The story behind the styles

On this day in 1966, The New York Times published an article exposing the illicit behavior of unscrupulous individuals who bribed, sneaked and transmitted unauthorized sketches and photographs of top-secret fashion designs from France to the United States. These fashion “pirates” poached on valuable assets and degraded the work of artists. They infiltrated the Parisian couture shows by bribing employees. They hid cameras and sketch pads under their jackets and sent their illegally obtained evidence back to Seventh Avenue and to those manufacturers determined to undermine the producers willing to pay for their line-for-line copies of Paris originals.

Hardly a new phenomenon but unknown to most American shoppers, the practice of “bumping-off” designs has existed since the early 20th century—if not earlier. In the 1930s, the Fashion Originators Guild was established in the United States to prevent copying, but was disbanded in 1941 by the U.S. Supreme Court because of methods deemed “an illegal boycott in restraint of trade.” Early in 1941, the National Retail Dry Goods Association voted to create a committee on design protection legislation. The importance and necessity of such measures disappeared during World War II, when fashion piracy was hardly a primary concern. (Not to mention the lack of materials and styles available to copy.)

By the 1950s the practice had not only returned in full force to the world of fashion, but there also now existed “sketch” agencies that specialized in the criminal behavior. The problem, surprisingly, was not that copying existed. In the 1950s and 60s, legitimate manufacturers and store buyers went to the Paris shows and fashion houses, paid for the designs and produced them back in the States. The problem lay with the thieves and pirates unwilling to pay for their copies.

Harry Potter costume designer Jany Temime knocks off Alexander McQueen. Or is it homage to the late designer?

Efforts by the National Committee for Effective Design Legislation, comprised of designers and manufacturers across various fields, including fashion, failed to gain support amongst retailers. In 1966, William Burston of the National Retail Merchants Association explained it like this: “Ideas in the ready-to-wear business—for that matter in any sphere of human knowledge—are never brand new. We are either all creators or we are either all pirates and thieves.” Everybody copied. Department stores copied the Paris designs. Bump-off houses copied the department stores. Budget bump-off houses recopied those bump-off houses. And so on and so on.

Forty-five years later and the culture of copying continues to thrive. Things seemed to be looking up for the anti-pirates this past December, when the Senate Judiciary Committee unanimously passed the Innovative Design Protection and Piracy Prevention Act. Backed by the Council of Fashion Designers of America and the American Apparel and Footwear Association, the bill recognized and sought to protect the artistry of original design in fashion. However, it failed to make it to the floor of Congress before the December legislative break.

A Catherine Holstein original versus the Forever 21 knock-off.

But there are dissenters: “The interesting effect of copying is to generate more demand for new designs since the old designs—the ones that have been copied—are no longer special,” wrote Kal Raustiala and Chris Sprigman on the NYT Freakonomics blog last year, echoing sentiments expressed by a NYT reporter in 1958 who stated: “The life-force of the fashion industry is the circulation of style inspiration. If the rules were enforced against piracy, the fashion world would plunge into chaos and lose continuity.”

Diane von Furstenberg leads the way in copyright protection, but she’s done bumping-off of her own. Is this instance OK? (Left to right) YSL, Forever 21 and von Furstenberg all stole designs from Dutch painter Piet Mondrian.

In a talk hosted by TED in April 2010, Johanna Blakely explained: “The reason that the fashion industry doesn’t have any copyright protection is because the courts decided long ago that apparel is too utilitarian to qualify for copyright protection.” The IDPPPA sought to counter that notion, specifically protecting artistry, which makes things even stickier. How can art be copyrighted? Arts prosper when creators collaborate. Look at the Impressionists. Go further back. Look at the Italian Renaissance and the discovery of perspective, most often attributed to Filippo Brunelleschi who passed it on to fellow artists Masaccio and Donatello. That’s right. He didn’t keep it to himself and I don’t imagine anybody would argue that art has suffered for it.

Blakely continued, “One of the magical side-effects of having a culture of copying…is the establishment of trends.” In other words, the culture of copying forces artists, designers and makers to innovate, to dream up something new. Not only is copying an economic boon, as Raustiala and Sprigman argued, it is an intellectual boon too.

Despite these strong pro-piracy arguments, it is hard for this writer to not cringe when I see blatant copying. Where does inspiration end and theft begin? Above all, I believe that the artists deserve a say in the propagation of their work. If a designer chooses to seek copyright protection, do they not deserve that choice?

Sole Trader or Limited Company?Partnerships

Full Partnership

Where two, or more, people start a business where neither are considered as employees (i.e. both are owners) the legal entity of Partnership is assumed.

Being, both partners are ‘jointly and severally liable’ for all debts and actions of the business (i.e. what one partner signs for in the name of the partnership, the other(s) shall be equally liable for in law: it is therefore crucial that ALL decisions/voting are equal irrespective of the ratio of capital invested.

A Partnership Agreement is a requirement of such a trading entity for such things as the ratio of profit for each partner – which can be dependent on start up capital invested – and what will happen to the other partners share in the event of one partners death – say, the surviving partner has to get the business valued and buy out that half of the business from the family of the deceased, or the deceased family will continue with the running of the business.

Limited Partnership

This type of partnership is fairly new and is based on the above -’Partnerships’ – but with the opportunity to have partners (Limited Partners) who make a capital investment but do not run the business in any way: a Limited P artner only has a liability up to the capital they invested. The working partners (General Partners) are ‘jointly and severally liable’ for all debts and actions for the rest of the business. Visit Limited Partnerships for more information.

Sole Trader or Limited Company? A Company

A Company (aka Limited Company- Private Limited Company – Incorporated)

A ‘company’ is a limited company with directors and shareholders.

Limited companies must have two directors, with one of those directors also acting as the Company Secretary.

Company Name

No two company names can be the same – i.e. Acme Limited and Acme Limited. However, Acme Limited and Acme Co Limited is OK. Certain words are controlled Company Names, such as ‘Royal’, ‘England’, ‘Institute’, ‘Association’.

2. Why Form A Limited Company ?

Limited Liability

In my experience, the main reason for the small business owner to become a limited company is the ‘Limited Liability’ afforded to it’s directors. This reason is closely followed by the ‘Perception’ of having ‘Limited’ after your name as being desirable (which in many cases it is). Third, it is believed that ‘Credit’ (be that from the bank or suppliers) will more readily be offered to limited companies. ‘Limited liability’ is afforded to company directors to help maintain the entrepreneurial spirit of the small British business owner who is known as the backbone of British commerce and industry (I cannot think of another reason). Limited liability has been abused for many years, and will continue to be so for some time. The government is addressing the need for new legislation to ensure the entrepreneurial spirit is maintained: we hope, without protecting the company director who shows, and intends to have very little, if any, care for their fellow business owner. Personal assets are at risk if malpractice is proved against company director/s by an insolvency professional.

Perception

Having ‘Limited’ after your company name can say different things to different people: I control a limited company, I administer a limited company, I am judged as being fit to run a limited company, and of course, I’m still trading as a limited company’ (which is a minor feat after the first three years, I add).

Credit

“Lenders will more readily advance credit to a bona fide company.” Banks will not lend to ANY limited company that it cannot secure the debt on ‘real and convertible’ company assets: like premises, book debts and machinery. However, banks will lend to a limited company where the director/s have security such as equity in their PRIVATE house and/or insurance policies, and will therefore demand personal guarantees. Often the bank will want a debenture (list of assets secured against lending) with all the business assets, and private ones, before authorizing lending/overdraft facility in excess of, say, £10K. However, suppliers will not expect that level of security and they will probably assess your credit needs through a number of avenues using a Credit Policy Standards & Assessment. Being a limited company does not mean that creditors MUST give you credit.

3. Company Taxation

PAYE & Income Tax

As a limited company owner you would pay yourself a salary which is subject to PAYE and you will have to complete a Self Assessment tax form each year to assess whether any other tax is due from company benefits etc. You must also deduct PAYE from all employees.

Income Tax PAYE in Small Businesses

National Insurance (NI)

Limited companies have a responsibility to deduct NI from all employees – including directors – and also pay Employers National Insurance – ENI. This in effect doubles your national insurance contributions and is one of the most overlooked areas when forming a limited company.

National Insurance Contributions for Company Directors

Tax – Corporation Tax

All company profits – the bottom line figure on your The Profit & Loss Account account are taxed by a system known as Corporation Tax. For example, a yearly profit between £1 and £300,000 is subject to 20% corporation tax. Corporation Tax Rates

VAT

The same VAT - Value Added Tax apply to a company as they do for a business.

Other Benefits

Being a limited company you will have to, at times, deal with Statutory Sick Pay (SSP), Working Families Tax Credits (WTC), Working Hours – Maternity Leave, Paternity Leave & Parental Leave, Student Loans etc. You do not have an option not to deal with these issues if your employees require any of these benefits.

All businesses with five or more employees are required to arrange a Stakeholder Pension for their staff, with a fine of £50,000 for those who fail to comply. The scheme will affect all those earning between £9,000 – 20,000 (those earning less can still take part) and who work for companies that do not provide a corporate pension. If you employ a fifth employee you will have three-months in which to set up a Stakeholder scheme. The onus is firmly on the employer to set up the scheme. Stakeholder Pensions

4. Responsibility

Once you are a limited company you have a legal responsibility to the government and your employees. Companies must comply with legislation covering tax’s (income tax, corporation tax, national insurance), health & safety, administration and employment. The Basics of Starting a New Business Although all directors have the responsibility and liability for their actions the ‘Company Secretary’ is the one that the law will look to if the trading accounts are not filed or are late at Companies House, amongst many other duties. Director & Secretary Requirements Form Your Limited Company On-line! If after reading the above, you have come to the conclusion that forming a limited company is the right move for you – you can form a limited company online.

Sole Trader or Limited Company? A Business

A Business (aka Self Employed – Sole Trader -Proprietor)

Business Name

For the sake of this article – and in most peoples mind – a ‘business’ is any entity that operates but is NOT a ‘limited company’. An explanation of what a business name can or cannot be can be found at Business Names but basically, the individual must be named and easily identified on all business papers.

It is common, in most circumstances, for a business to trade as one name (i.e. JJ’s Cafe) but the owner must use the proper entity (name) when dealing with finances, government communication.

Short Business Name: ‘JJ’s Cafe’

Business Name on Paper: ‘Jane Smith and John Smith trading as JJ’s Cafe’

Short Business Name: ‘JJS Machines Company’ Business Name on Paper: ‘Jane and John Smith trading as JJS Machines Company’ Short Business Name: ‘Smith’s’ Business Name on Paper: ‘Smith Partnership. Partners: Jane Smith & John Smith’

Business Taxation

Business owners are self-employed and are therefore liable to the Self Assessment scheme and National Insurance payments: you can register by calling the Inland Revenue Helpline for the Newly Self-employed on 08459 15 45 15. You MUST register as self-employed within the “first three-months of full trading”.

Self Assessment Tax

Tax is paid on annual income, less allowances (personal tax code) and expenses (specific to running your business). Self Assessment

National Insurance

Self employment does not mean that you lose the benefits of living in a state that provides treatment on the National Health Service (NHS). What it does mean is that you are responsible for maintaining NI payments relative to your earnings: all self-employed people pays class 2 NI which is currently £2.20 per week. Class 4 NI is also payable on annual profits between £5,225 and £34,840 at a rate of 8%. National Insurance Contributions for Company Directors

VAT

A business can be VAT - Value Added Tax regardless of annual turnover, but MUST be registered for vat if:

at the end of any month, the total value of the taxable supplies you have made in the past 12 months or less is more than £64,000; or

at any time you expect that the value of your taxable supplies will be more than £64,000 in the next 30 days alone.

However, registering for vat below the above criteria allows you to:

Claim vat on the supplies you buy (can be vital on start ups)

Be the difference of whether some customers deal with you

Give the impression to potential customers that you are bigger than you may be/are (a fair reason)

There is no legislation that forces you into incorporating your business, however, tax and investment benefits play their part when turnover, and more importantly profits, rise to a level where you are paying more than you need to in tax’s, or you are not utilising the benefits of company allowances in the chancellors budget etc. The question is, ‘what is that figure?’, well, lets say that if you have five or less employees (a figure used in much legislation as the threshold at which compliance would not be practical or cost effective – to the business that is) and your annual PROFIT is less than £50,000, it is arguable whether limited liability would benefit you – UNLESS you needed ‘LIMITED LIABILITY’ (see below) the fallacy of personal protection!

Records

Self-employment offers huge advantages in the administration of your business. You can quite literally ‘run your business out of a shoe box’. But, do get a small business accountant and look to pay between £10 – £15 per week which should get you a couple of meetings, your annual accounts prepared and help in reducing your tax bill.

Liability

A sole trader is PERSONALLY responsible for all amounts owed to creditors and the government. This also means that should the sole trader not be able to make suitable arrangements to settle any debts the personal possessions (including the house) will be fair game to the creditors. Homes that are jointly owed can be forced to sale, unless 50% of the market value can be found for creditors. So, husband & wife partnerships can have a nasty end if they are business partners and sole traders.