Starting my business...which structure?

It's high time I made my photography a business. I'm not smart on these type things and wondered what are your opinions, those of you who have done the same (A simple sole owner photo business ) on which structure to use? I've been told good things about S Corp and good things about LLC. Without having to get very deep and take too much of your time, I'd like to hear which you chose and why. Thanks for the help!

This is the point where everyone will tell you to talk to a lawyer. You've spent thousands on photography gear, you're now starting a business. Why would you not think of asking a lawyer these questions? Contact your local bar association and ask for a referral if you don't know anyone in your area. Most will probably talk to you for free or very cheap. Good luck.

If you are just starting out, you don't need to do anything except register a fictitious name with the state - called a certificate of authority in NC. This is the most basic form of doing business, called the sole proprietorship. You will have your name, then d/b/a after your name for "doing business as." It's cheap and effective. The downside is you get little or no liability protection. However, unless you are hiring people and hanging from high rigs and using heavy machinery, there's nothing that a good liability insurance policy can't handle. The benefits are that it's cheap and there are no tax forms to file come year-end. Your accountant should be able to report your earnings from your photography business together with your individual income tax return.

If you want an additional layer of liability protection, you can form a Limited Liability Company (LLC) with the state of NC. There is an annual fee of $200 associated with this form of entity in NC. As long as you are the only member (owner) of the LLC, it is treated just like a sole proprietorship (described previously) for tax purposes and earnings can be reported together with your individual income tax return. The difference is you pay an extra $200 for the LLC each year.

If you want more tax benefits (usually beneficial once you have an established photography business with additional employees and net earnings of $100,000 or more), then you can look at either creating a corporation (and electing S corporation status) or converting your LLC to an S corporation. This now requires not only an annual fee, but also filing different tax forms, possibly payroll tax forms, state franchise tax and a slew of more costly tax accounting work.

Remember whatever form you take on, you will still need to register for a sales tax ID number and report your tangible property (camera equipment, computers, etc) to the county for Business Property Tax.

PM me if you have questions. I am a CPA in NC and have an office in Raleigh. I'd be happy to help (free of charge, too.)

Alex

You need a) a good lawyer and then b) a good accountant.

Ms Corbeau and I recently set up a federally incorporated company, with an interesting share structure. (She has Class A, voting, and I have Class B, voting, which allows us to split the dividends according to the revenue which each brought in...so far, her business consulting shows much more income than my photography...)

Business entity choice is often based on risk perception but should be based on other matters that are tax related, for instance treatment of things like healthcare reimbursements and reporting requirements. So your first discussion should be with a CPA. Then to deal with actual risk such as liability risk, contracts, etc. have a meeting with a business attorney. Both will be money well spent.

What the above said.

First, talk to a good accountant. If you've never done this before (set up a business) you need one, because if you screw up when it comes to tax matters the penalties and interest will cost far more than the accountant does. And the organizational structure DOES MATTER.

Liability concerns are somewhat of a red herring when it comes to single-owner entities. They become an immediate issue, however, as soon as someone else is involved in the operation.

I understand most of this stuff quite well but I'm neither registered to provide that advice (I'm neither a CPA or a lawyer) nor should you take my (or anyone else's on the Internet) word for it. Seek professional advice on this, especially for the first time you do it and any time you increase the complexity of what you're doing.

Being a sole proprietor with enough Error and Omission insurance is just as good as an LLC

I don't think "red herring" is the term you want, but if you mean that being an LLC or in incorporating doesn't provide much protection to a one-man-show against personal liability suits, I agree. At least that's what my lawyer told me.

I hope you've called lehmanncpa. It's a short drive from Franklin to Raleigh.

it depends on what you do and how much liability you will be assuming and how you plan to handle taxes.

for instance i do location shooting of individuals and couples, nearly zero liability. if i had a home studio or did weddings I would need some sort of structure to protect me from being sued and losing my non business assets. I also don't need any special tax protections as its just me and my income is and deductions are simple.

mike_311 wrote in post #15687249
it depends on what you do and how much liability you will be assuming and how you plan to handle taxes.

for instance i do location shooting of individuals and couples, nearly zero liability.

My lawyer wouldn't say that.

If someone is injured during the course of a location shoot, my lawyer tells me I could indeed be held liable. ("Okay, lean back just a bit farther.... Oops! That was too far. Are you hurt?")

In fact, if you shoot at commercial venues (such as a hotel), don't be surprised if they insist on being given an insurance certificate that specifies your liability (to be covered by your insurance).

GoWolfpack wrote in post #15687232
I hope you've called lehmanncpa. It's a short drive from Franklin to Raleigh.

Concur. I soke to him a weeks ago and he knows what he is talking about. This coming from a CPA who needed more knowledge than he had.

RDKirk wrote in post #15687511
My lawyer wouldn't say that.

If someone is injured during the course of a location shoot, my lawyer tells me I could indeed be held liable. ("Okay, lean back just a bit farther.... Oops! That was too far. Are you hurt?")

In fact, if you shoot at commercial venues (such as a hotel), don't be surprised if they insist on being given an insurance certificate that specifies your liability (to be covered by your insurance).

yes, i am aware, i live in America. like i said its all about risk and how much you are willing to assume.

huntersdad wrote in post #15687661
Concur. I soke to him a weeks ago and he knows what he is talking about. This coming from a CPA who needed more knowledge than he had.

Thank you for the nice comments. Glad to help.