To Register or Not to Register?


TPF Noob!
Feb 8, 2012
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El Cerrito, CA
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Hello everyone,

Just trying to weigh the options of registering a photography business or not.

What are your pros and cons to this? Do the pros outweigh the cons?

Thank you!

Ask the tax men. They love fresh meat. If you get caught be prepared for the butt hurt.
Well... one can still sell services without being a merchant. And one can still report the income without being a merchant.

This is especially true in the digital age since often times no merchandise is sold.

One of my professors told us about a guy in Tampa who had a great photography/hobby/side business for years. It was thriving.

That is until he was charged with felony tax evasion and a host of other neat federal and local charges.

One of my upcoming photography courses is "Business Essentials for Photographers", you may want to entertain the idea of attending such.
Would you like to receive a free criminal record? Then by all means, do not register your business in accordance with local regulations.
Other than not having a criminal record (haha)... What are the pros and cons that you've noticed?
The IRS is not out to make us all honest. They operate like any other business; they have a budget and want as much return as possible.

State and local ordinances are different.

I can only speak of Illinois law and that of Kankakee County and City of Kankakee.

If you are not selling merchandise (albums, prints, frames, etc.), no tangible product, then you are selling a service. For instance: I'm a semi-pro musician. I work a music director at a church. I do report the income and I do pay taxes on that. But I have no other tax liabilities for this.

I'm a bonafide photographer. It's my primary source of income. On sales where I complete a job without prints, framing, photo processing, etc., I need only pay tax on the income. The same Schedule C I file with the IRS goes to the state of Illinois.

As for Retailers Occupational Tax (Illinois sales tax), I pay very little as most of my work no longer includes merchandise.

This stuff isn't all that tough. It scares us because the state, even when they're wrong, has seemingly unlimited measures to hurt us. You really have to be a blatant scofflaw before anything too terrible occurs. First, they want anything owed to them. It's only when they feel they're owed and you don't pay that life gets pretty rough.

The first thing you need to do is read up on the 'Hobby for Profit' laws because you may not have an option. These laws cover what is required for reported profits and taxes collected from a hobby. In some (very few) cases you're allowed to claim losses. There are also guidelines that distinguish when your Hobby is no longer a 'Hobby for profit' and is now a Business that must be registered as such. As a legal and legitimate business in compliance with the laws, you will have to collect and remit taxes to your Department of Revenue and adhere to other regulations.

If you DO have the option of simply reporting profits on Schedule C as an individual, one benefit of having something like an LLC is that it protects you and your personal property from damages that can occur from your business. For instance, if you get sued, they can't go after your house... things like that. There are also other tax related benefits that you may not necessarily be entitled to if you are operating as an individual.

Reading is your friend. You can start here: Business Entities - California Secretary of State
Having re-read your OP, can you clarify something? Do you mean should you start a legal business, or should you legalize an existing business?

There is no downside to operating a registered business.
There is no downside to operating a registered business.


However, if you have a store, that's when city ordinances kick in, along with a few federal regulation considerations.
This is stuff like signage, fire inspections, ADA, any local licensing and so on.

In either case, you'll have to keep the same records of monies spent and received.

If you operate as a local business, you have access to your Chamber of Commerce or any other business community organizations. Even some professional memberships in photography require this; some vendors too.

But back to the question: What is your goal? Do you want this to be your primary occupation?

FYI: Bestbuy and FB are still cranking out pro photographers daily
Well, ultimately, I'd like to have a studio some day. But for now, working out of my apartment is fine and I have a full time job I'm working too. I'd like to start a legal business and not be a "hobbiest" I don't mind paying taxes as long as it doesn't put me in the red. For instance, if I only make a little bit of money in one year and my tax fees for all the forms cost more than what I made.. that would put me in the red.

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