How to report money given to clients?

Discussion in 'General Shop Talk' started by Restomage, Mar 28, 2014.

  1. Restomage

    Restomage No longer a newbie, moving up!

    Joined:
    Jul 3, 2009
    Messages:
    517
    Likes Received:
    25
    Location:
    Fort Collins, CO
    Can others edit my Photos:
    Photos NOT OK to edit
    Business/tax related question here everyone. I'm starting to look into using high school senior reps to help me acquire more business for senior portraiture. For those who are unfamiliar with what a Senior Rep is, it's someone who represents your photography at their high school. In exchange you provide them with a free photoshoot (usually). As part of my incentive program, I was thinking that for every client my senior rep refers me to, I would pay them $15. I know there are other photographers who have done this in the past.

    My question is how I would I report this to IRS, or do I even need to? They're not an employee or even an independent contractor. Basically I just want to make sure I'm doing everything I need to do to not get in trouble with Uncle Sam. Thanks!


     
  2. 71M

    71M TPF Noob!

    Joined:
    Feb 10, 2014
    Messages:
    416
    Likes Received:
    61
    imo it's a business cost: it's a fee, a commission. They invoice you and you pay it, and it goes in your books.
     
  3. ronlane

    ronlane What's next? Supporting Member

    Joined:
    Aug 3, 2012
    Messages:
    10,016
    Likes Received:
    4,595
    Location:
    Mustang Oklahoma
    Can others edit my Photos:
    Photos OK to edit
    This would be a question best posed to an Accountant but I would agree that it is a possible commission or part of your marketing funds.
     
  4. KmH

    KmH In memoriam Supporting Member

    Joined:
    Apr 9, 2009
    Messages:
    41,401
    Likes Received:
    5,697
    Location:
    Iowa
    Can others edit my Photos:
    Photos OK to edit
    Like legal questions, an online photography forum is a poor place to be seeking definitive tax advice.
    There are state tax laws that also have to considered.

    A couple of issues when using high school seniors to promote your business.
    1. Unless legally emancipated people under 18 years old do not have sufficient legal standing to sign a contract.
    2. Paying for referrals in the form of a free photo shoot and $15 per subsequent referrals likely does in fact make your senior reps self-employed independent contractors. You may also be required to provide each senior rep with 1099 forms at years end.
    Independent Contractor Defined
     
  5. IronMaskDuval

    IronMaskDuval Been spending a lot of time on here!

    Joined:
    Mar 9, 2014
    Messages:
    1,396
    Likes Received:
    506
    Location:
    United States
    Can others edit my Photos:
    Photos OK to edit
    I don't think you need an accountant for this question. If it's just a few bucks, I would expense it as a marketing cost. Obviously, if you have one that is bank rolling for you by bringing in all the seniors, you should 1099 that individual.
     
    • Like Like x 1
  6. Restomage

    Restomage No longer a newbie, moving up!

    Joined:
    Jul 3, 2009
    Messages:
    517
    Likes Received:
    25
    Location:
    Fort Collins, CO
    Can others edit my Photos:
    Photos NOT OK to edit
    Thanks for the advice so far.
     
  7. vintagesnaps

    vintagesnaps Been spending a lot of time on here!

    Joined:
    Jan 13, 2013
    Messages:
    8,661
    Likes Received:
    2,746
    Location:
    US
    Can others edit my Photos:
    Photos NOT OK to edit
    I would think you'd need to go thru the school system - how are you planning to find/contact these potential reps? In my experience anything going out to students needs to go thru the school or at least thru the PTA. I don't know if students would be allowed to engage in promoting your business on school property or during school hours. And with them being under 18 I think you'll need parent permission, at least in my area that's necessary for photo releases, to participate in school sports/events, etc.

    I think it varies by state as to how much you can make before it's enough to report etc.; try looking up the secretary of state website for your state and look at the IRS.gov site and find out what you need to do.
     
    • Like Like x 1
  8. vfotog

    vfotog No longer a newbie, moving up!

    Joined:
    Feb 21, 2011
    Messages:
    265
    Likes Received:
    61
    Location:
    SoCal
    Can others edit my Photos:
    Photos NOT OK to edit
    this part is actually very easy. if you are paying someone, give them a W-9 to fill out. you can get the form at the IRS site. you need to know their tax status. unless they are a corporation, you need to report your payments to them to the IRS if they total $600 or above in the course of the year. This is a federal law and doesn't vary from state to state. One payment or a hundred, if it tops that reporting threshold, you need to report it. even if it's a company, they may not be a corp. Think of all those news stories on "nanny gate"... people not reporting payments to nannies, gardeners, maids, photo assistants.... keep track of your payments and save yourself from fines...
     
  9. CMfromIL

    CMfromIL No longer a newbie, moving up!

    Joined:
    Oct 11, 2011
    Messages:
    710
    Likes Received:
    132
    Location:
    Illinois
    Can others edit my Photos:
    Photos OK to edit


    Just do a 1099 for them, and document each payment. Even better, make sure you pay them by check. Never cash. And as a contractor, they are responsible for their own payments for SS tax, Medicare Tax, and income tax. As a bonus, because this is an expense you should be able to deduct the expense. Make sure of course you talk with a CPA or similar. This is an internet forum after all.
     

Share This Page