When you are just starting out in any business, there is no way to tell how successful it is going to be. Or if it will be successful at all. So should you immediately start the process of becoming a legal business? Should you pay for becoming a sole prop or an LCC right away?
This is my personal opinion, about those questions, as well as some advice to help you make your mind up about that. I must note, this is in no way legal advice, as I am not a lawyer. This is only from personal experience.
Let's just cut to the chase. Personally no I do not think you should rush out and pay hundreds of dollars on becoming an LCC, at the very least, $100 on registering for an EIN number.
If you are tossing the idea around about all the legalities, then I am assuming you have perfected your craft as a photographer correct? If not, then I highly suggest you do this first. Yes there is always going to be something in this art that we can learn or improve on. But if you don't have the fundamentals of photography down, then this step is not for you....yet.
If you are anything like me, you get extremely excited to start a new adventure, and make money. I used to do this a lot. I would get so inspired to create something, or paint something, and had so many visions of starting a little shop. And then I would lose interest, or move on to the next adventure. Photography and teaching small businesses are the only things that has stuck with me in the last 20 years. They are the only things that I feel give me purpose. So much so, I have a camera tattooed on my ring finger. You are more than welcome to read about that little tattoo and my commitment here. If I went and paid money to register all the businesses I thought I wanted to start, I would more than likely not be married, and living back with my parents right now!
So my point being, you need to decide if this is something you are truly committed to. Is photography something you know for a fact that you are in love with and in a sense, ready to be married to? You will have bad days. Are you willing to have those bad days and work through them? If you are a photographer that takes pictures of people, are you committed to giving them the best customer service? You can't slack. Not one bit.
If you have read through this post and thought to yourself, YES. Everything, that is me! I am so ready! Then go. Go talk to your accountant and pay a visit to your county building. They are the only ones you should be talking to at this point. They are the ones that can give you the 100% definite answers you need.
However, there are a few things that you still NEED to do in order to cover yourself.
In order to make money, you have to spend money.
You can not and should never take on clients without having a contract. Even if you are just trying to build your portfolio and are doing a lot of TFP sessions. You need to have a contract to cover yourself and that outlines your expectations so that there is zero room for confusion and miscommunication. If you need a contract, please check out BP4U's contract bundle. It has everything you could possibly need. And everything is customizable to your business needs. It is in your best interest to take any contract you purchase to a lawyer to verify specifics for your state.
Is your equipment insured? If something were to happen to your camera, and it doesn't work, then what? You have home and car insurance correct? Call up your agent and get their information on insuring your equipment. You will be surprised to find out how affordable it is.
You still need to be keeping track of your earnings. A simple excel sheet with columns for income and expenditures will be just fine. As well as saving anything tracking the income and expenditures. No there isn't a guideline of income that deciphers if what you do is just a hobby. All income needs to be reported no matter what. When tax return time comes around, you will take that sheet to your accountant.
I hope this has answered some of your questions about becoming a legal business. Again, I am not a lawyer and this post is personal opinion only. It is always best to talk to your accountant and county building for your personal needs.
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