Is it necessary to really have a business licence?

[astroNikon]

In Michigan, as I'm sure other states, depending upon how you operate can help in making a decision.

You can run as a "Hobby". Michigan has about 7 line items that you must qualify to be a hobby.
In essense not taking any money for income is a big one (not writing things off in taxes, etc).
The IRS and state normally identifies a profit amount as a business, I think it's $800 per year.

You can get a simple Sole Proprietorship / DBA (Doing Business As) from the County. This is something usually under $25. Then you are officially a business. But as a DBA you are also totally liable both personally and professionally. But you can write off a new computer, software, camera gear, space in the house to operate, marketing costs, marketing material etc etc etc

Then you can move up to a Incorporation or a LLC. This limits your liability.
The Insurance also can help limit your liability or loss (theft)
and so on and so forth

Also your DBA name is only a county name The next county could have a photog DBA with the same name. As you move up to incorporation and LLC then there is a wider state search for similar names.

FYI that State definition of a "Hobby" is like a business hobby. Not a "hobby" where we buy a camera and take pictures of everything that we enjoy and have fun doing.

If you start charging people Sales Tax and pocket it, then the state finds out about it. Well, that could be a problem.
If you do an odd job here or there and don't charge alot I can't see how it hurts, but refer to that $800 rule.

 

[nycphotography]

most people here dont want to hear any excuses for committing copyright infringement, or image theft...why are excuses for tax evasion so different?

Just because most people don't want to hear real world circumstances that invalidate their "black or white but never gray" view of the world doesn't in any way change the reality of the real world circumstances. Copyright infringement is a great poster child for that fact, btw.

But staying on topic... having first hand experience dealing with this crap in the past... it does suck and it does leave an aftertaste.

Also, not every state collects sales tax on "service" or "labor". Or at least they didn't used to.

 

[pixmedic]

most people here dont want to hear any excuses for committing copyright infringement, or image theft...why are excuses for tax evasion so different?

Just because most people don't want to hear real world circumstances that invalidate their "black or white but never gray" view of the world doesn't in any way change the reality of the real world circumstances. Copyright infringement is a great poster child for that fact, btw.

But staying on topic... having first hand experience dealing with this crap in the past... it does suck and it does leave an aftertaste.

Also, not every state collects sales tax on "service" or "labor". Or at least they didn't used to.

Florida does. They consider service as a "product" and they are like starving, rabid animals about it.
if the Florida DOR makes a mistake, you just have to deal with it. if YOU make a mistake, you have to pay their fines.
sometimes, THEY make a mistake, YOU have to pay the fines, and then HOPE you can convince them it WAS their fault and get a refund.
(been there, done that) they typically wont even deal with that issue until you have paid the fine first.

To answer IM46's question though. yes. it IS legally necessary to have a business license (or tax ID, DBA #, or whatever your municipality requires) if you are operating as a business and/or making money with it to whatever monetary degree your particular municipality has set their limit to.

 

[nycphotography]

most people here dont want to hear any excuses for committing copyright infringement, or image theft...why are excuses for tax evasion so different?

Just because most people don't want to hear real world circumstances that invalidate their "black or white but never gray" view of the world doesn't in any way change the reality of the real world circumstances. Copyright infringement is a great poster child for that fact, btw.

But staying on topic... having first hand experience dealing with this crap in the past... it does suck and it does leave an aftertaste.

Also, not every state collects sales tax on "service" or "labor". Or at least they didn't used to.

Florida does. They consider service as a "product" and they are like starving, rabid animals about it.
if the Florida DOR makes a mistake, you just have to deal with it. if YOU make a mistake, you have to pay their fines.
sometimes, THEY make a mistake, YOU have to pay the fines, and then HOPE you can convince them it WAS their fault and get a refund.
(been there, done that) they typically wont even deal with that issue until you have paid the fine first.

To answer IM46's question though. yes. it IS legally necessary to have a business license (or tax ID, DBA #, or whatever your municipality requires) if you are operating as a business and/or making money with it to whatever monetary degree your particular municipality has set their limit to.

I think we're in agreement here.

Just an "oh by the way"... if you are starting out... see if anyone you know is willing to "front door" for you, and pay you through as "contact labor".

IE, if they're willing to take a 20% scalp, charge the client the $1000, give you $800 and a 1099, and pocket the $200 for dealing with the paperwork, sales tax, and other crap.

That's how half the IT jobs work, so I imagine it would work here too.

 

[Derrel]

MY state has an on-line web site and a nifty "wizard" page that potential business owners can use to determine what license, if ANY, is needed, for various types of businesses and services. We have NO general sales tax on anything. So, there's no need to collect sales tax from any buyer of anything. Which is pretty handy, and eliminates a whole separate category of headache that most people must deal with.

License Directory - Oregon Licenses, Permits and Registrations

 

[amolitor]

If the hippies and the rednecks can agree on anything, it's "government out of my life". Or you can just say "Oregon".

 

[MSnowy]

I put out a "Yard Sale" sign when I sell prints. Everyone knows that people who have yard sales never pay taxes. Plus "cash is king" around here.

 

[Derrel]

If the hippies and the rednecks can agree on anything, it's "government out of my life". Or you can just say "Oregon".

My ex-wife used to work for the Oregon Economic Development Division, back in the early days of the division. They did a lot of opinion polling, which confirmed what S.N.O.B.s* already knew...that natives to this area are very tolerant of what other people do, because they share a very high degree of agreement about one fundamental idea: that government must stay OUT of the personal lives of the citizenry. But then, I know you lived in Corvallis for a while, and Deadwood too, and know this from experience. And yes, both hippies and rednecks alike actually state in polling that government needs to keep the hell out of peoples' bedrooms, basements, barns, attics, living rooms, yurts, condos, apartments, and so on.

* S.N.O.B. Society of Native Oregon Born, from a famous bumper sticker made popular during the California invasion.

 

[amolitor]

Yep! I was being amusing (I hope) but accurate! I am always pleased when I see that OR has remained to a degree the same. It was a pretty awesome place 25 years ago.

 

[imagemaker46]

So the simple answer to my question is no. All you need is a camera.

 

[vintagesnaps]

Seems to depend to some extent on your state; in mine you have to make a certain amount of extra income per year to have to pay taxes on it and there aren't licenses for doing work as a photographer AFAIK. I don't know how it works for someone who is running their own full time photography business (other local photographers I know do it part time).

I imagine there are plenty of people selling items online and having yard sales etc. and not filing or paying taxes. I would think someone running a business fulltime, or part time if you're making enough money at it, would need to file and pay taxes especially if accepting checks, credit cards, etc. (especially if work was done for a business and they cut you a check it would show up when they file, so I imagine it could bite ya in the ass if you didn't report receiving it). I would rather pay taxes at the time than have to pay the tax as well as penalties later.

I've always had insurance thru my fulltime job. If I was going to do something like portraits where I'd be responsible for choosing the location (possibly outdoors), setting up the shots, etc. I'd probably look into insurance to cover anything that might happen where I could be held responsible.

I had a couple of photos accepted into juried exhibits earlier this year and I just got another accepted - if this one sells it probably would still be under the amount necessary to pay taxes on it (unless I price it awfully high!). At some point I'll need to see if I'm at the level where I need to report the additional income (chances are that won't happen by the end of the year).

 

[vintagesnaps]

Simple answer?? Don't know if there is one. Is it necessary to be registered as a business? Seems to depend... on where you live, how much you make, what type of photography work you're doing and what expenses you have, etc. etc.

 

[JacaRanda]

I agree that Oregon peeps are really cool. At least my experience in Portland, Ashland, and even Medford.

There are also some differences if you are selling tangible items or not. Buying software in the box versus downloading it.

 

[Rwsphotos]

Simple answer there is none. Every state, county and city have diffrent rules. It is best to see what your area specifically requires. Is it necessary? If you want to look and take it seriously Yes. If you prefer to fly by the seat if your pants and hope you go unnoticed I say good luck. It will cost you more if your caught than to do things the way your region says to. Going on the assumption you won't because your quiet about it is taking a risk. Qestion then becomes is that a risk your bussiness can cash? Me not taking that chance.

 

[imagemaker46]

Simple answer?? Don't know if there is one. Is it necessary to be registered as a business? Seems to depend... on where you live, how much you make, what type of photography work you're doing and what expenses you have, etc. etc.

How many people that have facebook based photo businesses, or work from craigs list, will have registered anything? Are people that go out and buy an entry based digi cam, that play on weekends shooting weddings, portraits, babies, sports, on a part time basis going to bother to tell any government officials they are taking and selling pictures for cash? I have my doubts that many have any kind of registration at all anymore. It's too easy not to.

The advantages to having a registered business are obvious, but for many part time professionals it probably isn't worth the paperwork..