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aliengin
20th of October 2011 (Thu), 11:23
So this started as a hobby then I put stuff on Smugmug, couple of people bought etc. etc. After 4-5 months later a local store offered me an assignment. Which is photos of their athletes at couple of races and some photoshoots in the store. We agreed on time, pricing etc. Ofcourse like every business they want an invoice from me. Now what? I only made sales through SmugMug and this is a first for me. A friend of mine who is a little bit more into the "business" aspect of it doing Wedding Photography (he does also have a day job and doing photography in his free time) and he is trying to convince me register as a business.
Does it worth all the hassle to register as a business? Or should I just provide them an invoice?

mtimber
20th of October 2011 (Thu), 11:25
If you are doing work to be paid, you are a business already.

And you need to register.

Consider this, all of your equipment will become tax deductable...

aliengin
20th of October 2011 (Thu), 12:12
If you are doing work to be paid, you are a business already.

And you need to register.

Consider this, all of your equipment will become tax deductable...

Does it make any difference LLP or something else? I am CLUELESS!

Naturalist
20th of October 2011 (Thu), 12:16
You need to talk to a CPA and read and research a lot.

JacobPhoto
20th of October 2011 (Thu), 15:49
I've been making revenue from my photographer for 6 years now, and have never registered as a business. I report all of my income (and expenses) on my taxes each year as a sole proprietorship, and pay taxes accordingly.

Yes, there are some risks to this approach, just like there are risks with an LLC or Incorporation. You need to figure out what is best for you.

mtimber
21st of October 2011 (Fri), 05:23
In the UK once you make money as a business, you are a business in the tax mans eyes, just to qualify my comment.

edman22
21st of October 2011 (Fri), 08:29
I'm pretty sure you don't HAVE to register as a business but if you're making money then you ARE a business and have to pay taxes. You would probably benefit from actually registering and having tax deductions and things like that.

If you are doing work to be paid, you are a business already.

And you need to register.

Consider this, all of your equipment will become tax deductable...

You might know the answer to this....can you only deduct items that you purchase AFTER you register your business? I have few huge items that I purchased last year 2010 but I didn't technically begin doing business until 2011.

mtimber
21st of October 2011 (Fri), 10:43
I'm pretty sure you don't HAVE to register as a business but if you're making money then you ARE a business and have to pay taxes. You would probably benefit from actually registering and having tax deductions and things like that.



You might know the answer to this....can you only deduct items that you purchase AFTER you register your business? I have few huge items that I purchased last year 2010 but I didn't technically begin doing business until 2011.

We think you can back claim, you will need to check with an accountant though.

It was a long time ago when we had to deal with these types of questions. :-)

archer1960
21st of October 2011 (Fri), 11:02
I'm pretty sure you don't HAVE to register as a business but if you're making money then you ARE a business and have to pay taxes. You would probably benefit from actually registering and having tax deductions and things like that.



You might know the answer to this....can you only deduct items that you purchase AFTER you register your business? I have few huge items that I purchased last year 2010 but I didn't technically begin doing business until 2011.

In the US, You can deduct without registering as a business, if you file a Form C as a sole proprietorship. I'm a sports referee, and doing this allows me to deduct uniforms, mileage, supplies, etc. I believe you can't deduct expenses greater than your income in this case, though (not sure about that).

Jimconnerphoto
21st of October 2011 (Fri), 11:57
Depends on where you are located and your local laws.
I started out in an area that did not require me to register. I ran the business out of my home and the city did not want me to register. I moved to another city 20 miles away and got a studio and now it is required.
If your city requires it you may find a huge bill in your mail one day from running a business without a license.

edman22
22nd of October 2011 (Sat), 15:48
Hmm okay...maybe I'll do some more research or talk to an accountant.

RDKirk
22nd of October 2011 (Sat), 22:28
I've been making revenue from my photographer for 6 years now, and have never registered as a business. I report all of my income (and expenses) on my taxes each year as a sole proprietorship, and pay taxes accordingly.

Yes, there are some risks to this approach, just like there are risks with an LLC or Incorporation. You need to figure out what is best for you.

The big risk is that you're not collecting sales taxes.

Jimconnerphoto
23rd of October 2011 (Sun), 01:21
The big risk is that you're not collecting sales taxes.

He does say he is paying all taxes. I assume that means sales tax too.

RDKirk
23rd of October 2011 (Sun), 08:00
He does say he is paying all taxes. I assume that means sales tax too.

He only referenced income taxes. You have to be registered as a business in the state to collect sales taxes....if you're regularly selling items that the state collects sales taxes on, that's a requirement.

I don't know how other states word their laws, but in my state the tax law is actually written that the tax is actually upon the seller for the privilege of doing retail sales in the state...and the seller is allowed to "reimburse" himself by collecting more from the customer to pay it.

Jimconnerphoto
23rd of October 2011 (Sun), 09:21
He only referenced income taxes. You have to be registered as a business in the state to collect sales taxes....if you're regularly selling items that the state collects sales taxes on, that's a requirement.

I don't know how other states word their laws, but in my state the tax law is actually written that the tax is actually upon the seller for the privilege of doing retail sales in the state...and the seller is allowed to "reimburse" himself by collecting more from the customer to pay it.

In California it depends on the city. Sales tax is always a requirement but registering your business is not always required.

RDKirk
23rd of October 2011 (Sun), 10:59
In California it depends on the city. Sales tax is always a requirement but registering your business is not always required.

How does the law allow you to collect sales taxes without being registered as a business?

Added: Well, doing a couple of minutes of Googling, I found this page:

http://www.taxes.ca.gov/Sales_and_Use_Tax/index.shtml

California seems to have a "Seller's Permit" thingy that doesn't seem to be an actual business registration, especially if you get a temporary seller's permit.

I suspect somewhere in that law is a point that having a seller's permit isn't sufficient for what is actually a real business.

Jimconnerphoto
23rd of October 2011 (Sun), 11:38
Op was asking about registering as an LLC.
In some areas you are required to register your business with the city some you are not. But, you are required to have a sales permit and Pay sales tax in the state. That does not define you either as a business or a hobbyist.
I lived in an area that did not require a license unless you had a brick and mortar that customers would visit. In the eyes of the federal government I was still a business.
Some cities require a sales permit and sales tax collection if you want to have a yard sale at a swap meet.

Frugal
23rd of October 2011 (Sun), 12:23
Keep in mind that the equipment you use for making money (aka a business) most likely won't be covered by your homeowners policy. They usually specify personal use only. So if your camera disappears on this job you'll be SOL.

Then there's liability insurance....

RDKirk
23rd of October 2011 (Sun), 12:26
So this started as a hobby then I put stuff on Smugmug, couple of people bought etc. etc. After 4-5 months later a local store offered me an assignment. Which is photos of their athletes at couple of races and some photoshoots in the store. We agreed on time, pricing etc. Ofcourse like every business they want an invoice from me. Now what? I only made sales through SmugMug and this is a first for me. A friend of mine who is a little bit more into the "business" aspect of it doing Wedding Photography (he does also have a day job and doing photography in his free time) and he is trying to convince me register as a business.
Does it worth all the hassle to register as a business? Or should I just provide them an invoice?

To the OP: We don't know what state you're in, so we have no way to give you any worthwhile information. As you can see from the discussion so far, states vary immensely.

California appears to have a variety of local requirements. In my state, if you sell things at a retail level without being registered as a business, and you may find yourself wearing an orange jumpsuit.

You will have to check out your own state--it shouldn't take more than five minutes of Googling to determine the basic requirements you're under in your state.