Looking for the RIGHT business model...

[iskoos]

I have been involved with photographly for years but never took it to a business level. I would like to start it slowly as a side job and see where it goes.
I am looking for the right business type for the legal aspect of the work incase I start getting paid.
I will mostly be doing property/real estate/construction photography but I enjoy all kinds of photography and if I get a chance to do a portrait photgraphy, I would try that as well...
Just to make those overly sensitive wedding guys happy, I would not consider doing a wedding photography unless I am asked by a friend. And even in that case, I don't think I would seek to get paid.

So what type of business type should I be looking for?

Should this be a sole proprietorship, or LLC or even nothing? I was told that this could just be done by not setting up any business at all. In case I get paid for any work, the income can simply be claimed on individual tax return as other income. Of course then there will be no liability protection and down the road there might be negative consequences.
Anyways, I am not trying to defend one way to another here. I am just seeking advice.

What sort of business type would be the most common among photographers?

Thanks

 

[KmH]

What you are asking for is not a business model but a business type.

The business model for property/real estate/construction photography is commercial.


As far as business type, go with a sole proprietorship to start. When your revenue gets up around $50,000 to $80,000 a year, switch to a LLC. When you hit $250,000 a year start looking into becoming a sub-chapter S corporation.

Business licensing/registration requirements vary from city to city. Check with your City Clerks office.

Florida has sales taxes and use fees.

If the state finds out you have been selling taxable goods and services, but have not been collecting and forwarding their sales tax money, they will be pissed and will not hesitate to add severe fines and penalties to the back sales taxes they demand from you.

As a sole proprietor you can report your business income on your personal tax return. It would be very wise to consult with a qualified accountant before you do. The IRS has some interesting rules about the differences between their definitions of a "hobby" and a "business", if you are wanting to deduct "business expenses" to reduce your owed personal income taxes.

Some get by with ignoring all that and "fly under the radar". Some get caught.

 

[Antithesis]

From what I know, getting an LLC is a pretty simple process. You have to register your business name, get a business license and just choose 'Limited Liability Corporation' as your business type and fill out the necessary paperwork. That way, if you get sued for something totally random related to a shoot you did for someone, they can't take your personal assets. Otherwise, you could get really screwed and lose everything. I'm sure there is more to it, but that's about as far as I read.

 

[iskoos]

Thank you KmH. Per your recommendations, all I need is sole proprietorship and I guess I will have to stick with it for a long time because I never expect to hit those numbers any time soon

I will check the guidelines for sole proprietorship. All I want at this point is to be able to have something flexible in my hands that I can use to collect money, deduct some business expenses (if needed) or just do nothing.
I just don't want to prepare year-end reports or file pages of tax returns or pay hundreds of dollars fees each year for a business that brings only a few hundred bucks...

I hope I can explain where I am coming from.

P.S. "Business model" changed to "business type"

 

[iskoos]

Antithesis, you are right. I did some research online and realized that sole proprietorship doesn't offer personal asset protection as LLC does. I am pretty sure there would be way to get some liability insirance but it didn't seem it is pretty straight forward as LLC's protection. And it looks like LLCs are very easy to set up.
I don't know for sure; I will do some more research but LLC might be a better option for me if it is that simple to set up...

 

[KmH]

From what I know, getting an LLC is a pretty simple process. You have to register your business name, get a business license and just choose 'Limited Liability Corporation' as your business type and fill out the necessary paperwork. That way, if you get sued for something totally random related to a shoot you did for someone, they can't take your personal assets. Otherwise, you could get really screwed and lose everything. I'm sure there is more to it, but that's about as far as I read.

Each state has it's own rules for forming an LLC.

 

[KmH]

All I want at this point is to be able to have something flexible in my hands that I can use to collect money, deduct some business expenses (if needed) or just do nothing.

This is where a lot of people wind up butting heads with the IRS. If you are not actively attempting to make a profit they will reclassify your business as a hobby.

Don't forget to get together with a qualified accountant.