donation vs. payment

[artra]

quick question....

right now I'm basically taking pictures of friends/family and it's not big deal.
But if/when I decide to charge for my work, how does that work? I mean do I have to copyright my stuff / pay taxes on my profit? get parental permission if my clients are under age? could I avoid all this legal/tax deal if I just ask for a "donation" instead of a "payment"?

Any help here would be appreciated...

[tracknut]

Interesting concept, I suppose if you were a church or some other non-profit organization perhaps this would work. But I doubt if you've just figured out the answer to not paying taxes that nobody else thought of

Talk to a CPA, if you want to start making money, you are a business and you need to do it right.

Dave

[artra]

ok. So far it's been an awesome ride but you know eventually I can see this as a partial source of income and that's why I'm wondering...
I'm not trying to "work around the system" or anything. I'm just thinking if I dedicate some hours to this and people want to pay me, do I need to worry about the legal side of this or just treated as "hey I do this as a hobby" and the client "hey so here's a donation" type of thing. I know all this sounds pretty casual.
Anyways, and yes I work for both a church and a non-profit

[dreamcatcher23]

It's pretty easy to hide small amounts of money from the IRS by just sticking to cash, however that would be illegal. To be legit you'll need to regsiter everything properly. Remember there are expenses to running a business, so you may be able to write off equipemt and get tax breaks. However, if you write off a lot of equipment and don't show a profit, (for about 3 yrs i think) the IRS will treat it as a hobby and nullify the tax deductions of equipment and demand back payment of taxes.

The best and safest way of ensuring you're legal is to talk to a CPA.

[artra]

ok. that I'll do. So I guess it's fair to say that once you accept money for your work, it's not considered a hobby but a business. right? and if that's correct then the best way to do it it's to go the rout of getting a license, start copyrighting, and all that jazz... right?

[MJPhotos24]

So I guess it's fair to say that once you accept money for your work, it's not considered a hobby but a business. right?

Wrong - when doing taxes and reporting income this can be recorded as side income and you don't have to have a business set up to do it. State laws are different on how you set it up but there's thousands of photographers out there that have a normal day job and do photography on the side reporting it like this. There are limits though, you can only report a loss for x-amount of years and only can report up to a certain amount. You need to talk to a tax expert about this to find out the limits for your state.

Donations - you STILL have to report that and unless it's for a non-profit it's payment just like billing someone.

the best way to do it it's to go the rout of getting a license, start copyrighting, and all that jazz... right?

Copyright is yours as soon as you take a photo or create a painting or recording a song, etc, etc. However, it becomes hard to prove in some cases and ALWAYS best to copyright your images. You can do a ton at one time online now I believe for a small amount. Damages collected are a lot more if someone steals your work and it's on file in the copyright office.

If you set up a business (LLC for example) you have to start paying taxes on your income at certain times of the year (expected). Business insurance, record all income/expenses/etc/etc/etc.

[RDKirk]

However, it becomes hard to prove in some cases and ALWAYS best to copyright your images. You can do a ton at one time online now I believe for a small amount.

In the US, for $35 you can register the copyright of as many tiny JPEGs as you can ftp to the copyright office in a sitting (or $45 for as many tiny JPEGs as you can fit on a DVD), as long as they can be considered a logical "collection" of some sort, such as "All my work of 2008."

[MJPhotos24]

Originally Posted by RDKirk

In the US, for $35 you can register the copyright of as many tiny JPEGs as you can ftp to the copyright office in a sitting (or $45 for as many tiny JPEGs as you can fit on a DVD), as long as they can be considered a logical "collection" of some sort, such as "All my work of 2008."

I thought that's how they do it but wasn't sure if it was FTP or sending a zip for example.

[tgara]

Originally Posted by artra

quick question....

right now I'm basically taking pictures of friends/family and it's not big deal.
But if/when I decide to charge for my work, how does that work? I mean do I have to copyright my stuff / pay taxes on my profit? get parental permission if my clients are under age? could I avoid all this legal/tax deal if I just ask for a "donation" instead of a "payment"?

Any help here would be appreciated...

If you decide to charge for your work, it will be income to you and therefore taxable at the federal and state levels. And it isn't your profit that is taxed, it is your total revenue from the activity. Profit is what is left after you pay taxes and other expenses.

The general rule is that any income, from whatever source, is taxable unless there is a specific legal exception (e.g., tax exempt bond).