Go legit with business?

Discussion in 'General Shop Talk' started by roadkill, Aug 1, 2008.

  1. roadkill

    roadkill TPF Noob!

    Joined:
    Jan 26, 2008
    Messages:
    392
    Likes Received:
    1
    Location:
    Atlanta GA
    Can others edit my Photos:
    Photos OK to edit
    I get paid occasionally for simple shoots (portraits etc). I am considering getting a tax id number and making it a business (in the eyes of the gov.) Any ideas pro and con wise? I thought by doing so I could get a line ofcredit for the business and invest in some equipment as well as have the name legally trademarked as mine.
     
  2. Alpha

    Alpha Troll Extraordinaire

    Joined:
    Mar 15, 2005
    Messages:
    5,454
    Likes Received:
    41
    Location:
    San Francisco
    Can others edit my Photos:
    Photos NOT OK to edit
    I would start out the simplest way possible. You'll create a lot of possibly unnecessary hassle setting up a proper business.

    The easiest way to get started is to register yourself as a sole proprietor, which will allow you to use your SS# as an EIN. Then use a PayPal account for credit card transactions.

    One of the most common mistakes people make in starting a business is trying to write everything off as a business expense. Unless you have a compelling need for a business account at a commercial bank I would stay the hell away. Foot the bill with your own money until you develop a serious, legitimate need to operate like a full business. Tax write-offs and the like are facts of life for the business side of photography. But ask any venture capitalist or business accountant and they'll tell you that trying to write everything off when you don't need to will seriously stifle the growth of any business.

    Just my two cents.
     
  3. visualpoetry

    visualpoetry TPF Noob!

    Joined:
    Apr 29, 2008
    Messages:
    259
    Likes Received:
    1
    Location:
    Michigan
    Can others edit my Photos:
    Photos NOT OK to edit
    My business has resently taken off and I am in the same boat.. wondering how to make it official. I've leared a few things. I filed for a DBA (doing business as) just this week. I debated filing for an LLC. If you don't know, the difference is that if your company goes bankrupt or you get sued, the LLC takes the fall.. not you. Your credit is still crispy clean. So, in all reality.. an LLC is best. BUT, it costs more (obviously) than a DBA does. My DBA was only $124 from legalzoom.com. I have decided against getting a tax ID number. I can't imagine the govt taking half my earnings! At least not yet. I'd rather work low key and enjoy the entire paycheck.

    If you need a more detailed answer, it may be worth sitting down with an attorney over. I called into a firm and asked questions and that's how I learned about an LLC.
     
  4. Alpha

    Alpha Troll Extraordinaire

    Joined:
    Mar 15, 2005
    Messages:
    5,454
    Likes Received:
    41
    Location:
    San Francisco
    Can others edit my Photos:
    Photos NOT OK to edit
    Don't count on being able to get away with taking clients under the table. As soon as they start deducting your shoots from their taxes, you're an audit waiting to happen.
     
  5. roadkill

    roadkill TPF Noob!

    Joined:
    Jan 26, 2008
    Messages:
    392
    Likes Received:
    1
    Location:
    Atlanta GA
    Can others edit my Photos:
    Photos OK to edit
    thanks. never heard of a dba. dont know if it applies here in ga but I'll look into it.
     
  6. visualpoetry

    visualpoetry TPF Noob!

    Joined:
    Apr 29, 2008
    Messages:
    259
    Likes Received:
    1
    Location:
    Michigan
    Can others edit my Photos:
    Photos NOT OK to edit
    They can write off what they pay me for wedding photos?? How so? I could understand if they were a company or group.. but not for weddings. I could be wrong.. please educate me.
     
  7. Alpha

    Alpha Troll Extraordinaire

    Joined:
    Mar 15, 2005
    Messages:
    5,454
    Likes Received:
    41
    Location:
    San Francisco
    Can others edit my Photos:
    Photos NOT OK to edit
    I'm not really comfortable giving advice on tax evasion, especially not in public. It's not exactly a forte of mine.

    But I will say the following. If you register a business, not paying taxes on business income is a stupid move.
     
  8. maytay20

    maytay20 TPF Noob!

    Joined:
    Apr 30, 2008
    Messages:
    316
    Likes Received:
    0
    Location:
    Burton, MI
    Can others edit my Photos:
    Photos OK to edit
    Just be aware doing it this way also puts 100% of the liability on YOU. If you have a LLC or a C corp and some one sues you for the something your business may be gone but you personally are still ok. Meaning a sole proprietor you get sued anything of value you own is fare game. I just filed my LLC papers for $50. through my state and I know if someone sued me they could get to my business items but not to my personal. If I were you go to your local library and read up on LLC's and C Corps. Also The rich dad series is a huge help on this. And yes the minute the IRS or state finds out you are doing this under the table they will come knocking.
     
  9. sperry

    sperry TPF Noob!

    Joined:
    Nov 14, 2007
    Messages:
    25
    Likes Received:
    0
    Location:
    Richmond VA USA
    Can others edit my Photos:
    Photos NOT OK to edit
    i hired a local lawyer to take care of everything for setting up my S corp. it was a little more expensive than doing it online, but i like supporting local small businesses. i feel much better knowing everything is legit and businesslike from the ground up.
     
  10. Alpha

    Alpha Troll Extraordinaire

    Joined:
    Mar 15, 2005
    Messages:
    5,454
    Likes Received:
    41
    Location:
    San Francisco
    Can others edit my Photos:
    Photos NOT OK to edit
    I don't really see the benefit of the s-corp over LLC for such a small venture. Both allow you to avoid the double tax, no?
     
  11. sperry

    sperry TPF Noob!

    Joined:
    Nov 14, 2007
    Messages:
    25
    Likes Received:
    0
    Location:
    Richmond VA USA
    Can others edit my Photos:
    Photos NOT OK to edit
    yes.

    they both allow 'pass-thru' income for the owners. hence, avoiding being double-taxed. but if you look a little closer, that is not the only benefit you will see.

    in general an S corp is a little more complicated and restrictive in how profits are distributed to it's owners. however, according to my lawyer this is the preferred set up as an S corp allows more flexibility in employment tax savings based on how you pay yourself as an owner-employee.

    basically, you can pay yourself a [reasonable] salary as an employee and be taxed on it. then, you have the flexibility to give yourself an additional distribution that is not taxed with employment tax.

    a bit more paperwork and guidelines to follow, but not without benefit.
     
  12. roadkill

    roadkill TPF Noob!

    Joined:
    Jan 26, 2008
    Messages:
    392
    Likes Received:
    1
    Location:
    Atlanta GA
    Can others edit my Photos:
    Photos OK to edit
    LLC, C corp, S corp... ok. So would there be any benefit in a sole proprietership? Less liability makes sense to me. Guess I'll try to find an accountant or a lawyer.
     

Share This Page

Search tags for this page

how to go legit in a business

,
legalzoom
,
under the table to legit business