Any Sole Proprietor making >$40K/yr?

I wonder how many photogs stick with using Sole Proprietor while you generate >$40K of revenue per year? At what point should you dump SP and go S Corporate even though you do not have any employee and only work for yourself?


yea yea...I know, contact the lawyer and CPA, eventually I will. But it would be nice to hear from y'all as well.

If you risk losing more than you own somehow - it'll be a good idea to work under a legal entity.

What if I don't own a house and don't have any other assets to lose, other than photography equipments?

incorporating yourself or forming an "LLC" will not help in personal negligence liability lawsuits. It could help (liability wise) if you have a payroll or use commercial real real estate or could help in other ways say if you get a bank loan. An "scorp" will help in tax advantages for higher income levels but you could pay higher fees such as "franchise taxes". your best bet for now may be to just remain a sole proprietor (but use an accountant at year end to minimize taxes) I am (was) an accountant but now just interested in photography!

Do you own any copyrights? Are they of any current or possible future value?

You may not think you have any assets, but this is one photographers seem to forget, although most are pretty aware of protecting it from infringement. As I understand it, a copyright can be seized and reassigned as a valuable asset under a lawsuit, too.

However, you really should be talking with an accountant for advice on the form of your business, not relying on us strangers on the Internet. We all live in different states and countries, where business structures might have more or less meaning for you.

I don't feel the need for copyrights at the moment, majority of the revenue (95%) came from school portraitures of young children and graduation and such, so they do not have any commercial value at all. I'm very thorough and careful on setting up my lighting equipments and other stuff onsite, everything is away from kids so there is zero chance of them tripping over my stuff. Teachers are also instructed to keep the kids in separate room until the student being call into the dedicated photo room to have the picture taken. The student then leave the room immediately, it's a wash and rinse type process if you will.

I do not have any employee and do not plan on hiring any in the next few years, when I need help I have family members available to help sorting orders, payments, and other paper work stuff if necessary. So there is a very slim chance of me or my company getting sued, we deliver the result twice as fast as the competitors and yield much higher quality products and services, and the nature of this type of business is not as risky as say...Weddings. You can't really screw anything up unless you intentioanally scam people without giving them prints or do something really stupid. We also offer a full refund policy within a period of time if the customer is not happy with the photographs for whatever the reason may be, so far we have gotten nothing but praises and 100% satisfaction from clients, and I intend to keep it that way.

I have a general idea of the protection from S corp and LLC, just wondering if there is any other benefits that I'm missing by sticking around SP.

Thats what they all say. Don't be stupid. A LLC filing establishes slightly more legitimacy and far more importantly, removes your personal liability if something does happen (and it always does).

Not owning a house/etc makes it worse. You could have your wages garnished for life, etc... Not good.

amfoto1 wrote in post #5684620
Do you own any copyrights? Are they of any current or possible future value?

You may not think you have any assets, but this is one photographers seem to forget, although most are pretty aware of protecting it from infringement. As I understand it, a copyright can be seized and reassigned as a valuable asset under a lawsuit, too.

Alan, are you saying you have some sort of corporation for your photo business, and hold the copyrights to the images somewhere outside the corporation? This is an interesting idea, or maybe I'm missing your point. Could you clarify?

Thanks
Dave

I'm still a SP, well past your benchmark, and my accountant sees no reason to change it. I'm well protected with insurance, which is far better than relying on a corporate veil or organizational protection. That may have some bearing on her decision for me to remain a SP.

However, one line in your post caught my eye,

There is never a zero chance. If you keep working for any length of time, I can almost guarantee something will happen in the future no matter how careful you are. Things just happen, and in strange ways sometimes. Maybe its minor, maybe not. But if you are shooting at schools without insurance, and assuming there is a 'zero chance', you are taking a risk that could put your livelyhood and life savings in jeopardy. I'm even surprised they haven't asked for a guarantee of insurance, which seems mandatory whenever I step on a business property.

Even if something minor happens and a parent has the funds to make it a legal issue, you could still be left in serious debt just from protecting yourself. At least if you had insurance, even a minimal amount, the insurance company will be fighting the issue right beside you, and not landing it all on your shoulders. Heck, even if you just added $.50 to each portrait, with average volume you could have enough to cover a basic policy.

Yea I thought liability insurance cover accidents if it ever happen, but I did not think being in s/c corp or LLC can shield you in those situation, so...I guess sticking around with SP is not bad of an idea then, as long as we have liability insurance.