income tax

The legalities of starting a part time photography business - Startup Series, Part 3

The Part Time Photographer Startup Series:

Part 4: What does a successful part time photographer look like?

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With the disclaimer made that I am neither a lawyer nor an accountant, let's broach the topic of legalities you'll need to be aware of as you kick off your part time photography business.

All of the thoughts I share here are from my experience over the past 10 years as a part time professional photographer in a small town in Texas. The language, terms, and governmental entities you have to deal with in your state or country may go by entirely different names. At the end of this article, I'll provide some sure-fire advice as to how you can rest easy knowing you are completely covered as a working photographer. The peace of mind is worth the research.

DBA - Doing Business As

When I launched Outlaw Photography, I was required to go to my local county clerk (found conveniently at my local county courthouse) to file a DBA or Doing Business As form. This just makes a recorded connection between you as a person and your business.

You'll spend a few minutes going through their records to ensure your business name isn't taken (in a future article, I'll show you how to name your business in five seconds flat), then fill out a form and pay a filing fee. Mine was $25.

To accept checks in your business name, most banks will ask you to show them your DBA, and will require you to open a separate account. My local Wells Fargo branch did not have this requirement, but the bank I now work with does. Expect to pay a monthly fee for this second account.

It's sound business advice to always use your business checking account for business income and expenses.

Sales Tax

Next up you'll need to go to the web site of your state's sales tax enforcer and find their sales tax application.

For me, I went through my state comptroller's web site and completed the free and easy application online. You'll get your sales tax ID # slip of paper in the mail, which you'll want to keep displayed where customers can see it. Unless you have a retail studio space or home office open to the public, just slap this in a file which you can show customers if needs be. No one has ever asked to see mine.

When it comes to collecting sales tax, the rate you collect from customers and later deliver to the state will depend on where your business is located. When I worked out of my rural home I collected 6.75-percent sales tax - now that I have a retail studio in an incorporated city, I collect 8.25-percent sales tax. Your taxing entity will provide you with the rate you should charge.

To answer the age-old question of what services or products you should collect sales tax on, I charge it on everything. The wisest advice I was given was that professional photography is considered manufacturing a product and thus you collect sales tax on parts and labor both. See my advice at the end of this article regarding the Your Mileage May Vary aspect of this point.

In Texas, you hand over the sales taxes you've collected on an annual basis unless you collect in excess of $xxxx amount, in which case you pay quarterly.

You will need to report all of your business income and business expenses come tax time. I've always trusted my numbers to H&R Block, of which we have a local branch with local people who take care of me any time I have a question and have given me great advice and peace of mind over the years.

If you enjoy filing your own taxes form by form, you'll need a Schedule C. That's honestly as far as my knowledge goes in that realm. There's some good advice over at the Keeping Nickles blog for the do-it-yourself'ers out there.

Zoning

The last legal requirement you need to worry about is the zoning of your property if you live within a city and plan to work from home. This should only ever be an issue if you have clients visit you at your home, either for shooting in your home studio or doing photo viewing and sales sessions there. If you shoot entirely on location and do viewings at Starbucks on your laptop, you should never have an issue.

If you do plan to host clients, visit with your friendly secretary at City Hall about what permits or restrictions you may face working from your home. If you live in a subdivision, visit with your Home Owner's Association. Part time portrait photography is a very low-traffic business, so most associations will have no problem with you doing part time business from home.

Making sure your butt is covered

God bless the spirit of the bootstrapper, but even I will say that the legal issues of starting and running your part time photography business are no place to be chintzy. Talk to a local CPA (Certified Public Accountant), preferably one recommended by a fellow photographer so you know they know your business. Even the shortest consultation will help you understand your legal position and needs, specific to your business, city, and state.

Your second option is to visit with other photographers in your city or state via online forums. I'm a big fan of my state's best photography forum, TexasPhotoForum.com. Join your state's forum and search their archives in the Business section for startup advice. This won't guarantee your butt's covered, but it's the fastest way to get a good idea of what you need and where to look for more information.

While you're there, search for recommendations for a CPA you can trust and talk with.

If you have any lingering questions that you can't find from searching your forum's archives, don't be afraid to start a thread and ask dumb questions. Down the road when you've made it big, you'll be the one on the other side of the Internet helping newbies get their start.

Your third option is to visit with your local Chamber of Commerce or business association. They can give you good advice and resources to explore.

In Part 4 of our Startup Series, I'll show you what success looks like, and we'll answer the underlying question of, "Is this something I really want to do?"

Next Steps

(Lots of Next Steps at this juncture - don't be intimidated; this is where you are able to guarantee yourself the peace of mind you need to run your business without stress or worry.)

Search Google for your state's premier online photography forum. Join (should be free) and search their business archives for threads on startup issues and questions. Take the time to read over each one and as you go along, make notes of what you need to do or investigate further to ensure you're legal. You should be able to answer most of the above-noted questions here. (A couple of good lists for general photography forums can be found at Doug Plummer's blog and Amazon's Askville.)
If you have a question that hasn't been answered, or need clarification on something, PM (private message) one of the seemingly knowledgeable photographers who was providing answers in the forum. Tell them you're an aspiring professional photographer and ask your question. Keep in mind some people are jerks and don't let them wear you down if they aren't encouraging. If they won't answer your question or aren't encouraging, PM someone else.
Search the forum for a recommendation for a good CPA. If you can't find a recommendation, ask one of the knowledgeable posters in the forum. I suggest making contact with this CPA, finding out about prices, and finding out what the cost would be for an initial consultation.
If you can afford it, arrange for an initial consultation with your CPA of choice. This is the best money you can spend on starting your own photography business - the peace of mind of knowing you're covered is worth far more than what you'll pay.
Brainstorm session: Using what you learned in the forums and / or from your CPA, write down a list of all the things you need to do, all of the people you need to contact for more information, and make a plan for getting it all done. This is one of the hardest parts of starting your photography business, but the costs will be minimal, and there are no stupid questions. This will be the test of whether or not you have it in you to start your own business. Trust me, speaking from experience, it is way easier than you think it is. Go through the motions and within a day or two, you'll have or have set in motion everything you need to legally start your part time photography business.
I write and post new articles for PartTimePhoto.com daily to help you become successful as a part time professional photographer. If you like what you see here, you're welcome to click on the "Subscribe" link at the top of any page of this site.
What legal issues have you run into while starting your part time photography business? What have you found to be unique to your city, state, or country? Leave a comment below or drop me an e-mail.

by Outlaw Photographer James Michael Taylor