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FORUMS Post Processing, Marketing & Presenting Photos The Business of Photography 
Thread started 04 Apr 2009 (Saturday) 19:10
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How much to pay "associates"

 
sspellman
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Apr 08, 2009 09:14 |  #16

sbressler-

The accountant that you spoke to is just not giving you professional and informed advice. Your business lacks a basic structure for tracking income and expenses. For example-how are you going to issue a 1099 without an accounting system? How can you pay an independant contractor when you have no shared expenses/account? What tax ID do you provide on W-2s and how do you split income? Who is going to pay for the costs of a personal accident or even equipment theft/damage?

If your business does not exist, you are not ready to hire any type of employee. Even if your business is temporary, the government requires clear tracking of income and expenses for tax records. A DBA, partnership agreement, checking account, Tax ID, insurance, and tax preparer/accountant are all basic to operating even a small business.

Good Luck-
Scott


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sfaust
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Apr 08, 2009 10:15 |  #17

I would be looking for new accountant as well, they are giving bad advice based on all the accountings I've dealt with in the past.

Changes of having those shooting for you regarded by the IRS as independent contractors is pretty slim since they wouldn't fall under the normal guidelines they use. Thus, you could find yourself in a position a year or so down the road being liable for back wages, workers compensation insurance, back taxes, and all the penalties and fines that go with it. It's happened over and over again to small business and photographers. Learn from there mistakes.

Who is going to handle the money, track and pay the commissions, collect, file, and pay the sales taxes on those sales? Who is responsible for the liability insurance, and you MUST have this if you don't want to be held personally liable for yours, or their mistakes.

What about workers compensation insurance for the sub-contracts or IC's. You need that as well by law. Either you, or they, need to have coverage. If they don't, you will be held responsible.

And who will be responsible should the IRS decide your IC arrangement is an attempt to avoid following the labor laws, and where will the money come from to cover back wages? Someone will be responsible, and it could be you.

If you don't have some sort of a partnership or business structure, it could all fall on your shoulders. It would suck to make $30K as a whole, only to later personally have to shell out $53K in back wages, tax penalties, fines, and legal fees. It's not worth it in the end to do take shortcuts, the risk is too high.

IMO, you would be better off doing your own thing, let them do theirs, and working some sort of a referral or commission arrangement were you get paid for referrals or lead generation. At least you would be a self contained business, and not responsible or legally required to deal with all the issues of hiring employees or independent contractors, and won't be held accountable for actions by anyone either than yourself.


Stephen
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Alleh
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Apr 08, 2009 16:00 |  #18

Yeah sorry you bring in 10k a year between 2 people and you need employees?


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basroil
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Apr 09, 2009 09:20 |  #19

Some things that people seem to be forgetting is that he said this is a part time business of students. I think that treating it as a full time business might be overdoing it on the profitability region, though advice on the minimum requirements should be of some help. I agree that formality is needed, but does anyone actually know what the minimum requirements are?


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TroyRaymond
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Apr 09, 2009 10:00 as a reply to  @ basroil's post |  #20

In a similar situation I had with my sign shop. I hired an IC for overflow work at my location, after about 9 months he sky rocketed the bills and I got rid of him only to (all of a sudden) not have any jobs. After about two years I found out he had copied all of my customers information, all of the job files (graphic/vector/photog​raph), contacted them to let them know I was going out of business and he was taking over. Took several years to recover. This was only brought to my attention by a former customer asking me when I started up business again.

This former IC has now had 10 different business names in 10 years. His latest place of business disappeared after only a few months when previous customers found out where he was located and tried to collect their original deposits. Many for thousands of dollars with no product/service in return.

The unimaginable can and will happen if business continues so casually.

The business described seems to be becoming successful and I doubt after graduation you'll just walk away from your current customers. Someone will decide to take over. Will you be willing to start from scratch?

Troy




  
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Billo78
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Apr 09, 2009 10:22 |  #21

I don't understand your business model, these budding photographers come to you, bring their own clients, but only keep 35% of the fees while you take a 65% cut just for letting them use your online galleries and ordering system?

Have I missed something?

Why would anyone take up that offer?


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How much to pay "associates"
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