How do I set myself up as a "business"

[tbfoto]

My photography is keeping me quite busy. I've been shooting a few weddings a year, doing some product photography for a local company and am now doing some senior portraits for some people. I'm wondering if I need to (or should) make this a legal "business". I know that I can have a garage sale and sell my "junk" and make a couple hundred dollars and be ok...but If I make a couple hundred dollars from photography the IRS may think otherwise. I've always heard that the best tax advantage you can give yourself is to have a home based "business". Well...how do I do that? I mean can I just make up a name and "BAM" I'm a business? I've been trying to do some online searches for starting a small business but am not finding what I'm looking for. I dont want links on how to develope a business plan or how to insure my business or how to market myself. I just want to know what I need to do to become a legal business. I dont even know what the first step is. Do I have to register my business name and if so..with who? What about those taxes. I suppose I need to start collecting them and paying my share. How do I go about that?

I would like to hear from some of you that have gone down this road before me. Any help would be great!

Thanks,
Tom

[Wilt]

Register with your county government to use any fictitious name to be used by your business, e.g. John Jones dba (does business as) Acme Photo.
Get a business permit thru your city.
Register with your state to collect and forward Sales Tax, and to be able to purchase supplies without sales tax for things which are used directly in production of your 'product' or 'service'

[Wilt]

Oh, and you will need to be able to show some reasonable expectation to turn a profit, or else you will simply be classified as a 'hobby' and you will not be able to claim deductions against other income other than to offset that income (i.e. you cannot file a tax loss)

[siteman]

I would first have to determine how much "business" you are talking about. If it is a few hundred a year Id take my chances with IRS.
It is a bit of a hassel to become legit. You will need a business address or a conditional use of your home granted by the local city or county to conduct a business at a residence. If you become extremely busy and your neighbors complain, the conditional use may be revoked.
This may be a good thing because you have become that busy.
You are obligated by the tax code to report all income whether you receive a w-2, 1099, or sales of lemonade.
You are also obligate to collect sales tax on all items sold in any state that you have a store or studio. If someone comes to your store from out of state you still collect tax.. if you deliver out of state no tax.
Like I said its a bit of a hassel, but you may need to (should) be legit.
If you need to set up a business you can never underestimate the value of a good CPA.
My accountant saves me more than he charges me.

[robertwgross]

One photo company (that shall remain nameless) was doing all of its business in California. But then taxes and restrictions of different kinds began to add up, so they moved to Oregon. They still do most of their business in California, but they do it over the border, and that must really keep the tax men hopping.

---Bob Gross---

[tbfoto]

I'm not looking to avoid the tax man at all....in fact thats why I think I need to do something here so that I am in fact giving him my fair share.

Tom

[Joe R]

Nolo Press has good books on business matters:
http://www.nolo.com/product.cfm/ObjectID/0CDBB7AF-09B9-4E29-BD1BE4B2C6DB6468/111/

[sykocus]

I'm looking to do the same sort of thing. I have a new job and have to do something so that I'll actually be able to spend some of this new money I'm making. I just started looking into it but so far the best info i've found as been in this article. http://moneycentral.msn.com/content/Taxes/Taxshelters/P33572.asp It's a little basic but might be a good place to start. If it's old info for you I'd be interested in anything you can find out.

[tbfoto]

Sykocus, thanks for that link. Thats real interesting.

Tom

[IndyJeff]

Tom I thought I replied to this once but I was in a hurry and must have closed it out before I posted it, anyway, as was said before the County Clerks office is where you will file your DBA.

On sales tax ask the clerk about doing it locally or online. If neither is available, then a trip to Indy to the Goverment Center just west of the Statehouse and visit the IDR (Indiana Dept of Revenue) on the first floor shall be your next step.
You will be assigned a tax number and each month you file a report for sales and send them the amount due. I can't remember but, there may be a clause for if you don't collect X amount of $$$ each month you pay quarterly. Regardless of any sales or not, you will still have to file the reports monthly.

You also will need a DBA before you can setup a bank account and deposit checks with your business name on them. Keep everything seperate from your personal checking account tho in case of an audit.

[Tripod]

Check your state web site. I know Hawaii has a web page set up that walks you thought all the paper work from verifing your business name to getting all the tax paper work done. The good thing about that site is you enter the information once and as each step goes thought you do not have to enter it again.

[Tripod]

Also don't for get to go to the federal web site and get regestered there too.

[MJayne]

You need to contact the State Board of Equalization and apply for a Seller's Permit. Then you will need to fill out their fax form once a year to see if you owe sales taxes on anything that was purchased wholesale without sales tax. When you file your income tax, you can fill out the business income form or if you don't want to bother with the business Form as you are only dabbling in it you can also put the additional income on the 1040 listed as other income or something. Then when you are real serious and buy some expensive equipment ,that year can be your real start up year for a big write off. Prio to that, just be a hobby and pay your taxes.

[PhotosGuy]

If you need to set up a business you can never underestimate the value of a good CPA.
My accountant saves me more than he charges me. Total agreement here!

[Mayfly]

You need to register with you state dept. of taxation, at that time you will determine the type of business you are.........sole proprieter, LLC, ect. Our company is a LLC.
Then you register with the FEDS to get a tax ID number, there is also another form that I can't recall now, but my business partner took care of that one.
You will then want to set up a business account at your bank. You will need that in order to do alot of the filings that need to be in place.
I would check your state dept. websites for info.

[ChatKat]

A really good book for a new business onwer is by Paul and Sarah Edwards called Working from Home because it walks you through the various stages of starting a business. The SBA (www.sba.gov (http://www.sba.gov)) has some checklists on their website.

I am an Accountant and I am setting up my own photography business because Photography is my passion and everyone is asking to take their portraits or shoot their events. I love what I do. I've helped clients do this for many years but I will say, it's different when it's your own! And I am really having fun doing this.

First, I picked a name - since it's not my own name, I am also filing a trademark on the name; I don't want someone to steal it and keep me from using that name. I decided to incorporate - Corporations have some tax advantages and they are audited less frequently than Sole Proprietors (using your business name but filing on your individual return - also called a Schedule C filer); There are other entities (types of businesses) and they aren't one size fits all. You need to know things like how much gear you might want to buy or how much you have to invest in your business to decide. This is definitely where your Accountant can help you decide. You could save thousands of dollars by making the right decision. You also need to plan for taxes - I cannot tell you how many businesses fail because they don't realize how much money they will need for taxes. You have to put away for that from day one. DXon't forget you have to pay income tax -state federal and sometimes local and you have to pay Social Security/Medicare. Some states require you to have disability insurance or unemployment coverage too!

If you are doing a sole proprietorship then you need to file a Fictious Business Name statement with your local government; You might need to find out if you can work at home which is a local (city or county) regulation and you might need a Business License. Your local Chamber of Commerce can help you find this out. Same with Sales Tax. You might need to charge sales tax only on the finished product or your services could be sales taxable too.

You need a business plan. A successful business isn't just letting things happen. You have to decide how you are going to market your business, how you are going to operate from day to day. It can be as simple as a few pages. But you wouldn't think of taking a cross country trip without a roadmap.

You need to figure out how your telephone will be answered and what type of work you want to do and what you don't want to do!

What about insurance? For your gear but also what if someone fell over your tripod or camera bag? What if you shot a wedding and NONE of the images came out because your camera or memory failed!

You need to open a bank account once your entity is formed. You need a bookkeeping system. I love QuickBooks, it's not quick and it's not easy if you know nothing about taxes and accounting but you really should have it set up professionally so the numbers mean something and you need to have someone there to use it for you and keep it up to date. You always need to know what your expenses and profit are.

I hope this has helped ! My guess is there are more questions now than you had to start with, but do your footwork and you will be rewarded.

[tbfoto]

I started this thread last year. I have been "in business" ever since. The BEST thing I did was contact a good CPA. I was able to sit down with him and explain what I wanted to do and he explained how to go about it. He prepared all the paperwork for me and answered all the questions I had. He also computed my yearly taxes for me and is there every time I call with a question. At first the thought of having to pay someone for this information was hard for me to do but once I relized how much smoother and less stressful it was for me then I was happy to pay his fee. Oh yea...his fee is tax deductable as well.

Tom

[SonyaL]

I have been trying to get a business going last 1/2 of the year was spent pretty much getting my equipment together tax number business cards brochures etc.
Now its time to file taxes and normally I simply use turbo tax but most of the business stuff is very confusing.

Isn't there something that a business is allowed so much money for start up cost?
Now would that not be claimed as a loss?

Any help would be great.

Sonya

[ChatKat]

Sonya,

You will be best served by going to have your taxes done by a pro. You could lose a lot of deductions and even invite an audit for yourself by the do-it-yourself method. Would you pull your own teeth or go to a dentist?
(and you are talking about a Sec. 179 deduction for deducting equiptment all at one time - start up costs get amortized. Gear gets depreciated)