"Official" Business?

Joined
Feb 5, 2011
Messages
74
Location
US
For those of you making money from shooting events, portraits, etc. I am curious, are you an official business (ie. small business or LLC)? I would think if you do this for a full-time job, then yes, but what about for those of us that do this on the side/part-time?

Personally, I am not doing sessions every weekend, but requests have been increasing, and i DO make a small profit from it, so the thought came to mind...

I would think i'm better off w/o setting up a small business/LLC, but i'd like to hear what others think or have done


Thanks,
JR
 
Joined
May 11, 2008
Messages
680
Location
North Carolina
Short answer; if Uncle Sam or the state find out, you'll be in trouble.
I don't do much business either, (three paid sessions last year) but I had registered with the state (while still living in Indiana - have yet to do so here but will be soon) as a sole proprietor. This got me a business name, tax id number and allowed me to set up a business account at the bank. It's a pain but it makes it all legit and don't have to worry about tax collectors finding out the wrong way. Also, with the business bank account, you can accept checks to your business name.
 
Joined
Feb 5, 2011
Messages
74
Location
US
Short answer; if Uncle Sam or the state find out, you'll be in trouble.
I don't do much business either, (three paid sessions last year) but I had registered with the state (while still living in Indiana - have yet to do so here but will be soon) as a sole proprietor. This got me a business name, tax id number and allowed me to set up a business account at the bank. It's a pain but it makes it all legit and don't have to worry about tax collectors finding out the wrong way. Also, with the business bank account, you can accept checks to your business name.

Very good points - I mean, what are the "downsides" of being a small business? That my gains/profit is now taxed?
 
Joined
Dec 22, 2009
Messages
565
Location
Fox Lake, Il.
I personally always set up as a corp. Period. Never a sole-proprietorship. Reason? Liability protection.

You plan for when you get sued not if, and in this day and age, its always a when. As a Sole-Proprietor, all your assets are also the business assets, hence open to litigation.

As a corp, be it a LLC or a Full corp, it is its own entity, and treated as such.

Currently my main company is registered in Las Vegas, lower tax rate there then here in Illinois. My photo business will be the same in time...
 
Joined
Jul 22, 2005
Messages
2,322
Location
nashville
Very good points - I mean, what are the "downsides" of being a small business? That my gains/profit is now taxed?
Pretty much plus it's pretty easy to sell tax. Just mention your studio fee + tax etc. I've never had anyone deny my service because they didn't want to pay tax
 
Joined
Jan 29, 2010
Messages
371
Location
Atlanta, GA
Being an official business has nothing to do with whether or not you pay taxes. If you have income from photography, business or not, you're supposed to be reporting it and paying taxes on it.

An LLC (limited liability company) exists to - wait for it - limit liability. It does not affect whether or not it is legal to do photography for money. It can often make life easier to register as a DBA/sole proprietor, but for what you're describing it isn't required or necessary. You have to decide if it would be helpful to you to do so.
 
Joined
Jan 29, 2010
Messages
371
Location
Atlanta, GA
I'm sorry, but this is simply inaccurate information. What you did was helpful (easier to keep track of funds when they're separate, etc.) but not legally necessary.

Short answer; if Uncle Sam or the state find out, you'll be in trouble.
I don't do much business either, (three paid sessions last year) but I had registered with the state (while still living in Indiana - have yet to do so here but will be soon) as a sole proprietor. This got me a business name, tax id number and allowed me to set up a business account at the bank. It's a pain but it makes it all legit and don't have to worry about tax collectors finding out the wrong way. Also, with the business bank account, you can accept checks to your business name.
 
Joined
Jul 30, 2006
Messages
11,564
Location
Southern California
I'm sorry, but this is simply inaccurate information. What you did was helpful (easier to keep track of funds when they're separate, etc.) but not legally necessary.
Legally necessary if you are not operating under your own name, but under an FBN...

I am a sole proprietorship right now, but I would like to move to an LLC soon. I don't do "much" business, but I am legal, and it's nice to tell prospective clients that I am an official business. Almost more important, though, is the insurance! Don't forget about that!
 
Joined
Feb 5, 2011
Messages
74
Location
US
Being an official business has nothing to do with whether or not you pay taxes. If you have income from photography, business or not, you're supposed to be reporting it and paying taxes on it.

An LLC (limited liability company) exists to - wait for it - limit liability. It does not affect whether or not it is legal to do photography for money. It can often make life easier to register as a DBA/sole proprietor, but for what you're describing it isn't required or necessary. You have to decide if it would be helpful to you to do so.
True. Thanks for bringing up those two points. So, basically, being an offical business is not necessary, but i need to report my earnings with my taxes... makes sense.
 
Joined
Jan 25, 2005
Messages
1,133
Location
North Carolina, USA
Getting advice from random people on the global internet about matters that involve local understanding of licensing/requirements/etc. is a risky business. People will often give well-intentioned advice without having done the homework to fully understand what they are advising about.

These discussions get dicey because there's sometimes a difference in the practical vs. the technical requirements. Realistically, people who only occasionally do work for pay (and for friends/family at that) probably won't face repercussions if they don't do everything exactly by the book. But that doesn't change the technical requirement for them to do so.

So, basically, being an offical business is not necessary...
You have to qualify this somewhat. Necessary for what? Depends on what you're talking about doing. Banks differ in their requirements for setting up a separate business account, for example. Some venues require you to be insured before they'll let you book their location, which might in turn require that you go through other steps to gain the liability insurance.

Another example: if you do any work for a business, they will most likely be reporting that both to you and the IRS at the end of the year (if it's $600+). It's best to be prepared in advance for that type of situation.

As has already been mentioned, don't forget to check your state's requirements for doing business. Collecting and remitting sales/use tax applies to photographers where I live, and I suspect that it does for other states as well.
but i need to report my earnings with my taxes... makes sense.
Yes, and depending on the level of income you receive, you may need to pay estimated taxes that result from the increased income. Just something to keep in mind as your business grows.
 
Joined
Mar 1, 2009
Messages
4,793
Location
Nutley, New Jersey
I do not have any LLC but I do pay taxes on my income from photography. In fact Zenfolio tracks all my print sales and allows to me process it very efficiently.
 
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