finally proposed, but an individual artist could add something like this to their founding documents if they wished.

Can you talk about about the process for international A-corp in countries outside of USA?

YS: We can't say too much about them, as we're not well informed at all about what the legal processes are like beyond the US. But we have heard from people in multiple nations wanting to bring the A-Corp there. We'll be closely following when they do.

Would love to hear how you imagine this intergenerational? What happens when a primary artist in a A corp dies? If Van Gogh was part of an A corp what would his estate look like now?

YS: Love this question. This came up in our artist interviews. Some older artists especially noted the challenges of handing off their estate. Their kids would ultimately be responsible for stewarding, but the artist knew that their children didn't actually care, and weren't the right people to be stewarding their work. Instead, they wished that their current studio practice or structure could continue with protections and their wishes intact. This is something you can do with an A-Corp — use the same entity, same founding documents, same mission, with stewards hired by the board to protect and carry it out on an ongoing basis.

Like Delaware LLCs, will you register your business in the state, as a foreign entity doing business in the state, once registered in Colorado?

YS: Correct. We hope for there to be Delaware A-Corps one day too.

If someone already knows that their artistic practice covers multiple different “brands” that produce different kinds of work for different markets, but they are all connected by being produced by the same artist: how would that affect the process of writing the “mission statement” during formation of the A-Corp?

YS: The studio holding company, with sub-companies underneath, should provide a good structure for this kind of practice. I could imagine the overall mission statement referring to a project exploring whatever medium or form but using a variety of identities. That would make sense.

As a Choreographer, I’m curious to know how this structure might also work to support Movement Artists? What about when it comes to protecting the intellectual property of our work?

We are a dance company. How does this structure effect the whole music licensing issue — which is already complicated enough?

YS: Two different questions from the movement movement! I'm aware of the challenges of protecting choreography, especially in the TikTok age. The A-Corp would make registering your IP straightforward, though I can't speak to the reality of protecting movement-based UP. Similarly for a dance company, I would imagine that this would keep those music licensing issues largely the same.

What are the possible cons and risks of having an A-Corp as an independent artist who is not in Colorado?

YS: The risk of double the paperwork and bureaucracy. This isn't always the case, but there is that potential. The actual administration of your A-Corp will likely be simplest in your home locale. We're seeing widespread local interest in A-Corps, so we think it will be available very widely in the next five years. We'll keep researching and talking about what this path will look like.

Does the A-Corp provide any additional protection against an employer claiming independently created work, or does that still depend entirely on the employment agreement and applicable state law?

YS: This would still come down to employment agreements and state law. However the A-Corp would also give you a vehicle in which you could easily register and protect your IP.

Chiming in from NYS where I believe A-Corp legislation is being explored: One of our persistent problems is that we can't adequately identify/count artists/creative workforce. Do you know if A-Corp registration eventually give states better data about artists and creative businesses? And relatedly, will there be a really low-friction pathway for artists who already operate as LLCs to elect A-Corp status?

YS: Yes, we believe A-Corps and this overall initiative create much better data. In fact, there is a second policy we've been advancing in a few states that would create an Artist ID — a way for people to register with their cities or states as artists and creators. If something like this were created, it could lead to specific tax breaks for artists and creators; housing reserved for the creative community; and even tax breaks for landlords who rent spaces to artists. If we want to be a real political constituency and wider social force, more legibility about how many of us there are and how much we benefit our communities can help.

Has there been any pushback in introducing the law so far?

YS: Yes, but not much. The biggest pushback in Colorado came from a member of the Bar Association who wrote the original LLC statute and pointed out that everything in the A-Corp is technically possible by making your own version of the LLC. We agreed with this person, and pointed this out. However we also pointed out that the A-Corp is like a cake in the box rather than making a cake from scratch: it makes it simpler, more affordable, and more accessible to more people. This is what cooperative law is, for example — a template pre-built on top of LLCs. So while yes, it was technically possible with an attorney to do these things, in reality the law is expanding a service in a way that costs the state nothing. Our argument went over well. Beyond that, there's been more curiosity and a wait and see attitude more than pushback. We'll see if that holds.

How might this structure protect material IP against AI corp attempts to parse and graft ownership?

YS: Most IP law is handled at the federal level, and A-Corps are a state-based legislation. So on its own, the A-Corp won't change overall IP laws to start. It's a vehicle designed to protect artists and their work — including making reversionary rights standard (the work reverts back to the artist rather than investors if the A-Corp shuts down). How that might play out in courts or real disputes we will find out over time.

I wanted to share an idea for people wanting to get A-Corps started in their state. Each state has a dedicated cultural advocacy org that could help create pathways to new legislation or legislators that are interested. Wearecreativewest.org is the western states coalition.

YS: Great suggestion! These have been some of our best partners so far. Shoutout to the folks in Colorado who have helped us with this!

Thanks to everyone for the great questions and joining. We'll do another one of these next month!