 Karen Harrison |
Legalities of Starting a Photography Business Hello everyone, Does anyone have any advice/input regarding starting a home-based portrait photography business? I am concerned about the legalities (registering with the proper authorities, required insurance, etc). I am in the process of contacting my City Hall to find out what registrations are required, and I recognize every area is different, but I am curious if any of you who own your own business were caught off guard by anything when you started out? I am trying to cover all my bases so if there is something that I might not think of, please let me know. Also, if you know of any good resources, please feel free to share. I am currently reading Vik Orenstein's "Photographer's Market Guide to Building Your Photography Business". I appreciate your responses. Karen
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BetterPhoto Member |
I'm in the same boat. Looking forward to reading more comments on this thread. Thanks Karen. Best, -Jenny
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John G. Clifford Jr |
As a former small business owner, I'd advise you that the two secrets to making a business work are cash flow management and risk management. Re risk management, I'd strongly advise you to set up a separate legal entity for your business, either a limited liability corporation (LLC) or a Subchapter S corporation. Register your corporate entity with the state, register for all state and local taxes including getting a federal and a state tax ID number, get a company bank account, and make sure that you have a written agreement between yourself as an individual and the corporation that the corporation rents physical space from you for a studio. Talk to your insurance company and make sure you have liability for your company. Your big fear here is that someone gets hurt at your home (falls, etc.), and sues you, and you want to be protected so they can only get your corporate insurance. Re cash management, sit down and figure out your costs, including federal, state, and local tax payments, insurance, equipment, processing, etc., for the average job. Figure out how much time you'll spend on a portraiture session, and don't forget to add in the administrative time to book sessions as well as the post-processing time including running to the local photoprocessor or online uploading and ordering prints. Assume that a one-hour photo session will end up taking around six hours of your time. And, don't forget to add in the rent your corporation will pay you for use of your home as a studio. I don't see how most people can charge less than $50 for a session without losing money, compared to a minimum wage job. Be rigorous in treating your company like a company. Pay yourself rent by writing a check to yourself from the company checkbook. Pay all of your bills via check from the company checkbook... or get a debit card and use that for incidentals and expenses for which a check is an inconvenience (online ordering). This protects you from the claim that your company is a sham. Good luck, and remember to take care of the little things and the big things will take care of themselves.
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BetterPhoto Member |
Thank you, Thank you. This is very helpful. Best, -Jenny
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Karen Harrison |
Thank you John. All good info that gives me a lot to think about. I had been considering doing this as a sole proprietor, but will give more consideration to the LLC and S-corp options. Much appreciated! Karen PS - Good luck Jenny.
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Mark Feldstein |
Before you need a checking account, you need an income from your new business. Statistically, as you may know already, most new small business ventures fail because of management problems, under capitalization and short-falls in marketing/advertising. You can have the greatest product in the world or be among the greatest photographers, but if no one knows you exist, you're basically SOL. Make sure you can run a business out of where you currently live. If it's a rental, notify your landlord. Get the additional insurance. If you can't run a business from there, i.e., having clients coming and going, delivery trucks, etc., if the city busts you, it's going to be expensive. If your landlord pops you, you'll likely be told to move for breaching the rental agreement. So, what I recommend, aside from John's good advice, is that one of the best things you can do BEFORE you start out is do your homework and even take a few courses at a local JC. I suggest one in business law that covers contracts; an intro to accounting; one on marketing. Having a professional business practices book with customizable forms will help you. Also, join a professional association or two and attend local chapter meetings. Learn about pricing from other photographers in your area especially so you're not undercutting them but charging fair market value for your services. Lastly, I strongly suggest that along with any additional courses you get, write and follow a flexible business plan and budget and pricing strategy at you can revise as things change. Without that, you're kind of like a ship without a rudder. There are lots of organizations including SCORE that will help you with that one, without charge. And, you might not have guessed this, but this particular subject has been discussed repeatedly and often around here. Do a search and read the back threads on it.
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Mark Feldstein |
The LLC limited liability corporation is an interesting idea but for one significant drawback. If you don't precisely follow the rules set forth in your own corporate charter or fail to keep up with the paperwork and corporate filings, if for a longshot reason you get sued, then any lawyer worth his salt will find a way to pierce what's referred to as the coprate vail and you're individually liable any way. What I suggest along with what I said earlier, is that if you decide to go the way of an LLC, check out the advtanges and disadvantages with either a lawyer in your neck of the whatever state you're in that does small biz/corp law, or a very competent accountant.
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John G. Clifford Jr |
Yes, lawyers will look for ways to pierce the corporate veil... that's what lawyers get paid for. However, if you do your job right and treat the company as a company, a separate legal entity, then the lawyer will fail. If you don't, if you co-mingle funds, fail to pay your taxes, file reports, etc., then you won't be any worse off than you would have been as a sole proprietor in terms of exposure to liability. So... if you want to reduce your liability to a minimum, get incorporated (LLC if you have partners, sub-S if you don't, check with your own attorney before deciding), and follow the rules.
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Debby A. Tabb |
Karen, We are very fortunate to have a Atty. as a member here on BP. No matter what advise we all can give here, the real place to look would be to a Real Atty. So I thought you may be intrested in having this link: http://www.photoattorney.com/ Wishing you the Very best in your ventures,
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Karen Harrison |
This is all great information, thank you all for taking the time to respond and giving me more to think about. Debby, thanks for the link, that looks extremely helpful, I am going to check it out in more detail now. Regards,
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Debby A. Tabb |
You are so welcome! Her book is really great as well. Debby
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Vik Orenstein |
hi karen! sorry to jump in so late here --i was in the midst of senior season and wrapping up my betterphoto courses for summer when you first posted. this is all great advice here --as you may have noticed, there are many different views and ways to go about this. I will repeat the chorus here: talk to a lawyer to determine what type of entity you should be; get a good accountant who specializes in small biz; and register your trade mark and service mark if you're doing biz in a name other than your own personal legal one. and try to enjoy the process of start up --its an exciting time!
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Karen Harrison |
Thanks Vik. I am definitely going to take everyone's advice to heart. I am almost done reading your book as well, and have picked up some great ideas from it. Thanks for taking the time to respond! Karen
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Vik Orenstein |
i'm so glad you found my book useful! all the best of luck to you! this is a fun time --the start up! ;-)
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