Couple of business ?'s (tax and insurance)

[InskiP]

Do you you charge sales tax on prints? What about albums? I thought that you would since you are delivering a tangible product, but not sure. If so, what do you do w/ the tax after you collect it?

How do you insure your equipment? I asked my homeowners insurance about this and they said that anything used for a business is not covered, nor do they offer any kind of insurance, or umbrella policy, for business equipment stored in the home. This is a well known insurance company. Are they all this way? Are there special companies for insuring your equipment?

[llaamaboy]

Sales tax is a matter determined by State. Since you are in CA. YES!
Just wait till you see what the state wants for a resell number too. But it is a cost of doing business some a big deal if you do not do it.

Insure the equipment ... yup.

The question you did not ask ... with enough equipment, get off the Fed short from and take advantage of your deperciation expense or just write off the entire eqipment purchase in one year ($15,000 max?). It's a nice way to have the US tax payer help buy your equipment. :D

Ya know... here is something else very few photographers thinks about.

Sales
- Cost of good sold (the price of what you physically give them)
- expneses (rent, ins, gas - cost of doing business)
Gross Profit
- Taxes
Net profit (MINE)

Do you see anywhere in the the cost of capitalization (buying new equipment)?
You dont, because buying equipment is changing one asset for antoher. How ever, IT STILL TAKES CASH FLOW (if you like food and staying warm and dry).

Sales
- Cost of good sold (the price of what you physically give them)
- expneses (rent, ins, gas - cost of doing business)
Gross Profit
- Taxes
- New Equipment
Net profit (MINE)

Is the way I suggest you price your product.

[InskiP]

Just wait till you see what the state wants for a resell number too.

Can you break it to me so I don't faint when I go there??

But it is a cost of doing business some a big deal if you do not do it.

Sorry, what do you mean by this?

Insure the equipment ... yup.

How? Where? My homeowner's insurance said they don't insure equipment used for a business at all, nor were they very helping in telling me how I could do so.

Thanks for the info.

[InskiP]

I was told a resell number is free???

[llaamaboy]

OK ... it has been years since I appllied for a resale number. Back then we needed either a BOND or a rather large down deposit as a gurarentee of payment.
If things have changed since then, then so much the better. I will be reapplying in a few months.
Partially want I meant is also the paperwork and Liability you will be assuming.

However, If you are selling photographs, you will need to take on the burden or the penelty will be a lot worse down the road. Expecially as you grow and start to show up on the radar. Your competetion may just well check up on your resell and business license.
The bottom line is pretty much how far under the radar you are, and what your plans are. If a photo business is in your future, there is a lot that come with that and you need to step up and take the bull by the horns or his horns will come back to haunt you.

Insurance. A good place to start is a photo association. PPA CA offered group rates on insurance for photographers. It was a good deal, better than I could find on the open market. In fact you may want to join a photo association just for the insurance program. You will have to work the numbers to see if insurance plus fees (plus other benefits from the association) is a good deal compared to the open market price for the insurance. Also keep an eye on the cost. If the insurance cost is too high, you might be better using the expense to get more equipment, but that is risky especially if you keep your equipment at one location. Where to get the Ins? Open the yellow pages and call. They will quickly route you to the right person. Get at least 3 bids and make sure you are comparing the same rates.

One last VITAL tip ... write this down and look at it every day of your career.

You make money four ways:
1. Bringing money in the front door. (Sales)
2. Stop money from going out the back door. (Cogs and Expenses)
3. Legally keep as much from the tax man as you can.(Get an accountant)
4. Lead more than you follow. (You will need vision)

My first studio lasted 28 years. In my next studio, I plan to really keep my eye on #2.

Hope that helps ... :D

[InskiP]

I was thinking that I could use the local printer(Cosco) where they would charge me tax, therefore I'd be paying it at the source instead. However, what I would be charging my clients would be more than Cosco is charging me.I'm not the most business savy person, so this may not be the best scenario...I'm just trying to avoid the hastle of the resale issue. What kind of paperwork and Liability will I be assuming?

What if I've already started my business recently? It's VERY small. I don't know how involved a I want to get being as I may be moving out of state within the year.

[llaamaboy]

What if I've already started my business recently? It's VERY small. I don't know how involved a I want to get being as I may be moving out of state within the year.

That being the case, you are probalby well under the radar and probably do not have to worry.

Look at it this way ... its a part of being a photographer selling thier photos. We all have to do it, its part of what we do.

[InskiP]

Sorry to keep drilling you about this, but I can't seem to find much info on the legal side of things in the "how do I get started posts." Maybe people don't want to go there...If anyone knows of a good resource that will help me to better understand this stuff I'd appreciate it, because here I thought I knew what I was doing but I don't.

I'm so green on this that I thought if I charged clients tax that I'd somehow be paying the state when I did my income taxes..duh. I didn't even know about a resale license until recently. I guess I didn't do my homework well enough.

I've had only a couple of customers, but the calls are starting to come in, so I may have to get the resale license afterall. Can you tell me a little more about the paperwork and liability(especially) I can expect?

Me paying tax at the source probably won't work because the lab charges me $20 and I'm charging the customer $120 (hypothetically) and that doesn't add up.

Thanks for the info.

[PhotosGuy]

I was thinking that I could use the local printer(Cosco) where they would charge me tax, therefore I'd be paying it at the source instead. However, what I would be charging my clients would be more than Cosco is charging me. Talk to your accountant re: charge the client just what you paid for the print ("Materials"). Add another charge for "Other" for labor which is not taxable.

[InskiP]

Talk to your accountant re: charge the client just what you paid for the print ("Materials"). Add another charge for "Other" for labor which is not taxable.


Thanks I will talk to my accountant tomorrow about this. However, I did notice that other photogs that I've seen have their order forms set up so that the customer fills it out. It usually has a price list attached and a line for sales tax. To me it appears that it's designed to add tax to the total finished print price. This is what I was modeling my form off of. It can get confusing if they have to pick it apart for materials and other, which I really wouldn't want them to do/see.

Maybe Sears is a whole other ball game, but I drug out a reciept from their portrait studio and they charged tax on everything-the session, prints and any creative servies..hummmm