# Starting a new business - LLC?



## DreamPhotos (Dec 30, 2013)

How do most of you have your business set up? LLC? I'm probably just going to use Legal Zoom, as I've used them in the past for my non-profit foundation set up. 

Also, should I hold off on purchasing equipment until the business is officially set up and legal, so I can deduct the expenses? 

Thanks in advance!


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## DanielLewis76 (Dec 30, 2013)

Good Luck (in the UK so can't advise on the best way to set up a company in the US).

What is your company doing?


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## robbins.photo (Dec 30, 2013)

DreamPhotos said:


> How do most of you have your business set up? LLC? I'm probably just going to use Legal Zoom, as I've used them in the past for my non-profit foundation set up.
> 
> Also, should I hold off on purchasing equipment until the business is officially set up and legal, so I can deduct the expenses?
> 
> Thanks in advance!



LLC is always a good way to seperate your personal assests from the business, which means you'll most likely get hurt a lot less should something go horribly awry.  However, keep in mind I am not a lawyer, I don't play one on TV, and I'm no longer welcome to stay at any holiday inn express on the planet.  So I'd recommend you get some good, sound, paid legal advice on this one just to be sure you have all the I's dotted and the T's crossed.


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## ronlane (Dec 30, 2013)

Notice: I am not a lawyer and don't want to be one and I'm not a tax accountant.

That being said, I would applaud you on using a lawyer to set things up. Now, you mention not buying equipment until you set up the LLC. What equipment are you referring to? Why would you not have equipment and have been shooting for some time before concerning yourself about a business? What is your photography background? Have you spent time practicing your skills and learning the craft of photography?

Please know that I am not judging here because I do not know the answer to these questions, but these questions need to be addressed prior to spending the money on a lawyer to set up an LLC.

Good luck.


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## Tiller (Dec 30, 2013)

I would not go with an LLC. It's technically it's own entity so it's subject to taxation on its own on top of your taxes as an individual.

I would just go with a sole proprietorship. There's a reason it's the #1 most popular business type in America.


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## Tiller (Dec 30, 2013)

And I would never ever ever use legalzoom. Ever.

Get a real lawyer.


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## KmH (Dec 30, 2013)

As a new business, be careful deducting equipment as a business expense.

The IRS requires a business to make a profit in 3 of the last 5 years including the current year.

Business or Hobby? Answer Has Implications for Deductions

LLC specifics, cost to establish and maintain, reporting requirements, and accounting requirements vary by state.
A single member LLC may not protect a persons asset's any better than a SP will (sole proprietorship).


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## rolbai (Dec 30, 2013)

Tiller said:


> I would not go with an LLC. It's technically it's own entity so it's subject to taxation on its own on top of your taxes as an individual.  I would just go with a sole proprietorship. There's a reason it's the #1 most popular business type in America.



A single member LLC is invisible for federal tax purposes and most states. It may provide some protection from some liabilities but not professional liability. That means if you fail to deliver your professional services then the LLC (or SCorp or CCorp) will not protect you. 

In SC, after the cost of creating the LLC, there is no additional costs as opposed to a sole proprietorship.  Other states may have an annual fee they charge. Check with a local CPA. 

I recommend a LLC for all my self employed clients.

Sent from my iPhone using PhotoForum


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## imagemaker46 (Dec 31, 2013)

I was also wondering about the gear question, if you are waiting to buy gear as a deduction, how is it that you are wanting to set up a business that requires you to know how to use the gear in the first place?  Do you already have cameras? and are you skilled enough to open a professional photographic business?


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## DreamPhotos (Dec 31, 2013)

I have a camera, limited lenses, lighting, backdrops, speedlight, editing software. I'm looking into a few new lenses, props, a new equipment bag to hold more. Nothing major, but I was just thinking it might be more of an advantage to buy it through the business, if I set one up.


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## DreamPhotos (Dec 31, 2013)

I have to say that I'm a bit curious, because I sort of expect other photographers to chime in with how their business is set up, but now I'm wondering how many people are operating under the table, as opposed to through an actual business.


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## imagemaker46 (Dec 31, 2013)

Under the table, not declaring the extra income, I would guess the majority of facebook photographers, weekend amateurs, kijji photographers, craigslist photographers.

What kind of "real" experience in photography have you acquired that you feel it would help you in becoming a successful full time professional photographer?


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## wyogirl (Dec 31, 2013)

Laws vary somewhat by state.  My business license is as sole proprietor, I'm registered with the state with "doing business as" with my name and my web name.  Essentially I have no additional paperwork to do, I just have to report my income (however, I haven't turned profit so I am still in hobby range) and collect sales tax.  I pay 2 fees, one to the state and one to the city.

I only have a business license because I do occasional work for the schools.  I really have only brought in about $200 this year and have spent way more.


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## imagemaker46 (Dec 31, 2013)

I'm also sole proprietor, collect and pay tax on everything I earn.


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## KmH (Dec 31, 2013)

DreamPhotos said:


> I have a camera, limited lenses, lighting, backdrops, speedlight, editing software. I'm looking into a few new lenses, props, a new equipment bag to hold more. Nothing major, but I was just thinking it might be more of an advantage to buy it through the business, if I set one up.


Are you familiar with Florida's Use Tax:

FL Dept Rev - Florida Sales and Use Tax


> Use tax is due on the use or consumption of taxable goods or services when sales tax was not paid at the time of purchase. For example:
> 
> 
> If you buy a taxable item in Florida and didn't pay sales tax, you owe use tax.
> ...


Florida expects you to pay Use Tax on anything you have bought or buy online that did/does not include paying sales tax.


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## 12sndsgood (Dec 31, 2013)

I'm an LLC.  Most of my equipment was bought before my business started and I listed out all equipment and it was basically transferred over to the company and now depreciates each year.  That's basically my way of explaining things.  My accountant knows the legal side of things.


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## JoeW (Jan 3, 2014)

I've been a sole-proprietor, a C-Corp and an LLC.  I've got a father-in-law who used to be an S-corp in Florida.  I'm also not a lawyer or accountant.

1.  Be clear about why you're seeking to set up some kind of formal structure.  If it's to protect your assets (i.e.: you don't want to be sued), than incorporation is highly over-rated and your best answer is very good liability insurance.  I can't emphasize this enough--people sue corporations all the time and you can end up spending money in court.  For a one-person shop, being incorporated isn't some magic veil form legal suits--your best answer is a heft liability insurance program.  If your objective to reduce taxation or be able to deduct business expenses, than some of what's a factor is if you have a job on the side, want to be able to contribute to retirement, have employees (vs. sub-contractors) or a spouse with a full-time job and benefits.  It ain't rocket science but the answers to those questions determine which form of business is going to serve you best.  For instance, when I was a C-Corp, getting my unemployment insurance filed on-time was always a major hassle for me (even though I never had any employees).  Or having to document to some clients that I paid a "living wage" (a requirement for some state and local govt. clients).  The point is not to argue that one approach is better than the other, it's to say that each model has strengths and weaknesses and so you need to be clear about WHY you're doing this and your specific situation in order to choose wisely.

2.  Additionally, the LLC model varies somewhat with each state.  When I originally became an LLC, many states didn't recognize them.  Some had set them up with law partnerships in mind (so you were expected to actually be a partnership, not just one person).  So I wouldn't be surprised if the LLC details for Virginia vary from those in Florida.  All of the advice you get here (including from me) is nice...but you still need to go to a lawyer or accountant in Florida.


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## The_Traveler (Jan 3, 2014)

JoeW said:


> I've been a sole-proprietor, a C-Corp and an LLC.  I've got a father-in-law who used to be an S-corp in Florida.  I'm also not a lawyer or accountant.
> 
> 1.  Be clear about why you're seeking to set up some kind of formal structure.  If it's to protect your assets (i.e.: you don't want to be sued), than incorporation is highly over-rated and your best answer is very good liability insurance.  I can't emphasize this enough--people sue corporations all the time and you can end up spending money in court.  For a one-person shop, being incorporated isn't some magic veil form legal suits--your best answer is a heft liability insurance program.  If your objective to reduce taxation or be able to deduct business expenses, than some of what's a factor is if you have a job on the side, want to be able to contribute to retirement, have employees (vs. sub-contractors) or a spouse with a full-time job and benefits.  It ain't rocket science but the answers to those questions determine which form of business is going to serve you best.  For instance, when I was a C-Corp, getting my unemployment insurance filed on-time was always a major hassle for me (even though I never had any employees).  Or having to document to some clients that I paid a "living wage" (a requirement for some state and local govt. clients).  The point is not to argue that one approach is better than the other, it's to say that each model has strengths and weaknesses and so you need to be clear about WHY you're doing this and your specific situation in order to choose wisely.
> 
> 2.  Additionally, the LLC model varies somewhat with each state.  When I originally became an LLC, many states didn't recognize them.  Some had set them up with law partnerships in mind (so you were expected to actually be a partnership, not just one person).  So I wouldn't be surprised if the LLC details for Virginia vary from those in Florida.  All of the advice you get here (including from me) is nice...but you still need to go to a lawyer or accountant in Florida.



I must have wandered onto a different site; an actual informative, intelligent response with real experience.


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## The_Traveler (Jan 3, 2014)

I owned about 51% of an LLC with ~20 employees and my CEO (and I) got sued for an amazing amount of money - and my liability company said that I wasn't covered under the insurance because of a whole bunch of legal language.
After one full year of litigation, I finally reached a settlement with the company suing us.
My CEO disappeared leaving house, another business and family behind and a medium large court decision.

Without giving financial details, for me it was like getting out of a burning building by gnawing one's arm off.
Nothing really protects you from a vindictive but legal, pursuit


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## DreamPhotos (Jan 8, 2014)

Thank you for taking the time to offer your input. 

The_Traveler, that sounds like an awful experience! 

I will speak to our accountant and see which route he thinks is best. With our other businesses he has recommended LLC, so we will see what he says this time.


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## bratkinson (Jan 9, 2014)

DreamPhotos -

Other than the fun and games of setting up a business and playing bookkeeper, my biggest concern is that of your photography skills. 

A little more than a week ago, you first logged on and stated you haven't taken the time to learn your D3100 and will be doing some study of photography. In another post, you stated you were going to 'self teach' and wean yourself from using the Auto mode. This may sound extremely strong, but there's no other way to say it...I think you are a LONG way from becoming a professional, fee-charging photographer. Or, at least, for long enough to making enough to put food on the table. 

While there are/have been several fee-charging professional photographers on this forum with limited experience and gear, their pictures show they know how to use what they have and get consistent, good results. Your up-front statement of not learning how to use your D3100 implies you need a good deal of experience shooting with what you have before jumping off into self-employment.

My own experience? As a very well-experienced mainframe computer consultant, I jumped off on my own 27 years ago, formed an S-Corporation, had enough contacts to get started, had strong accounting experience (not degreed), and still flopped. Not enough contacts with projects to do and a couple of customers that never paid. The corporation 'survived' for 20 years, but mostly as me subcontracting to another consulting company that had good sales people but short on staff.


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