What should we expect, if we do this for a business?

Ratjack wrote in post #14374941
1. I am not making any income from this as of now.
2. I have no clients since right now its just a hobby
3. I thought I may have... but after going on craigslist and searching there are so many "photographers" here. Its sad too because I can tell even though they are advertising for a business they do not have any proper licensing. Their photos even looked like they cut the person out and pasted them onto a fake background....

Well this all seems like ALOT of work to get into. So we are going to just keep practicing and improving on doing editing until we feel we might be ready to do all this. We would not be planning on making a ton of money, it just seemed like a decent way to earn some extra cash on the side.

You can still take on clients and do side work as a sole proprietor, you don't need to have full liability insurance / business license / accounting to accept money. Just start slowly and start building up your book of business until you have a steady stream of bookings and can commit to it full time. Obviously this isn't the optimal situation, but this is how a majority of businesses start.

I have a very small number of clients, but they provide a decent amount of business for me. Not enough for me to quit my day job, but enough for me to fund a vacation and some new gear and toys every year. I pay taxes on my photography profits every year just the same as anyone else, so Uncle Sam is fine with my sole proprietorship.

JacobPhoto wrote in post #14375369
You can still take on clients and do side work as a sole proprietor, you don't need to have full liability insurance / business license / accounting to accept money.

If he's selling he sure does have to have certain licenses/ tax certificates, pay sales tax on his out of state purchases and property taxes on his gear.

mobei wrote in post #14376399
If he's selling he sure does have to have certain licenses/ tax certificates, pay sales tax on his out of state purchases and property taxes on his gear.

I am just about to say where is Mobei when comes to enforcing the tax and immigration laws... Yes, the OP can go through all the paper works and license fees WITHOUT having a firm grasp of his market and clients. At least, he wouldn't get snitched..... Mobie, the OP needs to test his market and to find out his client base first. This means payment is paid with cash or personal checks. Dude, this is the REALITY of things.

Lets rename this forum - "The Business of Bootleg Photography" then.
If your not going to give legal advice keep your mouth shut in this forum.

mobei wrote in post #14376604
Lets rename this forum - "The Business of Bootleg Photography" then.
If your not going to give legal advice keep your mouth shut in this forum.

I thought lawyers should give legal advises, not a snitcher. I am waiting for you to call others criminals now......

mobei wrote in post #14376399
If he's selling he sure does have to have certain licenses/ tax certificates, pay sales tax on his out of state purchases and property taxes on his gear.

I would say in reality that all depends on the size and volume of the business the OP will be doing.

A lot of small business do quite well by flying under the RADAR and avoid paying licensing and such other business paperwork and filings.

Is it legal, technically no, does it happen, all of the time...

Wayne

As you're saying, state sales tax law is all over the map. Even the fundamental philosophies of the states about their sales taxes are different, thus the permutations can be wildly different.

In Illinois, only tangible items are taxed, as in Kansas. However, there is a special codicil just for photographers that presumes the service/product split for photography is 90/10. So if a photographer charges a client an unitemized flat fee, sales tax is calculated on only 10% of the fee. But if the photographer itemizes the fee such that the service component is separated from the product component, then the sales tax must be calculated on the product component.

For things like wedding albums or high-end frames, itemizing the fee can result in substantially higher sales tax than charging a flat fee. What's even trickier, though, is that to take advantage of this provision the photographer has to be careful that he never shows a breakout in any of his client documentation; there can't be any price list or anything that ever shows a customer what the tangible items cost.

It seems obvious that internet delivery (which involves no tangible product at all) should be completely tax-free. But this hasn't been tested as far as I know.

So the IL basic philosophy, which presumes at the outset that most professional photography is not taxible, is very different from the KS philosophy, which seems to presume from the outset that professional photography is taxible.

Ratjack wrote in post #14371323
My wife and I are spending alot of time practicing with taking photos and are considering investing more money into more/better equipment and trying to do a very small thing on the side doing portraits for people.

What would we need to be expecting?
If anyone has some time to go through and tell me what kind of things I would need to have people sign that would help alot.

As far as getting a business license do we need anything special?
We would not be doing weddings or anything like that, would we need some sort of insurance?

Let's presume you don't want to have to glance over your shoulder for Johnny Law all the time.

If you're selling and/or bartering products and services, your state will want you registered as a business for both income and sales tax purposes, and the IRS will want you to report all your extra income.

In most states, there is no "minimum income" or "minimum sales" provision. They want you registered and filing even for periods that you have no sales at all, and if you don't file (or if they discover you're doing business without being registered) they will presume a sales tax liability and charge you for it anyway.

As for organizing the business (sole proprietor, LLC, corporation), keep in mind that in most states "business organization is for tax protection; insurance is for liability protection."

If you really are a sole proprietor, organizing as an LLC will not necessarily protect your personal assets in an injury liability suit. This is an area where case law makes the difference, and you need a lawyer to tell you how case law is trending in your state.

But in my state, the purpose of LLCs is to protect partners in a business from the liability of other partners (for instance, if two doctors are partners, one doctor's business and personal assets are protected against a malpractice suit filed against the other doctor). But in this state, if a person is actually a sole proprietor, the courts will "pierce the veil" immediately in a liability suit regardless of business organization.

So, yes, you need liability insurance at the very least, and quite a bit of that. You should be able to bundle a couple of million dollars of liability insurance with several thousand dollars of professional equipment coverage for $300-400 per year. Be sure that both coverages extend to all on-location situations.

I personally prefer working with a local agent for such things--one advantage of a local agent is that whenever I go to a venue that requires a certificate of insurance to show that your coverage extends to them while you're on their location, my agent can print one out for me in just a few minutes.

I and a lot of portrait photographers don't operate with an actual "contract," just a good invoice. Mostly, it's just important to have solidly determined and communicated what is expected of each party at each step. This can be written out, but doesn't need to be a legally enforceable contract.

For one reason, if a portrait photographer carefully plans his workflow, there is no reason for him ever to be "in the red" in cash flow. You should be paid in advance in increments through the process ahead of each step, then make sure the client knows what to expect for her money. If she's disappointed, do that step over...but you're never doing a step that you haven't been paid for.

Now, weddings are an entirely different picture, as are commercial transactions. In those cases, a tight contract is necessary.

You might need permission from the event organizers if the event is on private property or on public property where the organizers have gotten permission from the local government to control admission.

You never need a release to sell a picture of someone to that person (actually, you don't really need a release to sell a picture of someone to anyone, but we don't have to go into all that right now--go through the model release sticky for details).

brett201 wrote in post #14371950
There is a whole thread made into a sticky titled "When do I need a release". Shall I go read it for you and report back?

For someone who is just starting off its a bit unfair to assume they know what a 'release' is.

By the way, I recommend reading this guy's blog for part-timers.

I don't agree with every single thing he says, but this is overall a good source of information for people getting started.

http://parttimephoto.c​om …iness-the-startup-series/