To future-proof my business, I`ll probably switch to the LLC structure. Why? When I reach certain financial goals, I`m well on my way to earning more income and working towards owning certain assets! Yes. An LLC offers you personal liability protection from potential business risks and gives your professional photography business more tax options and credibility. It is relatively inexpensive and easy to form and maintain CLL. Companies are complex to manage and subject to double taxation. For this reason, most small businesses will not benefit from starting a business. Once you`ve chosen the perfect name for your photography business and have already done your research to find out that the name is available, you`re ready to make it official. If you choose a business name that does not include your name (for example, „Cole Joseph Photography“), you must register a „fictitious company name statement“. Opening a photo shop is not particularly complicated. But there are certain tasks to be accomplished to become legal and viable and survive in the long run. If you actually open the account, you`ll need your IRS EIN (tax number). You will also need proof of your business registration, such as your articles of incorporation or a „conduct of business“ certificate.
It`s always a good idea to call ahead and make an appointment to open a business account. Each partner is responsible for exercising its own independence. Profits and liabilities are divided into percentages. The partners are personally liable for all business debts and each partner has an „agency power of attorney“. If you don`t feel creative at all and prefer to follow the „personal name“ path to grow your business, then you are ready and ready to register your name. However, if you`d rather come up with a unique name, here are some of my tips on „what“ makes a good business name. If your photography business plans to make significant investments in physical equipment or studio, a loan may be required. This will be much easier to achieve if you operate as an LLC that enjoys these particular benefits of trading as a business.
Banks know that they can seize any business asset if these loans are not repaid. Your article inspired me to read my state`s sales tax laws. I had heard from a professional photographer that she only had to pay VAT if a tangible product was delivered. My reading makes me disagree with that. @Paul – If I`m an amateur and don`t make money from photography, copying a number won`t do anything for you. Yes, you can cancel it, but do you cancel it? There is no income. You cannot deduct your photography equipment from your daily income – only the self-employed income from your photography. Professional photography companies enjoy liability protection because of the risks associated with inviting clients to their studios and visiting the various locations where they are photographed.
These factors are much more expensive than the cost of forming an LLC. For the greatest possible protection and security of your business, consider an LLC as your photography business structure. Each quarter, you must add up the amount of money you earned and pay quarterly taxes to your state and federal government separately. Just to make things difficult, the government doesn`t do it at the typical end of the quarter. You pay on April 15, June 15, September 15 and January 15 of each year. Here`s what you do: The sum of the amount of money you`ve earned since the last payment. Take about 25% of that amount (or whatever the tax rate is – different for everyone) and pay it to the IRS. You will also restrain yourself for your condition.
Typically, this is about 5-8%. Go to the IRS website and print a coupon. It`s just half a sheet of paper that you send with your check at the end of each quarter. Thanks Jim, excellent article, really answered a lot of questions I had. I wanted to start offering some of my photos for sale and one day it might be easy. Another hobby that gives me a good reason to do something productive outdoors. All the contract scenarios were quite interesting and probably the reason I love landscape photography. (Mother Nature always looks great and never complains if you don`t get the photo you were hoping for, but gives you more and more chances to get it right.) Thanks also for letting us all choose your brain through tutorials and other things like presets every year, it really helps all budding photographers. Cheers: „A corporation is a separate, legal business entity owned by shareholders who are protected from personal liability.“ Corporations are taxed as a corporation and not as an individual or individual partner. If you`re starting an LLC as a photographer, you need to evaluate these aspects of your business: No. And yes.
There is no single regulatory body that oversees photo services like there is for doctors, lawyers or CPAs. You don`t need to take a test or get permission to call yourself a professional photographer. However, you may need certain licenses to operate as a business in your state, county, and city. There are different tax structures that an LLC can choose from as opposed to a sole proprietorship. This is beneficial for companies, depending on the revenue they generate and their balance sheet and income statement. As an LLC, your photography business can register as a sole proprietorship, partnership, or corporation. I`ve gathered as much information as I can in 20,000 practical and actionable words to help you get your wedding photography business off on the right foot in the US. The focus is on the behind-the-scenes work you need to take care of to ensure your business is legitimate, secure, and efficient. How does the IRS prevent hobbyists who want to be close to the equipment from starting a business that will never be profitable and writing off expenses as business losses? The answer is simple! If you think your job involves a lot of risk and you have clients that you may have done wrong for something, then you need an LLC. Otherwise, LLC is an expensive way for small, budget businesses. A sole proprietorship is founded as a sole proprietorship.
Profits are taxed at the sole proprietor`s individual tax rates, unlike corporations with different tax obligations and scales. The type of business I chose for myself is a sole proprietorship. Since I don`t have separate assets like a car or a house, it seemed like a good choice when I started my business. Click here for more information on the different options for the company structure. S Corp`s status requires the company to pay employee-owners an appropriate wage for the work they do. If you earn more than $90,000 per year as a photographer, consider starting an LLC. Not everything that`s inferior is such a financial risk, as you don`t earn enough to need extended protection. One can opt for insurance as protection at a lower price and with less effort than forming an LLC. When you hear the term „partnership“ in business, it refers to „general partners.“ There are different types of partnerships: limited partnerships and limited liability companies (but these are unusual in our field). Thanks again Jim.
Super, super, great info. Another follow-up: Just to be clear, in your scenario, you would suggest doing this („Get a separate bank account and put all the trades. etc) after registering a DBA and obtaining an EIN, etc., or is all this relatively useless for this type of scenario? Setting up your CLL is only part of the fight. If you don`t maintain your CLL, it`s worthless. The most important thing you can do is separate your personal and professional finances, but we`ve already discussed that. Wow Jim, the timing of this article literally couldn`t be better. Thank you very much! Here are some follow-up questions, but don`t hesitate to say: Get an accountant/lawyer/etc! – I guess I`m not alone in this scenario: I can make a profit or not, but there is income from my photographic hobby. Does it still make sense to start a business? For example, I`m an amateur (I mostly do landscape photography), and I sell a few prints here and there. I also receive about 1 request/month for a simple portrait session (babies, families, etc.). While I don`t shoot specifically to make a profit (and usually not, after the cost of equipment/travel/etc!), there is some cash flow. Thoughts? – While you suggest using a CPA for large companies, do you recommend Quickbooks or anything else for „small“ photographers? If there are no matches in TESS, we should use Google. Do the same by searching for other companies with the same name.
If so, it`s really best to avoid it. Just because they haven`t REGISTERED their trademark doesn`t mean they don`t have a trademark.