I am looking to establish my self as a business so I can begin selling some photographs locally in my area as well as maybe eventually branch out to some portraits and weddings as well even though my love is nature. For tax reasons, I want to be legit.
I am sure some of you are selling photographs and have a business. I am curious how many of you are set up as a sole proprietor and how you did it. There is so much to research and I was hoping to get some input on where you did your research and things you have learned along the way.
I know it is a little off topic from our usual posts, but thought what better place to ask.
I am not looking to establish a fictitious name. I would probably just operate with my name and Photography on the end of it.
I can't say thank you enough for the help from one fellow photographer to another.
Ed,
You should be able to find the information that you seek at the Secretary Of State's office for your state or at the Revenue Commissioner's office.
In South Carolina, a sole proprietor whith their name in the business name is exempt from licensing requirements unless required by the local government.
Posted by Andy Richards on March 9, 2008 at 10:24 AM
Ed: I was just "browsing" over here. I am in the MWNP forum most of the time as I reside in Michigan. My "real job" is as a business and estate planning attorney. As much a people cringe at the thought, you really need to seek good professional advice (to me that means CPA and/or attorney). The need to be folks who have experience in small business representation. If you can find one that has worked with photographers, that's a bonus.
I am not licensed to practice in FL, and wouldn't want to give formal legal advice in a forum in any event. Almost always, there are specifics that can only really be addressed one-on-one.
HOWEVER (that's a "legal phrase" used altogether too often ), some generalities:
Most states now recognize a business entity known as a Limited Liability Company (LLC). Most state also recognize a "sole-member" version of the LLC. The IRS generally treats a sole-member LLC as a sole proprietor for income tax purposes. There are usually no onerous filing, record-keeping or other requirements. In Michigan, for my "sole-proprietor" clients and often for my partnership clients, we see the LLC as a kind of "no-brainer."
My own belief is that in addition to the liability protection it affords you in some instances, it gives your business a "legitimacy" to the general public, and perhaps, to the IRS. The IRS will always be looking at the SUBSTANCE of your business activities--i.e., is it a true business, or just a hobby in which you are attempting to write off expenses. Lots of factors enter into that.
I had not ever heard that you could not incorporate if you did not have employees. That is certainly not true in Michigan. If it is true somewhere, it is not an IRS rule--there may be state laws that restrict. However, most clients who are comfortable with the sole proprietor model will prefer ether staying that way, or going the sole-member LLC route because of the ease and simplicity. Corporations are a bit more formal and complex. The require a separate tax filing (where the sole-member LLC does not). They require maintenance (annual meeting minutes or the equivalence, etc.). Not neurosurgery, but still a bit more of a hassle. There is a thread of law that defeats the liability protection if you do not follow the formalities (and that is the most common "fault" I see with corporations in my practice -- they do not do the minutes).
I am clueless about "licensing" though it would again, be a state law issue. There is no federal business license for most businesses. But Florida may have licensing laws. That is why seeking some professional advice is important.
Hope my rambling is helpful. You can pm me if you have questions and I'll certainly try to help.
Andy offers some good advice. A few years ago the company I worked for offered a few of their top sales people the opportunity to resign and become independent contractors. I researched it with my financial planner and an attorney as well as the CPA I felt I would need. All recommended I incorporate because of the tax advantages as well as better liability protection given the caveats Andy already alluded to. Most of my peers were looking into sole-proprietor/LLC. I gathered from talks with them most had asked advice from CPA's/bookkeepers that were more comfortable with this arrangement and may not have felt comfortable with incorporating. Almost to a person those that sought out a possibly more qualified CPA were steered toward incorporating. Also none of us had employees so it is possible to incorporate without them. ( If you consider yourself an employee).
I am not suggesting this is the route to go just that you might want to explore all options. My case involved a lot of travel and entertainment expenses which made the incorporation much more attractive from my point of view. If I felt my business was going to generate a lot of revenue which could justify the additional services of a CPA, keeping of records, and additional cost of incorporating I would go that route otherwise, as Andy, pointed out the LLC can be much much simpler.
Discussion
3 repliesI am looking to establish my self as a business so I can begin selling some photographs locally in my area as well as maybe eventually branch out to some portraits and weddings as well even though my love is nature. For tax reasons, I want to be legit.
I am sure some of you are selling photographs and have a business. I am curious how many of you are set up as a sole proprietor and how you did it. There is so much to research and I was hoping to get some input on where you did your research and things you have learned along the way.
I know it is a little off topic from our usual posts, but thought what better place to ask.
I am not looking to establish a fictitious name. I would probably just operate with my name and Photography on the end of it.
I can't say thank you enough for the help from one fellow photographer to another.
Thanks,
ERS
You should be able to find the information that you seek at the Secretary Of State's office for your state or at the Revenue Commissioner's office.
In South Carolina, a sole proprietor whith their name in the business name is exempt from licensing requirements unless required by the local government.
I am not licensed to practice in FL, and wouldn't want to give formal legal advice in a forum in any event. Almost always, there are specifics that can only really be addressed one-on-one.
HOWEVER (that's a "legal phrase" used altogether too often
Most states now recognize a business entity known as a Limited Liability Company (LLC). Most state also recognize a "sole-member" version of the LLC. The IRS generally treats a sole-member LLC as a sole proprietor for income tax purposes. There are usually no onerous filing, record-keeping or other requirements. In Michigan, for my "sole-proprietor" clients and often for my partnership clients, we see the LLC as a kind of "no-brainer."
My own belief is that in addition to the liability protection it affords you in some instances, it gives your business a "legitimacy" to the general public, and perhaps, to the IRS. The IRS will always be looking at the SUBSTANCE of your business activities--i.e., is it a true business, or just a hobby in which you are attempting to write off expenses. Lots of factors enter into that.
I had not ever heard that you could not incorporate if you did not have employees. That is certainly not true in Michigan. If it is true somewhere, it is not an IRS rule--there may be state laws that restrict. However, most clients who are comfortable with the sole proprietor model will prefer ether staying that way, or going the sole-member LLC route because of the ease and simplicity. Corporations are a bit more formal and complex. The require a separate tax filing (where the sole-member LLC does not). They require maintenance (annual meeting minutes or the equivalence, etc.). Not neurosurgery, but still a bit more of a hassle. There is a thread of law that defeats the liability protection if you do not follow the formalities (and that is the most common "fault" I see with corporations in my practice -- they do not do the minutes).
I am clueless about "licensing" though it would again, be a state law issue. There is no federal business license for most businesses. But Florida may have licensing laws. That is why seeking some professional advice is important.
Hope my rambling is helpful. You can pm me if you have questions and I'll certainly try to help.
I am not suggesting this is the route to go just that you might want to explore all options. My case involved a lot of travel and entertainment expenses which made the incorporation much more attractive from my point of view. If I felt my business was going to generate a lot of revenue which could justify the additional services of a CPA, keeping of records, and additional cost of incorporating I would go that route otherwise, as Andy, pointed out the LLC can be much much simpler.