 Kristi Eckberg |
paying taxes as a portrait photographer Does anyone have info. on paying taxes and what kind of deductions I can take when just starting to make money?? Basically I'am a portrait photographer just getting serious about making more money but don't have a business license yet. Would like to be able to take some deductions (just bought a new camera) if I can but don't know if I need to claim this as a business when I'am only doing it on the side and not making much money yet. Any websites I can get info from or any advice as to how I get this started would be a great help.
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Mark Feldstein |
Greetings Kristi: First, to really get the straight scoop on what you're asking, you need to talk to an accountant who can help you set up your books and do it the right way. I'm just a photojournalist. Meanwhile, I can tell you that Section 61(a) of the Internal Revenue Code (IRC) defines gross income as "all income from whatever source derived". The definition is construed liberally "in recognition of the intent of Congress to tax all gains except those specifically exempted". All realized accessions to wealth are presumed taxable income unless the taxpayer can demonstrate that an aquisition is specifically excluded from taxation." As to deductions, the Internal Revenue Code essentially says that any reasonable and necessary expense made in conjunction with a business is deductible. So that means anything you buy to further the interest of your portrait business is deductible against your income. Taxes, licenses, permits, film, processing, equipment, props, travel, are all legitimate deductions. Major expenses can be depreciated and deducted over a period of years or in some instances all in one tax year. Also, the IRS allows someone to operate a start-up business at a loss for three years before they determine it's a hobby and disallow the previous deductions and add interest. So, in my view, you earned it, you declare it, and if you bought it deduct it. And...as my accountant tells me, "When in doubt...deduct." There's a ton of free information available for small business owners on everything from taxes to how to survive and prosper. The small biz administration offers a fair amount of info, as does a group called SCORE which is made up of retired business executives who help small biz owners. I can also tell you that most of us who've been in this business awhile know the horror stories of other photographers who didn't properly pay the IRS and got caught. It ain't pretty. I know one guy in S. California who lost his studio, all the equipment and nearly lost his home. I highly recommend that if you're going to do this as a business, do it right and don't dink around with taxes or as the IRS may call it initially, "miscellaneous income." Talk to an accountant.
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