# Business questions



## Esperanza86 (Nov 25, 2015)

sabbath999 said:


> I was away from the forum for a couple of years, and have come back to check in with you good folks again.
> 
> Coming in with a fresh perspective, I was surprised as to how much emphasis some people are putting on commercializing photography.
> 
> ...


Omg I so needed to see this! I have done about ten paid sessions and love taking photos of people. I have known all the steps I need to take to make it a well thought out plan but currently do not have the funds to do everything at once. Do you have any advice on where to start and how to start? I am afraid to do the tax ID  because if I am not making any money I am afraid they will expect me to pay. I am attempting to pay for this years sessions but am thinking it is best to do it as a hobby until I have more things in order. I have a 2 year old son and have to be smart about these things. Here are some of my images I have made. I love the editing and shooting part. I am dealing with my first unhappy person and it is not fun. I so badly want to do this and do it right. I looked into PPA insurance and it is $500 ish a year? When you are learning that is a big chunk of change.  Also PPA has sample releases and contracts to use- do you recommend getting a lawyer to form contracts etc.? I wish I could do this full time but I don't have the ducks in a row. Also, can you explain to me how to make my images high resolution? From what I understand it is done in photoshop? If I am wrong correct me. I want to know the process. Thanks!


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## astroNikon (Nov 25, 2015)

Talk to a tax consultant.

But if you were to ask me, I think you are beyond the "Hobby" stage per the IRS Rules (but, we don't know where you live, so I really can't give any inadviseable internet advice ==> Business or Hobby? Answer Has Implications for Deductions

High Resolution ??  or detailed / in focus using something other than f/1.8 ?

You can sharpen it a bit depending if for print/screen.  But if you take it Out Of Focus (aka, OOF) then it's OOF.

Understanding DOF ==> Understanding Depth of Field in Photography

read it and reread it, and test it out.  Then understand the situations to use f/1.8 and the situations to not use f/1.8.  You can,but you have to learn how to use it. 

If you have 2 ppl and they are not parallel with each other then you have a DOF/OOF issue on their faces if you are too close.  You have to use the Calculator and visualize (and test on inanimate objects) how you use your camera settings.  => A Flexible Depth of Field Calculator

Also learn your camera's Focusing Mode.  ie, Single point focus mode (don't use auto focusing mode). You'll have to consult your camera manual (since we don't know what you use) for this.  Then focus on the eye as a general rule (don't let the camera decide for you).


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## tirediron (Nov 25, 2015)

As I indicated in the other thread, IMO, you are a long way from being ready to take money for photography.  A HUGE part of running a successful business is having everything set up.  If $500 for insurance (that's a LOT less than what I pay) is too much money, you're not ready.  Yes, it's expensive, but how much will the lawsuit resulting from a client tripping over your lightstand and breaking a tooth cost?


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## Designer (Nov 25, 2015)

Esperanza86 said:


> Do you have any advice on where to start and how to start? I am afraid to do the tax ID  because if I am not making any money I am afraid they will expect me to pay. I am attempting to pay for this years sessions but am thinking it is best to do it as a hobby until I have more things in order.


I'm a bit confused as to whose thread this is, but this is for Esperanza86.

Build your skills by shooting friends and family "for trade", meaning you give them prints (if they're good photos) for their time in posing for you.  Yes, you're going to "wear out" a couple of friends, but hopefully they will have some nice photographs that they can pass out among their friends and family.

Call your state department of revenue, and ask some questions.  They can tell you how to get your federal tax ID.  The IRS (and probably your state) wants your money in the form of taxes paid on your income.  A tax attorney can get you set up with the legal stuff.  Yes, you're going to have to pay the tax attorney, but probably just the one time. 

When you file your tax return, there is a form for reporting business income and expenses.  If your expenses are high relative to your income, your tax liability will be low.  It is WAY better to report your income and expenses on your tax return than to NOT do it, and WISH you had.  With most small businesses just staring up, the taxable income will be negative for a couple of years, so your taxes won't go up right away. 

If you are considering your enterprise to be more of a hobby at this point in time, then don't accept any money.  ANY money.  Just don't.  Later you can set it up as a business.

ps; the first two shots are showing potential.


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## astroNikon (Nov 25, 2015)

FYI, for the first couple years use an accountant (not H&R block but a real accountant).  Then you'll understand the forms and how to break down your expenses, etc.
It's really quite easy overall once you see it done.

Don't be afraid of a TaxID.  it's just a number the gov't uses for you to submit any tax stuff if you have any.

We still don't know where you are from? US, Canada, Argentina, Spain, Phillipines, South Africa, Australia, Antartica ???


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## KmH (Nov 25, 2015)

If your business is a sole proprietorship your social security number is your Federal TaxID number.

If you're in the US and your state has sales taxes, you need to register your business with the state. The state requires a business to collect and forward the appropriate sales taxes the state is due. Your city likely also requires a business be registered with them too.

I've seen more illegal, unregistered photography businesses get in serious financial trouble over state sales taxes than for any other reason.
The illegal unregistered business usually is brought to the attention of local and state authorities by a legal competitor photography business.
If an illegal business discovered by the state does not have good accounting records, the state will estimate what back sales taxes, fines, and other financial penalties are due. They usually guess on the high side.

It is almost impossible to start and keep a business going without significant funding from the start.
On very rare occasions that has been done by people that have very good business knowledge and business management skills.

I highly recommend this inexpensive book about lighting for photos of people:
Direction & Quality of Light: Your Key to Better Portrait Photography Anywhere


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## gsgary (Nov 25, 2015)

You need to get your photos in focus before you think about anything else


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## Esperanza86 (Nov 25, 2015)

astroNikon said:


> Talk to a tax consultant.
> 
> But if you were to ask me, I think you are beyond the "Hobby" stage per the IRS Rules (but, we don't know where you live, so I really can't give any inadviseable internet advice ==> Business or Hobby? Answer Has Implications for Deductions
> 
> ...


I live in the U.S- I want to stop taking $ and just do this as a hobby until I am experienced enough and feel more confident. I just had some unhappy customers for the first time and I am lost and stressed. I am going to just refund them their $100 and be done with it. Basically they want to print a 16x20- mpix.com wouldn't let them print it that size, my car and computer broke in the same week, and now all I have is my iphone and ps touch and  ps express apps. Limited editing tools. I have no idea how to fix this other than give them their money back after almost two weeks of them being upset. Back to the topic, I talked to a Tax accountant and he is going to help me report my stuff for the year.


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## Esperanza86 (Nov 25, 2015)

KmH said:


> If your business is a sole proprietorship your social security number is your Federal TaxID number.
> 
> If you're in the US and your state has sales taxes, you need to register your business with the state. The state requires a business to collect and forward the appropriate sales taxes the state is due. Your city likely also requires a business be registered with them too.
> 
> ...


Thank you for the recommendation! I will check it out. So far I have read the Tony Northup DSLR book and love it. It is a lot of information to take in so I will have to keep reading and practicing.


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## dennybeall (Nov 25, 2015)

Just touching on a few things. First - get legal tax advice!
If you make the money it needs to be reported (no matter business or hobby)- how you report it and what business format you choose is complicated and you just need help with it, or spend a lot of effort to learn it all......
I'd say look at the IRS Schedule "C" and get an Umbrella policy on your regular insurance. The Sched. "C" can save you taxes while you're getting started, not cost you taxes.


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## KmH (Nov 26, 2015)

Even doing it as a hobby and not charging I highly recommend having a written contract and making sure you are covered insurance wise in case someone gets injured during a free shoot.


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## beagle100 (Dec 1, 2015)

tirediron said:


> As I indicated in the other thread, IMO, you are a long way from being ready to take money for photography.



I agree, looking at those images you're a long way from being "professional" but if and when you are ready to charge customers you will need a tax ID, insurance, contracts, etc.


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## desertrattm2r12 (Dec 13, 2015)

Most freelance photographers are in fact underfunded business persons.
The last time I checked the IRS will let you lose money, and take a tax deduction for that, one year out of three.  General Motors can lose money year after year but you can't.
Business licenses, taxes, insurance -- they are like a giant Kabuki dance. Style and form mean more than content is what I mean. As Radar OReilly said on MASH "It doesn't have to make any sense. You just have to submit the right number of copies of the form."
The county where I lived allowed a photographer to do business without paying for a business license but all the cities nearby required a license. Going pro is tough but you can do it if you apply yourself.
A tip -- "zoomy' out-of-focus backgrounds ("bokeh") are all the fad. It's getting pretty cornball. Bokeh is not photography, it's a gimmick. Concentrate on the subject of your photo and make the background a minor consideration. Zillions of photographers these days are taking snaps just for the bokeh and then complain that their subjects are out of focus. Duh.
Nothing creative about yet another bokeh background with fuzzy people in front of it.
Hang in there!


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## James W. (Dec 13, 2015)

I believe, and this will vary a lot depending on where you live, that you can put a small amounts of money in the "Miscellaneous Income" category.  If, for instance, you have another job which you work full time and you've just done a couple of shoots for some cash, then the money needs to be reported as miscellaneous income.  If/when you start taking in a lot of money, then you will have to report yourself as a business and that business will become part of your regular income.  Here's the link to the IRS page:  Reporting Miscellaneous Income

While it's unlikely that the IRS will go after you over a few hundred dollars, they have every right to do so, and could do that if they wanted to, so it's best to make sure your taxes are in order.  Just ask Willie Nelson, he could tell you all about the IRS.

Basically, if in doubt assume that it's taxable income. 

As for insurance, you can be sued for literally anything (even paper cuts and minor things like that) so having some form of insurance is paramount. I would recommend getting insurance that covers your health, your equipment, and your backside in case a client gets themselves hurt.  A liability form should also be written up and you should have every client sign it which will release you from damages that may occur either to the client or anything they brought along.  That way, if something should end up in court, you can pull out that form and use it like a shield against getting sued.  There are people out there who would sue you for everything you own over a simple cut or a trip on the pavement.  I have a word for such people, but I can't write it on this forum.  Moral of the story is this, make sure your protected.

And as for licensing, I believe that is handled at the local, county and state levels so it all depends on where you live and work.

Otherwise, you could do shoots for free in exchange for using the photos to promote your future business.  Get it in writing, and you'll be set.  No need to worry about the IRS or licensing.  But some form of liability insurance should be a priority.  

Thanks!

--James


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## JoeW (Dec 13, 2015)

Esperanza...let me start by staying that I am NOT a lawyer or an accountant.  My memory on this stuff is fuzzy (it's been a while since I was a corporation and dealing with the requirements of a one-person business).  That said....

1.  The general rule of business vs. hobby is determined by whether or not you make money over a certain number of years.  I think (but may be wrong) that if it is profit 1 out of 3 years it's considered a business (and you can deduct expenses...hobbies you can't deduct your expenses).  I tend to believe that people value what they pay for.  If you don't charge them, they find it easier to flake/no show or not prepare, not take it seriously.  And then you have crap results.  Charge if the people you're working with are willing to pay.  If there are new areas you want to get in to and can't get people to pay you (b/c you have no track record)...say like:  boudoir...or weddings...or pet photography...then you do TF.  In the meantime, just make sure that your expenses exceed any income that you get.  And yes, you need to report the income (especially if you had 10 paying gigs in 2015).  But if you then go out and upgrade your gear.  Or buy stuff you'll eventually want for a studio (stands, seamless backdrop paper, triggers, strobes, soft boxes, upgrade your lens, etc.) you won't have a problem with more money coming in then going out.

2. Niche, niche, niche.  Every successful (by this, I mean someone who's been in business 10 years or longer and has made money every year in that span and their ONLY job is that of photographer) has a niche.  That means they specialize.  I have 2 friends who 90% of their work is pet photography (one of them has an RV and goes on the road almost every weekend to dog shows and agility trials).  I have 2 other photographer friends where for one, 98% of her work is weddings, for the other, it's probably 100% (he couldn't name a single playing job in 2015 that wasn't a wedding or wedding-related portrait).  Two others who specialize in boudoir.  Another who does glamour and porn.  The point is:  all of them specialize.  Yes, there are plenty of examples of someone who shoots a wedding, then family portraits, then kids'  sports teams, then some pets, then sells some landscapes, then maternity shoots, then buildings and interiors and then another wedding.  But in my experience, people surviving that way often have a hard time flourishing--they get by (and also have lean years).   When you have a niche, that means you have a track record in the field you're trying to get work in.  It means you have references.  You probably belong to the relevant trade groups (someone I know who shoots interiors is an associate member of AIA--American Institute or Architects, someone I know who does a lot of commercial and business work belongs to the local Chamber of Commerce AND the local Technology business council).  You have equipment that works for that particular genre.  You get a rep in that field so your work markets itself.  Most importantly, you become really good at what you do.  And so you get an identity or a "brand" (that's JoeW the commercial interiors shooter, or that's Esperanza the maternity photographer) and that will get you business.  People will think of YOU when they have that specific need.  So you need to be thinking of the niche you're going to pursue.  

I can't overemphasize this bit about a niche enough.  One of my favorite business quotes of all time is from Jack Welch:  "if you don't have a competitive advantage then don't compete."  There are a gazillion photographers out there (many of whom are long-time professionals, even more are someone's nephew who has an expensive camera and they watched some You-Tube videos).  Why would someone hire you over anyone else (other than chance)?  If you are seen as someone who knows all of the local tech firms and has shot 40 business interiors then I guarantee it will be your name that comes up 50% of the time when someone says "hey--we should get pictures of the new furniture for the annual report" or "this building is going to look great when the buildout is finished...let's get some pictures when it's done."

3.  It's better to be a business (even if you're still learning) than call it a hobby and wait until you think your're good.  Here's the deal:  you should never reach that stage where you go..."I've learned it all."  The field is always changing and evolving.  Furthermore, as a business you can deduct expenses.  Take that trip to the Carribbean or Florida in winter and shoot a couple of models.  Buy that new lens and write it off as a business expense.  Attend that expo.  Take the trip to Yosemite in winter to shoot landscapes (and then sell a few of them...but writing off your travel expenses).  Again, their are tax issues here about how much money you make.

4.  Get the insurance (and not just liability insurance...you don't want to have your place burgled and you lose all your gear).  I once lost two bags of camera gear on a direct flight.  Multiple bodies, lens, strobes...none of it insured (yeah, I was really dumb--28 at the time I believe).

5.  Even if you think you're still learning now (and I hope you NEVER reach a point were you decide you've stopped learning), you can still be a professional.  But if you know this is what you want to do, (photography as a business), then take your learning seriously.  One of my friends was a supermodel...runways in Milan and Paris, the face for an international perfume ad.  When she was 25 she could see the writing on the wall and starting bugging the photographers she was working with "why did you shoot me that way?  Why that lens?  Why put the lights there?"  She began accumulating gear and shooting for fun on the side (but it was serious fun).  Shot for friends, did TF work, entered some contests, gave herself challenges.  She got some of the shooters she'd worked with to give her instruction and coaching and critique some of her work.  When her modeling gigs were drying up b/c she was getting too old she took a multi-week long workshop out at Sedona.  She now has her own photographic business specializing in wedding.  And when she wants to have fun, she travels and shoots that (I was really impressed with her results from Mongolia and Patagonia--beautiful stuff).  But even now, as a professional who has had a successful wedding photography business for decades, she doesn't hesitate to pay someone to get training and instruction for genres that are new to her (like the trip to Mongolia).


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## shmne (Dec 15, 2015)

Pretty much everyone has covered the important stuff but I'd like to cover a really nice way of becoming a pro while limiting your own investment and liability.

Nothing works as well as real subjects when it comes to learning poses, but until your shots are consistently solid that doesn't even matter. A good pose will never beat a bad photo. Go out there alone and just take amazing photos of the world or candids of people. Learn what makes a great photo, learn how to shoot in various conditions. Go out in the public and ask a stranger (have a printed out, simple, non-legalese contract) if you can take their photo - admittedly this can in of itself creates another set of issues, however in my experience since people were not expecting free images in the first place they leave very happy. Learn about your camera first.

Then learn about business. Learn about starting up an LLC, talk to your local small business development center or SBDC - practically every state college has one. Its free and they provide insane amounts of information. In fact my consultant that started my career as an entrepreneur STILL helps me and stays in touch with me. 2 years later! He has been such a great help from determining tax rates online, to ensuring pricing plans that match my overhead, to ensuring I minimize liability any time I'm on location and more.

Then learn about marketing because without getting in front of people, no one will know you're even offering a service.

Truthfully I'd prefer more people learned business first but its rare anyone is willing


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