Sole Proprietor vs. LLC
Structure your business.
Protect your work.
A practical guide to choosing the right legal structure for your creative practice — and a ready-to-use sales proposal template to start landing clients professionally.
Which structure is right for you?
Sole Proprietor
Best for: Artists just starting out, low-revenue creative practices
Pros
- Zero setup cost, no annual fees
- Simple taxes (Schedule C)
- Full control
- Immediate — no paperwork required
Cons
- Personal liability for business debts
- Harder to get business banking
- Less professional perception
- No separation between personal and business assets
LLC
Best for: Established artists, those selling to galleries/businesses, anyone with significant inventory or equipment
Pros
- Personal asset protection
- Professional credibility
- Easier business banking
- Potential tax advantages
- Can have multiple members
Cons
- Setup fees ($50–$500 depending on state)
- Annual report fees
- Slightly more complex taxes
- Requires an Operating Agreement
Help me decide
Answer four quick questions to get a personalized recommendation.
1. Do you earn more than $20,000/year from your art?
2. Do you sell to galleries, businesses, or corporate clients?
3. Do you have a studio, significant equipment, or inventory worth protecting?
4. Are you concerned about personal liability?
Step-by-step
How to form an LLC in New Mexico
- 1
Choose a business name
Must include "LLC" or "Limited Liability Company." Check availability at the NM Secretary of State website (sos.nm.gov). Tip: your artist name + "LLC" or "Studio" + "LLC" works well.
- 2
File Articles of Organization
File with the NM Secretary of State. Fee: $50. Can be done online at portal.sos.state.nm.us. Processing time: 1–3 business days online.
- 3
Get an EIN (Employer Identification Number)
Free from the IRS at irs.gov/ein. Takes 5 minutes online. You'll need this for business banking and taxes.
- 4
Open a business bank account
Keep business and personal finances separate from day one. Bring your Articles of Organization + EIN. Most local NM banks and credit unions offer free business checking.
- 5
Create an Operating Agreement
Not legally required in NM but strongly recommended. Outlines ownership, profit distribution, and decision-making. A simple single-member template is included below.
- 6
Register for NM Gross Receipts Tax
New Mexico has a Gross Receipts Tax (GRT) instead of sales tax. Register at tap.state.nm.us. Most art sales are subject to GRT.
Your sales proposal template
Fill in the fields below to generate a professional sales proposal you can copy and send to galleries, clients, or collaborators.
Live preview
SALES PROPOSAL ────────────────────────────────────────── Prepared by: [Your name / business name] Email: [email] | Phone: [phone] Date: October 17, 2026 TO: [Client / gallery name] RE: [Project title] PROJECT DESCRIPTION [Project description] INVESTMENT Total Project Fee: $[price] Deposit Required: $[deposit] (50%) Balance Due: $[balance] (upon 50% deposit, 50% on completion) TIMELINE Estimated Completion: [completion] TERMS • 2 revision round(s) included • Additional revisions billed at hourly rate • 50% deposit, 50% on completion • Work begins upon receipt of signed agreement and deposit • All rights to artwork remain with artist until final payment received ────────────────────────────────────────── To accept this proposal, reply with your signature and return a signed copy. Prepared by [business name] | October 17, 2026
Single-member LLC Operating Agreement
Starter template — replace all [BRACKETS] with your information.
OPERATING AGREEMENT
[BUSINESS NAME], LLC
A New Mexico Limited Liability Company
Effective Date: [DATE]
ARTICLE I — ORGANIZATION
1.1 Formation. [BUSINESS NAME], LLC (the "Company") is a limited liability company formed under the laws of the State of New Mexico.
1.2 Principal Office. The principal office of the Company is located at [ADDRESS].
1.3 Purpose. The Company is organized to engage in [DESCRIBE BUSINESS — e.g., the creation, sale, and licensing of original artwork and related creative services].
ARTICLE II — MEMBERSHIP
2.1 Sole Member. [YOUR FULL LEGAL NAME] ("Member") is the sole member of the Company and holds 100% of the membership interest.
ARTICLE III — MANAGEMENT
3.1 Member-Managed. The Company shall be managed by its Member.
3.2 Authority. The Member has full authority to bind the Company in contracts and agreements.
ARTICLE IV — CAPITAL & DISTRIBUTIONS
4.1 Capital Contribution. The Member's initial capital contribution is $[AMOUNT].
4.2 Distributions. The Member may take distributions at any time, subject to the Company's ability to pay its obligations.
ARTICLE V — TAXES
5.1 Tax Treatment. The Company shall be treated as a disregarded entity for federal income tax purposes (sole proprietorship taxation).
ARTICLE VI — DISSOLUTION
6.1 Dissolution. The Company may be dissolved upon the written decision of the Member.
IN WITNESS WHEREOF, the Member has executed this Operating Agreement as of the date first written above.
Member Signature: _________________________
Printed Name: [YOUR FULL LEGAL NAME]
Date: _______________Ready to formalize your practice?
Peacemaker Arts members get access to quarterly legal workshops, contract reviews, and a network of NM-based attorneys who work with creative businesses.