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Photography Question 
Jimmy D. Eubanks
 

Independent Contractor vs Employee


My wife and I have a part-time home based wedding photography business. Last year we had two or three assitants shooting, and editing different events. Our hobby is now turning into a business. I am putting together a business plan and setting up a LLC. I have look at irs.gov discussing the difference between employees and Independent contractors. I am now more confused than ever. So what do you think Pros...can you help me? My wife and I have people over every tues and thursday night over to help edit our events and this year we have 24 weddings scheduled so far. I just don't want to get penalized later by the irs for not doing it right...PLEASE HELP!


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3/18/2008 8:18:29 PM

 
Pete H
BetterPhoto Member Since: 8/9/2005
  Questions such as this one I ALWAYS defer to a tax attorney or a accountant.

While BP is great for photo discussions, it really is not a good forum for legal advice.


Pete


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3/19/2008 5:28:56 AM

 
Mark Feldstein
BetterPhoto Member Since: 3/17/2005
  Pete's suggestion to talk to a tax lawyer or an accountant (doesn't need to necessarily be a CPA) and someone who is familiar with your state laws regarding employment and business taxation is key here.

Generally though (and I mean very generally) in California for example, your hobby became a business last year when your assistants (who were photographers really since an asssistant who shoots is an "assistant photographer) and editors, worked different events. At that point, assuming you paid them more than $500 during the tax year, you should have reported that on a 1099 form to the IRS and any state taxing entities.

In California, trying to treat employees as independent contractors is one of the surest ways to get jammed up with the Calif. Dept. of Labor, the State Franchise Tax Board, Workers Comp. or a rock-n-roll lawsuit by someone injured on the job who, now, claims to be an employee when they were told they were independent contractors. Three questions in this regard are always asked: Who controlled the work-product or result of the work; who provided the tools (equipment) and supplies necessary to do the work; and whose space was the work performed in?

While you may not be required to provide health insurance given the number of hours they work or number of people doing it, my guess is at a minimum, you're liable for workers comp insurance, probably payroll taxes, and subject to the state labor laws at least if you were in California. Someone trips going down a flight of stairs and breaks a limb, who do you think is liable? If a lightstand falls on someone because they tripped on it, spraying hot glass shards over your subjects, who do you think is liable?

If one of them gets hurt at your place, they're going to put you on the hook and in all probability the house insurer will deny liability when they discover you were operating a business at the time out of your home without having business liability insurance. This also brings up the issue of municipal zoning and whether you CAN operate a business out of your home and what type. SeewhatImeaneh? If I were you, I'd suspend operations but for you and your wife until you actually establish a business entity with proper adherence to the labor laws, tax laws and insurance provisions. That way, no sharp lawyer is going to be able to hold you individually liabile by piercing your corporate veil as having operated before establishing the corporation.

Now my standard disclaimer, to paraphrase Pete here: This is a lousy place to get legal advice because you could never rely upon this as a defense at trial. Talk to a lawyer and accountant. We live in a litigious society. Be aware...be very aware.
Take it light ;>)
Mark


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3/19/2008 9:21:10 AM

 
Mark Feldstein
BetterPhoto Member Since: 3/17/2005
  Two things I plum forgot to mention.

First, in California, public policy favors determining that someone is an employee over an independent contractor. If you provide someone with things as rudamentary as a desk, chair, pencils and paper, they'll probably be considered employees. Finding someone to be an employee, despite written agreements to the contrary, just protects individuals in the workplace better than finding they were independent. It's simply a way for the employer, who is usually in a better place than the individual, to bear the cost and responsibility of operating a business.

Secondly, photographers, especially wedding / event photographers are frequent targets of tax people because they do make such easy targets. They advertise, work out of their homes making them easy to find, have clients easy to find in their business records, and are quite lucrative for the state and IRS when they find arrearages in tax payments plus interest plus penalties.

I know of two photographers, one studio and one wedding shooter that were closed down and their assets, including bank accounts, equipment and real property seized. One for failing to do employment tax deductions and pay them to the state; the other for failing to actually turn the deductions over to the state. Nasty business.
M.


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3/19/2008 9:33:27 AM

 
Debby A. Tabb
BetterPhoto Member Since: 9/4/2004
  I have real questions on the vilitity of this:
"My wife and I have a part-time home based wedding photography business. Last year we had two or three assitants shooting, and editing different events.Our hobby is now turning into a business."
Sir if you had 2-3 Asst. this was NO hobby.
"My wife and I have people over every tues and thursday night over to help edit our events and this year we have 24 weddings scheduled so far. I just don't want to get penalized later by the irs for not doing it right...PLEASE HELP!"
And how many of us have "People over" to do our editing!
I apoligize if I'm wrong,but just joined,no gallery,unbeleivable situations usually means someone is wasting our time!

Just my opinion,


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3/19/2008 9:47:05 AM

 
Debby A. Tabb
BetterPhoto Member Since: 9/4/2004
  But I want to add,Great Answers guys!

Your better than I for taking the time.
I get a bit tired of silly posts.
although,sometimes they can give some a bit of info.who really deserve our time.such as these quite through answers here.


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3/19/2008 9:50:11 AM

 
Mark Feldstein
BetterPhoto Member Since: 3/17/2005
  Go get'em Debby !!! You're right IMO. Even when I don't think the person will be back or if they're Derek, I try to leave some info for others to think about. Hope you're doing well ;>)
Mark


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3/19/2008 9:50:19 PM

 
Debby A. Tabb
BetterPhoto Member Since: 9/4/2004
  Oh my gosh, Really,I figrured one out this time?! Yeah!

Usually I've answered sincerly several times before one of you e-mails me to stop being a goofball,its a hoax.
LOL,LOL


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3/19/2008 9:53:15 PM

 
Samuel Smith
BetterPhoto Member Since: 1/21/2004
  just listening.well since roberts thread disappeared.


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3/19/2008 11:20:59 PM

 
Debby A. Tabb
BetterPhoto Member Since: 9/4/2004
  Hey Sam, How are ya!
You see I realized one early,lol.

Roberts thread disappered?
Oh thank Goodness , I was tired of getting up and finding 2o something emails to delete, and 30 more through out the day,lol.

I hope all of you are well,
Debby


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3/20/2008 8:49:02 AM

 
Jimmy D. Eubanks   Mark,

Thanks for your response. For Derek we didn't realize the business was going to grow as fast as it did. We both work full time jobs and I own several rental properties. At first my wife was just seeing if this was something she really wanted to do. Then a lot of people started asking us if we do their wedding. Our business just started to grow with out any advertisement. All of our business has been word of mouth.

Mark thanks again for your advice and not for being a ....

We are getting insurance through Profession Photographers of America (workman's comp,Commericial General Liability, and etc.), setting up our LLC, outsourcing our payroll to a company ($50 a month), and our CPA is helping us get our Quickbooks up and running correctly. We also in the process of finishing our business plan.

I will be setting up a gallery soon. Thanks for bringing it to my attention.

Mark do you have any other suggestions for someone getting there feet wet in this business.

THanks again for you help :)


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3/20/2008 2:47:35 PM

 
Mark Feldstein
BetterPhoto Member Since: 3/17/2005
  Well yeah, Jimmy. Two bits of advice.
First, regularly attend the local meetings of your PPofA local chapter. Secpmd, talk to the local members about rates and price structuring so you're not undercutting them. If you do, word is going to get around and if you ever need help from them, you'll likely be hard-pressed to get it, if at all.

Third (did I say 3 things?) is get a book on business practices and forms for professional photographers. I recommend the one published by ASMP.org. Also, having a book on "Law for Professional Photographers" is just as important to get you into the ballpark on various general state laws that apply to our business including contracts, torts and criminal law.
Good luck. Take it light.
Mark


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3/20/2008 3:30:24 PM

 
Gregory LaGrange
BetterPhoto Member Since: 11/11/2003
gregorylagrange.org
 
This will get you started. Sounds unnecessary though.


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3/20/2008 3:58:36 PM

 
Samuel Smith
BetterPhoto Member Since: 1/21/2004
  i know that many keep track of what we say.to further bp and a voice.your heart is in the right place.
now the new bottom feeders are to respect the law?they can charge your fees and reap huge profits?
so it's wrong.programs implemented will help?that business law and regulation apply.desolate players.
well mark.what did miss locy do wrong?
jail,fines?is it a different topic?


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3/20/2008 8:21:49 PM

 
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