Advantages of getting a business license?

IggySpringer · Sep 16, 2013

So I've been in photography a few years now. Recently moved to a bigger city and business really started to PICK UP for me. I was told I should go get a business license now that I'm not just freelancing anymore. I'm sure most people don't get a license. So my question is, what are the advantages of getting a business license?

sm4him · Sep 17, 2013

We just went through a four-page thread about that very thing. Here you go--grab a cup of coffee, click the link, and read away!

runnah · Sep 17, 2013

I show mine at parties, it's a real hit.

SCraig · Sep 17, 2013

There was a post here right after I joined from a new member who had recently gotten a letter from the city in which she lived. I don't recall where it was, she made a few posts in this one topic and then was gone. The bottom line was the city had gotten wind of the fact that she was running an unlicensed business and, in partnership with the IRS, slammed her for back-taxes and fines to the tune of about $25k (maybe less, it's been a couple of years and I don't remember for certain). She said she hadn't even MADE that much, didn't have the money, was a single mom, and didn't know what she was going to do. Is it really worth the risk?

rexbobcat · Sep 17, 2013

The advantage is that you don't go to jail for running an illegal business/evading taxes

Well, at least it's that way in my city. Yours may not require a business license...which would be kinda weird but I'm sure it's like that somewhere in the world.

KmH · Sep 17, 2013

SCraig said:
There was a post here right after I joined from a new member who had recently gotten a letter from the city in which she lived. I don't recall where it was, she made a few posts in this one topic and then was gone. The bottom line was the city had gotten wind of the fact that she was running an unlicensed business and, in partnership with the IRS, slammed her for back-taxes and fines to the tune of about $25k (maybe less, it's been a couple of years and I don't remember for certain). She said she hadn't even MADE that much, didn't have the money, was a single mom, and didn't know what she was going to do. Is it really worth the risk?

I remember that. I wish I had kept a link to the tread.

astroNikon · Sep 17, 2013

YUp, if the city notices "traffic" into your house they investigate. Then the IRS "estimates" your income. Then you have to pony up on all your financials to counter that and pay fines, etc. even to the city if you are running an illegal business that has a lot of foot traffic.

If you are making income then Check with local regulations
and at least get a DBA from the county.

SCraig · Sep 17, 2013

KmH said:
SCraig said:

There was a post here right after I joined from a new member who had recently gotten a letter from the city in which she lived. I don't recall where it was, she made a few posts in this one topic and then was gone. The bottom line was the city had gotten wind of the fact that she was running an unlicensed business and, in partnership with the IRS, slammed her for back-taxes and fines to the tune of about $25k (maybe less, it's been a couple of years and I don't remember for certain). She said she hadn't even MADE that much, didn't have the money, was a single mom, and didn't know what she was going to do. Is it really worth the risk?

Click to expand...

I remember that. I wish I had kept a link to the tread.

Me to. It's a good lesson for those who think they won't get caught. This one did and probably wound up paying dearly for it.

sm4him · Sep 17, 2013

SCraig said:
There was a post here right after I joined from a new member who had recently gotten a letter from the city in which she lived. I don't recall where it was, she made a few posts in this one topic and then was gone. The bottom line was the city had gotten wind of the fact that she was running an unlicensed business and, in partnership with the IRS, slammed her for back-taxes and fines to the tune of about $25k (maybe less, it's been a couple of years and I don't remember for certain). She said she hadn't even MADE that much, didn't have the money, was a single mom, and didn't know what she was going to do. Is it really worth the risk?

KmH said:
SCraig said:

There was a post here right after I joined from a new member who had recently gotten a letter from the city in which she lived. I don't recall where it was, she made a few posts in this one topic and then was gone. The bottom line was the city had gotten wind of the fact that she was running an unlicensed business and, in partnership with the IRS, slammed her for back-taxes and fines to the tune of about $25k (maybe less, it's been a couple of years and I don't remember for certain). She said she hadn't even MADE that much, didn't have the money, was a single mom, and didn't know what she was going to do. Is it really worth the risk?

Click to expand...

I remember that. I wish I had kept a link to the tread.

Oh, right. I remember that too. And, because I already wasted half my day going to a completely useless mandatory meeting, I decided to waste a few more minutes, so here ya go: http://www.thephotoforum.com/forum/general-shop-talk/262313-i-think-i-m-trouble-please-help.html

KmH · Sep 17, 2013

FWIW.

A post in that thread implies an individual's would be protected from tax liability if they had a business registered/licensed as an LLC.

I doon thin so Babalouie.
As far as I'm aware, a single member LLC doesn't protect an individual or the individual's assets any more than a Sole Proprietorship does.

SCraig · Sep 17, 2013

sm4him said:
Oh, right. I remember that too. And, because I already wasted half my day going to a completely useless mandatory meeting, I decided to waste a few more minutes, so here ya go: http://www.thephotoforum.com/forum/general-shop-talk/262313-i-think-i-m-trouble-please-help.html

That's it! I have no idea where I got that $25k fine though since it was never mentioned. Sorry, my bad. Guess I just dreamed it or something.

astroNikon · Sep 17, 2013

Cities are usually initially concerned with zoning ordinances. Such as if you start a camera shop out of your house basement/apartment in a residential zoned area versus business zoned. And then get people constantly parking on the street, going in and out of the house. At best an officer will ask you about it, or they may think drugs dependent upon the characters going in/out.

But if you have a traffic light/friendly small business the city may not even notice. Some cities charge taxes on equipment/assets (at least for large businesses in some cities). So a city has alot of reason$ to find out a business is operating for taxes and zoning issues.

If you run it as a IRS defined Hobby, that is one thing but if you are taking profitable income then that's different.
Business or Hobby? Answer Has Implications for Deductions

But the rules are quite easy. If you are providing yourself income that you depend on from it, then it's a business and one should get at least a DBA. After all, you could write off all your gear, and some room in the house/apartment, mileage to/from shoots, etc.