photography as a side job

[mvshutter 2009]

I am looking at starting to pull in a little extra cash with my photography, although I don't want to start a full on business just yet. If I were to shoot some portraits for people and a few sporting events and charge for my work, would I absolutely have to get a business license and go threw all that legal stuff?

[10megapixel]

Don't advertise on paper, get paid cash, and don't piss off the local photographers who have taken the time to legally establish a business ( They may have a friend in the IRS :))

[martial76]

Hey... I am in the same boat. I am in the process of getting my buis lisc. Right now. Don't quote me on this, but from what i have heard and read... If they catch you working without one all they can do is fine you and make u go legit. I know several people that detail cars, make tiedyes etc without having an established buis and charge for it. They have been doing this for a long time, no one has ever said anything to them...

I just decided to go legit from the beginning for two reasons... I didn't want the hassel of being caught and forced to do it right... And I wanted to be able to use the money spent on gear and startup as a tax right-off...

Best of luck!
J

[zelseman]

I would like to hear about this as well. Is there an income cap on what is an official business and whats not? Like under $10,000/year?

[egordon99]

Business License stuff is all local and/or state. The Feds don't really care.

You WILL need to pay federal income tax on all your earnings. Easiest way when starting out is to just "become" a sole proprietor and file a Schedule C with your personal tax return.

Track ALL your expenses and mileage as you'll get to deduct these from your taxable income. Deducting equipment is tricky, especially if you also use it for personal use.

I deduct all my miles, advertising, and any DVDs I mail out (including the envelopes/postage). I don't put down my equipment though...The IRS will raise an eyebrow if you make $200 but then deduct $5,000 in camera equipment...So for this part, I'd consult a professional.

Just make two cents on how I handle my "side job"

:)

[bobbyz]

Why not get a license? It is expensive in Livermore? Here in Milpitas, CA it is only < $50 per yr. Just go to city hall and fill couple of papers. Why not do the business the leagl way. You have to pay taxes on any money you make, business license or not.

And I would also get insurance and ca resale permit.

[mvshutter 2009]

oh is it really only $50? I figured they would be a few hundred (which i would rather spend on photo equipment lol) If it's anything like that here in livermore I will go ahead and get one. What kind of papers did you have to submit? will i need a business plan? I do have one, just needs to be a little refined.

[RobNYC]

It's all about paying taxes in one sense. You usually don't HAVE to have a business license at all. But you do have to pay taxes!

That said, there are alot of advantages to forming a real business organization, such as tax breaks and liability shelter. If you file a simple local DBA it is not a real business organization and you are still personally liable for everything so be careful.

[tim]

Your might be interested in reading the wedding photography myths (http://www.wildphotography.co.nz/blog/wellington-wedding-photographer-blog/2009/wedding-photography-myths/) article on my Wellington Wedding Photographer (http://www.wildphotography.co.nz/blog/) blog. It might give you some perspective on doing photography as a side job - it's more work than most people expect.

[DDCSD]

That said, there are alot of advantages to forming a real business organization, such as tax breaks and liability shelter. If you file a simple local DBA it is not a real business organization and you are still personally liable for everything so be careful.


It doesn't matter how you organize yourself, you are personally liable if you own the business.

[RobNYC]

Derek...?
If you incorporate, you are generally not personally liable. A corporation is a separate legal entity. If you do things properly, you cannot be attacked personally unless the attacker can "pierce the corporate veil." The ability to do that depends on state business law.

[DDCSD]

Derek...?
If you incorporate, you are generally not personally liable. A corporation is a separate legal entity. If you do things properly, you cannot be attacked personally unless the attacker can "pierce the corporate veil." The ability to do that depends on state business law.


Huuuuuuuuge myth perpetuated by internet companies that help you file LLC paperwork.


Let's say I spend $200 to incorporate. I then go to a basketball tourney to take photographs. My flash bulb explodes and the pieces fall into a kid's eyes. Kid goes blind. I don't have insurance, but hey, I'm an LLC so they can't get my stuff, right???!!!?!?!

Wrong. They'll take your car, house, savings, dog's toys.... Incorporating a business when you're the only owner does nothing to shield you from any liability. If your business doesn't have enough insurance and assets to cover a judgment against it, the other people's lawyer will just say that the corporation was underfunded and the judgment will go against the owner's personal assets.


The best thing to do is properly insure your business, but that still doesn't do anything to shield your personal assets if the lawsuit is great enough. Incorporating is a waste of money for most people, especially for those that are their "corporation's" only "employee".




But this really has nothing to do with the OP's question. The OP just needs to get a sales tax license for his state and file the returns on time. If there's any profit, he needs to put that on his income tax returns. Incorporating doesn't enter into that discussion.

[RobNYC]

Sorry Derek but you are wrong. Being the only owner is only one thing that courts will look at, as is undercapitalization, which you mentioned. Again, that depends on state law. In New York, it takes alot more to pierce the corporate veil. You're giving bad advice.

But the key here is, when I said liability, I didnt mean tort liability, I meant financial liability. Of course you can be sued as a person for tortious conduct.

And I wouldn't say it has nothing to do with the OP's question either. He asked about a business license and "all that legal stuff."
I'll leave it at that.

[RobNYC]

Your might be interested in reading the wedding photography myths (http://www.wildphotography.co.nz/blog/wellington-wedding-photographer-blog/2009/wedding-photography-myths/) article on my Wellington Wedding Photographer (http://www.wildphotography.co.nz/blog/) blog. It might give you some perspective on doing photography as a side job - it's more work than most people expect.

Nicely done Tim.

[DDCSD]

Sorry Derek but you are wrong. Being the only owner is only one thing that courts will look at, as is undercapitalization, which you mentioned. Again, that depends on state law. In New York, it takes alot more to pierce the corporate veil. You're giving bad advice.


Telling someone that incorporating provides them with

tax breaks and liability shelter.

is awful advice. It does not. If an individual "incorporates" them-self, they will be personally liable for anything that the "corporation" does.



Either way, when I said liability, I didnt mean tort liability, I meant financial liability.


What is financial liability? Taxes liabilities? Protection from defaulting on loans? No bank will loan a "corporation" with one owner (who is also the only employee) a dime. No business will extend a line of credit to such a "corporation". Not in today's banking world at least. Any loan that the "corporation" seeks will need a personal guarantee from the "owner". So it doesn't matter if incorporating provides you with a shelter from financial responsibilities, because no one in their right mind will loan that "corporation" any money. If the "corporation" doesn't pay its taxes, the state/IRS will go after the "owner" and not the "corporation".

Either way, you may want to specify that you're not talking about legal liability when mention liability shelters.


Incorporating is not the magical wand that the legalxxxxx.com's want you to think it is.

[tim]

Nicely done Tim.

Ta. I took an existing article, with permission, and rewrote most of it.

[evilryu530]

do photography for friends, family members...get paid cash...or checks in your name. it's like you're doing a "favor" and they are just giving you money as a gift. try to get a couple of "favors" a month. you're on your way. businese licenese is cheap. 80 bucks in my county for a year. then just get a tax ID for free at irs.gov. done deal! good luck

[RobNYC]

Like I said Derek... I am going to leave it at that.
I don't get my advice from dot coms.

[RDKirk]

The state of California and the government of the United States will want their cut in whatever income you make.

There is no minimum amount of income that will fall below their radar. If you do not organize yourself as a business, they count it as additional to your personal income and must be filed with your personal income. If you organize as a business, you have to file whether or not you shoot a single job; if you never had a single client, never collected a single dime, you still have to file--probably quarterly for the state.

This is not to say that people don't move to California and earn money without either the state or the feds knowing it. But if you're asking for advice of what is legal: Yes, you must file with both governments, no, there is no minimum.

[amfoto1]

Original poster...

You should sit down with a local attorney and/or small business incubator. The legalities vary from place to place, but you seriously want to avoid all the pitfalls.

Ten or more years ago friend of mine had to pay $600,000 fine and back sales taxes to get his studio out of trouble, that was due to bad advice. That was in California, too. His business survived, but it was on the ragged edge for a while... And that was just over sales taxes!

Today the states and municipalities are all crying broke and looking harder than ever for ways to "recoup" missed taxes and fees at all levels. Expect them to be very agressive coming after you if you don't have your ducks in a row and follow all the rules to the letter.

Don't trust the information from a bunch of photographers here on the Internet. You can already see diverse opinions emerging in the responses you are getting. What's "right" in New Zealand might be completely "wrong" in New York or Livermore, Calif. Even locally, confirm any info you get from the various experts you consult, as best you can.

[mvshutter 2009]

thanks guys! all this info is great!

[shaggymatt]

I haven't seen anyone post this... but the magic number is $600. Once your income from your hobby exceeds this amount, you must begin filing the income as taxable.

FWIW, It cost me about $300 to become a LLC.

[DDCSD]

I haven't seen anyone post this... but the magic number is $600. Once your income from your hobby exceeds this amount, you must begin filing the income as taxable.

FWIW, It cost me about $300 to become a LLC.

Technically (according to the law) you need to file any income you receive, even if it is only $10. The $600 mark is the magic number that others need to report to the IRS when they pay you, or you win something, etc.

For example, if you win a raffle from the school and receive a $650 prize the school needs to fill out a form and send it to the IRS stating that you won a prize worth $650 (that is considered income). If the prize is $550, the school does not need to send the form to the IRS, but you are still required by law to report it on your income tax return.

[Mike Ben]

Dude, you're wasting good deduction there by not deducting your equipment. Your equipment is very expensive. Any gov ageny knows that it willl take 3 to 5 years for a biz to take off. Any biz that is under 3 to 5 years are in the loss and it is expected.

I have deducted every single penny I can think off and I'm still in the red after being in biz for some time <5years.

My tax guy said it's okay as long as you show that you are at least making money after the third year.



Business License stuff is all local and/or state. The Feds don't really care.

You WILL need to pay federal income tax on all your earnings. Easiest way when starting out is to just "become" a sole proprietor and file a Schedule C with your personal tax return.

Track ALL your expenses and mileage as you'll get to deduct these from your taxable income. Deducting equipment is tricky, especially if you also use it for personal use.

I deduct all my miles, advertising, and any DVDs I mail out (including the envelopes/postage). I don't put down my equipment though...The IRS will raise an eyebrow if you make $200 but then deduct $5,000 in camera equipment...So for this part, I'd consult a professional.

Just make two cents on how I handle my "side job"

:)

[Mike Ben]

That's so true. The legit guys are paying so much more to do it right.

I wonder why the city business office is not going around kicking doors down. This might just get more funding for the city.

do photography for friends, family members...get paid cash...or checks in your name. it's like you're doing a "favor" and they are just giving you money as a gift. try to get a couple of "favors" a month. you're on your way. businese licenese is cheap. 80 bucks in my county for a year. then just get a tax ID for free at irs.gov. done deal! good luck

[tim]

Depreciation is a valid expense, but you probably need an accountant to make sure you do it properly. Mine deducted thousands of dollars last year in depreciation.