Business or Hobby?

imagemaker46 · Jul 28, 2013

Do the shoot, enjoy the money, pay or don't pay the taxes, your choice, if it's a good chunk of money you're better off adding it to your income, if it's not a lot, take a chance. It seems to be what most professional hobby photographers are doing.

DiskoJoe · Jul 30, 2013

lissthis said:
Hey guys, so I know asking this question probably means I am not ready for a business... I have been doing more shoots lately but they are still pretty casual. I am now "hired" on to do a photo shoot for my company (headshots, buildings, etc), but I don't have a business license. Do I need to get one? While I should be making a good chunk off of this, I have never profited before because I am buying new camera equipment. I am not afraid of what comes along with a business, and am interested in businesses (accounting major), but I don't want to end up losing a lot money because I have a business. This is also something that I do more as I can since I work full time too. [Sorry I'm so scatter-brained!]

Thanks!

You should take some entrepreneurship courses if offered at your school.

Browncoat · Aug 13, 2014

Never ask about starting a business on an internet forum. You get a lot of armchair lawyer and CPA responses that have little to no value. There are some general rules of thumb, but your particular situation and location have a major part in this.

Ask a professional. Talk to a business lawyer (most will consult for free) and/or a CPA where you live.

JacaRanda · Aug 13, 2014

The $600 figure that many like to toss around I believe is now $400. If you really want to find out if you need to file you may enter the information here IRS.gov 503 Error Page.

Tailgunner · Aug 13, 2014

tirediron said:
Is it not the case that a PORTION of the item's value can be written off? For instance, if I buy a new D4, but I only make 25% of my income from photography, than I will only be allowed to claim 25% of the value as a write-off?

Who would know? I mean who would suspect a photography business spending $6,000 on a camera body that would primary be used for personal usage? It's not like writing off gears equates to free gear, you still pay for it and deduct it from your taxes. You could still end up owing money at the end of the year.

Anyhow, It's complicated. I can't speak for Canada but I believe we can write the whole camera off in one shot or you can write off an annual depreciation for up to a certain amount of years...I believe 5yrs? I haven't actually sat down with my CPA to discuss this subject but I'm holding on to every receipt.

As for the OP, Photography makes for a great side job. The most basic thing you can do I guess is to get a DBA (Doing Business As) which will use your SSN for a tax ID number. Then I would highly recommend anyone photographing groups, people, or events to take out insurance.

KmH · Aug 13, 2014

The thread is over a year old and was dug up by a spammer who has since been banned, but ....
Check what is required by your city and state governments.
As far as US Federal :

Business or Hobby? Answer Has Implications for Deductions

JoeW · Aug 13, 2014

lissthis said:
Hey guys, so I know asking this question probably means I am not ready for a business... I have been doing more shoots lately but they are still pretty casual. I am now "hired" on to do a photo shoot for my company (headshots, buildings, etc), but I don't have a business license. Do I need to get one? While I should be making a good chunk off of this, I have never profited before because I am buying new camera equipment. I am not afraid of what comes along with a business, and am interested in businesses (accounting major), but I don't want to end up losing a lot money because I have a business. This is also something that I do more as I can since I work full time too. [Sorry I'm so scatter-brained!]

Thanks!

Not to overcomplicate this but you (and a couple of the posts) are mixing a couple of issues.

1. Do you need to formally be a business in order to do work for another business? No. In fact, you can operate as a sole-proprietorship in most cases. So for taxes purposes with the IRS, this will likely be the workable approach.
2. What does your employer require? You see, I've operated as a one-person business (sole proprietor, LLC, C-Corp, S-Corp) at various times in my life. And bigger businesses often times will require you to sign a contract, provide proof of insurance, have your "chief financial officer" sign the forms, sign a NDA, and a host of other nonsense. Not all companies. But yeah, stuff like this does happen.
3. Then there's the issue of what your locality expects and requires of you. For instance, they may require that you register as a business (or your state requires you to get a license as a corporation) depending upon the amount of money involved, who the company is, etc. Let me give you an example: I did some work for a local City. They required me to file a quarterly "proof of a working wage" form. I have no (and have never had any) employees. So I'd fill the form out indicating I had no employees, send it in. They'd send it back to request details, I'd explain and then we'd repeat it all the next quarter.

As another post indicated, the State (or County you're in) should have an office for small business startups. Or you can contact SCORE (US Dept. of Commerce, retired business executives who offer advice for free...it's a great program). And explain your situation and have them tell you if there is anything you need to do.

I am not a resident of Alaska nor am I an accountant or tax law specialist. But I bet that unless you're making an obscene amount of money for this gig, there is nothing you need to do (other than to indicate it on your taxes). Effectively you'd be a contractor, your employer could pay you and send you a 1099 or just include it as supplemental income on your paycheck.

Tailgunner · Aug 13, 2014

KmH said:
The thread is over a year old and was dug up by a spammer who has since been banned, but ....
Check what is required by your city ans state gevernments.
As far as US Federal :

Business or Hobby? Answer Has Implications for Deductions

Dangit.

Browncoat · Aug 13, 2014

Ugh. We got necro-trolled by a spammer.

Scoody · Aug 13, 2014

Well, I went from hobbyist to professional when I wadded up my Yamaha R6 on the side of a car that turned left in front of me. After several surgeries I was given good news and bad news. They were able to save my leg was the good news. The condition of my leg would for ever be a detriment in working my trade as a mechanic. I started shooting for money. Got a DBA license and put my name out there. Business has been growing and this past Saturday was contacted to do the local Freshman, JV and Varsity Football Team and individual photos. 212 kids. Most of sons of very voracious sports parents. I have been taking orders all week and almost all of them are for my most expensive package and many want extra products. Very wise decision to go pro.

Santa_Claus · Aug 23, 2014

Just wanted to add that if you are going to make money from your photography you will probably want to strive to be considered a pro in the eyes of the IRS. Primarily because as a hobbyist you cannot deduct your photography expenses. To be considered a pro the main hurdle is you need to demonstrate a "profit-motive". I have heard that you don't want to show a loss more than 2 out of 5 years, but things like economic downturns can affect such "rulings". Of course, you have to have gross income of over $600 a year to even show up. It is highly recommended that you segregate your business finances from your personal, so get a DBA or business license and open a business account. And as has been mentioned above, if you deliver anything tangible (even a thumb drive) you need to collect sales tax. I hand that part off to SmugMug. Finally, I will agree with the above that almost every expense that you can legitimately claim benefits your business can be written-off. The big exceptions are gas (you take a milage deduction, instead), clothing that _could_ be worn off set, most dry-cleaning, and "personal care" expenses like hair, makeup, manicures, etc. Hiring a hair and makeup artist to come on set, however, IS deductible! But if you pay them more than $600 be sure to get a 1099 from them! Arghhhhhh.....