With Polis’ expected signature, the state will become the first to develop the A-Corp as a business entity for creatives

The full Colorado General Assembly has now passed the Colorado Artist Company Act, with the state senate Wednesday joining the house in passing the bill on the final day of the session.

Upon Gov. Jared Polis’ expected signature, Colorado will become the first state in the nation to develop the A-Corp, a new, specialized type of business entity designed for how creative people actually work, rather than forcing artists to use business models designed for factories, shops or other traditional businesses. Think of an A-Corp as essentially a “super-LLC” built just for artists, musicians and creators.

Now, for the hard part: Getting people to understand what the heck any of that means, and who this will most benefit. Here to help.

To recap:

The problem, as stated by the Colorado Business Committee for the Arts (CBCA): “While artists are vital to our economy, current business structures available to artists do not always fit how creative work is made, owned and shared.”

The solution: An A-Corp will offer artists greater protection over their work, greater access to capital, and new opportunities for collaboration.

If you are an artist, the A-Corp makes it easier to get funding because it allows you to sell “shares” to fans, friends or investors – similar to most any startup company.

The new law keeps you in control of your art: A-Corp artists never own less than 51% of the company. That means no business entity can take over your creative vision. And should your company go broke or dissolve, your intellectual property legally belongs to you again – not to creditors. That includes copyrights, master tapes, original paintings and more.

This new law also affects liability because it legally separates you from your art. So, if someone were to sue you because they slipped in your studio, they can’t come after your personal house or car.

Is this for me?

So who is the A-Corp for? In short, it makes the most sense for bands, commercial artists with a product to sell, and anyone who starts a company of artists (regardless of discipline).

Who is this not for? Probably not so much individual performing artists, who are typically offered short-term work at a fixed stipend before they go off in search of the next gig. These are not the kinds of artists who go out and form an LLC, anyway.

My unsolicited conclusions after going a bit down the A-Corp rabbit hole led me to believe that three types of artist businesses (collective or individual) would be wise to check this out. Like, say:

• Horse Bitch is a rising Irish Denver band. (They’re just not Irish.) They are fun, fierce and frenetic. And, at present they still appear to be operating as an independent collective not yet signed to a major label. That makes them the kind of band best poised to benefit from the A-Corp for their business affairs. Then they are no longer seven individuals, from the law’s perspective. They are one. And they collectively own the business that has the power to own their intellectual property, their gear and their business itself.

They self-determine the percentages for how all revenues flow back to each band member. They can collectively choose to set aside money to be saved for future projects. Or not. They can join together with other bands to get health insurance. They would be eligible to earn both commercial and nonprofit funding.

If a label comes along, rather than just selling the rights to their intellectual property, which has been customary until now, as an Artist Corporation, they can issue shares. Essentially, the label would be invited to make an investment in the corporation. But all of their intellectual property would remain in their control, not the label’s. That’s the law, and it’s about to become the norm, not the exception.

“I can tell you a handful of other states are already champing at the bit to do this next year,” the CBCA’s Meredith Badler said.

• Detour, or Pat Milbery: These two are prominent, busy and well-compensated large-scale muralists whose works are commissioned all around the Mile High City. While the CBCA expressly does not dispense legal advice, when prompted, Badler said, “Detour is an interesting example because he works in so many commercial spaces. When Netflix licensed his portrait of David Letterman (for the premiere of his show “My Next Guest Needs No Introduction”) –  I think it could potentially be a different type of negotiation if he had an A-Corp.”

• Control Group Productions is a Denver-based, experimental performance company founded in 2008 by Patrick Mueller, specializing in immersive, site-specific, and “expeditionary” performances. “I do think for theater artists who are involved in creating collaborative works, or if you have a troupe, maybe an A-Corp is a better financial model for your theater company than an LLC or a nonprofit,” Badler said. “It’s worth checking out.”

After the bill is signed by the governor, it will be about a year before the first A-Corps are formed and recognized – which is just as well. That will give people plenty of time to better learn whether this is best for them and, if it is, how to implement one.  

“But what we’re doing is starting a movement,” Badler said. “We’re starting a new conversation about how artists can show up with agency and empowerment.”

John Moore is the Denver Gazette’s Senior Arts Journalist. Email him at [email protected].

• Read our previous report introducing the A-Corp
• Read John Moore’s essay: “The case for artists as everyday heroes”