So You Want To Be A Photographer? What to do to establish your photography business
February 18, 2016 | Alexandria Sayles
Photography is something that I love to do, and as the years
go on I realize the passion I have for it continues to grow and grow. It was
this fire that drove me to continue with capturing portraits as my career path
and expand my abilities. But, as I was building my portfolio, I begun to ask
myself, "What do I need to do next?" How do I establish myself, and
my name as a business?
When I decided to pursue photographing as more than a hobby,
I was lucky to have guidance in the right direction from many different
resources, mainly my dad. He started his own business when I was 4, and has
always answered any questions I had when I decided to make the next
leap. Yes, starting a photography business is exciting, but setting up
business is so super important! I was lucky to have my dad know the in's and
out's to owning a business, but I know many people don't have that
ability.
That's where this post comes in to help.
So many people do not understand the consequences of running
a business without the right licenses and paperwork. It is not as simple as
taking money from a client and pocketing it for profit. That is illegal;
actually taking any form of payment for services rendered without reporting the
proper documents and taxes is illegal in ALL 50 states of the US. Many states
will prosecute businesses ran illegally, and the end game can be anywhere from
the State and Federal government requiring you to close your business and not
reopen a new one, to thousands of dollars in fines, to even jail or prison sentences.
So please, don’t be a rebel, legalize your business to avoid any penalties.
“The IRS presumes that an activity is carried on for profit
if it makes a profit during at least three of the last five tax years,
including the current year” -Internal Revenue Service
To help people out in this, I have collected the necessary
steps to starting your photography business, the right way!
STRUCTURE
The first step when you decide to start collecting money for
your services is to figure out what you want to call your business. This should
be done before ANY form of payment is ever received. Since I am currently
located in Michigan, I will use this state as an example for the proper means
to get your business certified.
There are a few options to certify your business, Sole
Proprietor, LLC, C Corp, S corp or a Partnership. Choose the structure
that fits what you want for your business. Just because others choose one thing
that doesn’t mean that you have to do the same. Below is a link for helping
decide what structure works best for your company.
There is also another option for if you are just a hobby
photographer and will not charge for your services, but it still must be filled
out. This is known as a DBA (Doing Business As). This form lets you run a
business under the assumed business name, but doesn’t protect that name from
other people using it.
“Although the DBA is a business name and allows you to do
business under an assumed name, it is not a legally REGISTERED entity name with
the State of Michigan and it does not assure you that your business name will
be unique and reserved for your use only.”
-State of Michigan
Since a DBA is not an entity at all, but rather just an assumed
name, the individual doing business under an assumed name must pay taxes in
accordance with its own filing status as income. An individual doing
business under an assumed name must file taxes as an individual and offers no
protection from any form of legal suit. Anyone doing business under an assumed
name can be sued personally for any negligence, conflict, or accusations. Which
is why I don’t recommend that anyone, other than hobbyist that do not charge
for their services, to just conduct business under a basic DBA.
For the state of Michigan, the forms can be found at the
following links:
DBA Michigan
I, personally, chose an LLC for my business structure. Many
other photographers choose other entities, but this is what suited my needs the
best. Since, I have the most experience with running my business this way I
will show the steps to establishing a business in this direction. If you chose
another structure many of the filing situations are the same, but it is
different paper work for the structure.
When filing for an LLC, you can find the form online and
print it off, or you can go in person to file at the nearest government
business entity location. For me, it was easier to fill out the form online and
mail it in with my payment. Each state has a filing fee, but they vary from
state to state. For example, in Michigan, the filing fee was $50 and it was an
approximately a 2-4 week wait for filing to be submitted and my form returned
to me. If you go in person, the time is a bit shorter, but locations vary. The
form to fill out is listed below for the state of Michigan.
LLC Form
ESTABLISHING TAXES
After you have your entity formed, the next step in
establishing your business is to file for business taxes. To do this you apply
for an EIN (Employer Identification Number), which is done online at the following
link.
Apply for an EIN Number
Businesses must file both Federal and State taxes, depending
on their state’s requirements. The link for Michigan state tax registration can
be found in the following.
Michigan State Tax
These are so you can file the taxes on your services. Most
states require sales tax on tangible goods, which in photography means, that if
you provide any images to your client, you must pay sales tax on those. Look
into your own state’s sales tax guidelines to be sure you know what products
and/or services to charge tax on. Also, if you offer all-inclusive
collections, not paying sales tax may be a big N-O for your state! For example,
in Michigan you must charge tax on everything that was physically given to the
client, whether it was in CD or USB form, print, or digital download.
PROTECTING YOUR ASSESTS
The next step after certifying your photography business
legally is protecting yourself from any liabilities. This is done with
developing a client/photographer contract and purchasing insurance for your
company.
Before you accept any money from your client, I recommend
having a filled out photography agreement signed and dated. These entail the
service you are given, when and where, what you are including in said service,
along with the cost and payment plans if necessary. This protects both you and
your client is a misunderstanding happens to take place. I know many people
think that the random client horror stories that they hear will “never happen
to me,” but it always better to be safe than sorry.
You’ll want a contract for every session type, and a legal
document to cover all of the following:
- Model Release
- Print Release
- Portrait Agreement
- Independent Contractor Agreement
(for second shooters)
- Copyright Notice
I purchase all of my contracts from Rachel Brenke of The
Lawtog, being a lawyer and a photographer herself, she created contracts for
various session types and offers much advice on legal and technical business
aspects. You can purchase her contract at the following link, but always have a
lawyer double check the clauses since states vary with legalities.
A contract protects you as much as it can, but sometimes
Mother Nature happens and it is best to have insurance to cover all of those
various needs.
The following are types of insurance you need when operating
a photography business:
(Also a shout out to The Modern-Tog for the shortened
information!)
#1 Equipment Insurance
This will cover all equipment related to a loss or damage
due to a variety of events. The type of equipment, coverage and loss causes
will be defined through specific coverage policies. At a minimum, photographers
need equipment insurance to cover the following equipment; camera, lenses,
computers, business interruption, etc. Equipment insurance should also cover
the basic losses due to severe weather, damage through dropping, and theft. It
is especially important to not assume that your homeowner or renter insurance
covers business equipment as many policies exempt equipment used for income
purpose.
#2 General Liability Insurance
This insurance is especially critical for photographers
working in sensitive specializations (wedding, newborn, extreme sports, etc.)
This insurance works as an umbrella to provide protection against legal actions
arising from injuries, accidents and other claims.
#3 Commercial Automobile Insurance
This insurance acts to cover the photographer for auto
accidents in case the personal automobile insurance does not cover commercial
activities. It provides financial protection against potential bodily injury
and physical damage to the vehicle that results from automobile accidents. Some
jurisdictions require this insurance to be held under specific circumstances so
always check your local laws.
#4 Disability Insurance
The insurance should be on the “to get” list as quick as
possible for photographers that depend upon photography as their sole income.
This insurance is a form that insures the photographer’s earned income against
the risk of disability (sickness, etc.) that prevents them to fulfill their
work capacity. As a small business owner, planning to weather bad storms that
may come your way is worth the investment and time especially when it could
potentially cut off all income.
#5 Property Insurance (Owner or Renter)
If you own or rent a studio, insurance to protect against
damage to the building and items within are crucial. It is also important that
a photographer consider selecting a policy that includes business loss of
earning insurance to protect earnings in the event that the shooting location
is damaged or destroyed. Note: Some property insurance policies include all
equipment within the property and others do not. Always read your policy.
#6 Life Insurance
This type of insurance is important for a small business
owner’s peace of mind and allows your family and friends to be covered in the
event of your death. Savings helps to provide in the event of death but life
insurance can help to supplement for settlement of debts and related expenses
in closing up the business.
Many insurance agencies offer bundled discounts to business,
so shop around for quotes.
GET THE CORRECT PERMITS TO WORK
Since so many of us photographers shoot on location rather
than in a studio, it is important to make sure you have permission to be
shooting on certain properties, along with knowing what is legal to shoot on
versus what isn’t. For any private property, you must obtain the permission
from the owner in written form before proceeding to shoot on said property.
To ask permission to shoot on private property, Rachel has
another fabulous post with tips and what to include in a private property
agreement.
Many public places also have policies regarding photography
on the premises, make sure you double check all the regulations before you ever
book a session at a new location to see if you need to get a permit to
photograph on that property.
“Don’t get shut down for simply not getting the right
licenses and permits for shooting. Licenses can include extra business
licenses on top of your formation. Permits can be for specific shooting
areas”
-Rachel Brenke
After all of your legalities are established and you have
everything covered to protect yourself and your business, you are ready to
start taking on paying clients!
Oh happy days! Welcome to the land of small
business owners, may the force be with you!
