Deciding to turn your passion to a professional career is a big step for photographers, and the bigger question that they face is how to start a photography business legally. The more you go into the depth of the research on legalizing your photography business, the more you will find yourself in the middle of nowhere.
Legalizing your business is definitely a complicated procedure and you need to be careful of every detail you put on it as it will represent your business. It is essential to do good research on how to start a photography business legally or what are the legal requirements needed for a photography business.
The initial business decisions that are made make a huge impact on the business’s future and it is important to make sure you learn the basic photography business license requirements and have a good business plan ready.
Here’s to starting a photography business checklist and the initial and basic information and steps you need to know to get a photography business license to make your passion official and legal.
1. Business Plan
It’s a little bit more complicated to start a legal and successful photography business than having just a camera. Opening and creating the basic structure of your licensed business needs a proper business plan.
Even though there is no legal need for having a business plan, it however helps you to combine all your thoughts and aimed goals into an actionable plan. It helps you to strategize and find out a way or methods to achieve those goals as well as set a time frame to make it all happen. A business plan for your photography business will give you a more clear objective and vision for your business.
What should my photography business plan include?
A comprehensive and well thought out business plan will include the description of photography business and idea including the type of business you want to focus on for example if you are going to have a large studio or a small setup, market analysis and your target customer base to determine the competition in the market and the market price, how are you going to run the business, what are the financing options and your sources, and most importantly what are your goals and objective towards your business.
2. Business Structure of Your Business
One of the major decisions you have made as the first step on how to start a photography business legally is to determine or decide the entity of your photography business. What type of business entity do you prefer to operate. It is important to know, research and learn about each one of them before you make the decision on which one will be the best for your business type.
What type of business structure should I consider going for?
While you are working and researching on how to start a photography business legally, the type of business entity you decide for your photography firm will have a direct connection to the amount of tax you have to pay, your finances and personal liability as well as the amount of paperwork you would need to do.
If you are not very much sure which one is right for your consulting a CPA will be a good choice to help you decide however here are few suggestions for you to get an idea:
Sole Proprietorship: The simplest form of business entity and a common structure to get started with any business. Business owned and run by individuals or only one person without any distinction between the owner and the business itself. It is easiest to operate however, owners have to be solely liable for any liability.
Partnership: These types of photography businesses consist of two or more owners and it is important to carry out either written or oral agreement to carry out a partnership business. It is somewhat similar to sole proprietorship however easy to set up and get your finances easily. However, liabilities have to be taken by the partners themselves.
Corporation: It is a separate legal business structure and a costlier business entity. Shareholders can enjoy protection of liabilities however, there is a lot of paperwork involved and taxes are higher for these types of business operations.
Limited Liability Company (LLC): Last but not the least comes LLC. Mostly, LLCs are set to operate as partnerships with multiple owners or partners. Benefits of LLCs are that it is taxed similarly as individual tax returns and gives you liability coverage similar to corporation however the major drawback is it carries out more formality fees and expenses than a partnership or sole proprietorship business entity.
3. Employer Identification Number from IRS
This is important documentation for business entities like Partnerships, Corporations, LLCs. Sole Proprietorship businesses however can avoid this. This documentation is needed to help the banks identify your photography business as an entity when you sign up for accounts.
4. Choosing a Business Name
Now that your business structure is set and is good to go, the next big step would be to find the perfect name to name your establishment. It goes without saying that naming a company is a big deal and is a very difficult job to accomplish as it is such a vital component to launching a successful firm. Now, there are two different kinds of names that can be chosen.
One type is when the owner names the company after their own name or something very personal to them, and the other type is when one creates a unique name that specifically embodies the brand and work of the company. Whilst, the “personal” option seems easy enough, making a name out of scratch has more complexity to it than one would think.
The first thing to keep in mind is to make sure that the name that you will choose is simple or simple enough and short to easily pronounce and spell as that would allow for people to remember the name without any problem. You should also be careful that you are using a completely unique and new name so that you can have your domain for the website. Along with this, each country has their own variation of legal procedures and its fees, hence make research a top priority when selecting a name for your business.
5. Business License
Your business permits and license depends on the state you are in. You may need sales and use permits, tax certificates and few more as per the state rules. Make sure to check out what documents would you require as per the state you reside in.
6. Bank Account for the Business
Money is by no doubt, the founding factor of a business, but what’s even more important is to be able to handle it correctly by keeping track of transactions. The safest and best way to do this is to open up a business bank account to make sure that your funds are separate and that you have a monitored transaction history. This ensures reduction of unnecessary spending and makes procedures for legal purposes infinitely easier as well, especially when it comes to taxes.
Having a legitimate trail and a bank vouching for your business’ credibility is extremely beneficial for your establishment. And aside from the complicated procedures, a bank account also gives a good rep to your branding when customers are asked to pay into the account as they’ll feel safe giving their money rather than a random anonymous person.
However, the woes of fulfilling legality does not end there. It is absolutely imperative that you are well aware of the process in the bank you are going to be opening a bank account. Every bank has their own policy which also differs from city to city and country to country and it is very important to follow them.
Hence, we strongly recommend you to ask you bank authorities beforehand, and they’ll help you with all the documents you’ll need and the fees you are going to have to pay.
7. Prioritize your Taxes
Something that absolutely cannot be neglected in any way are the Taxes that you will be paying. Your business type will be the deciding factor of which and what kind of taxes that needs to be paid for the said establishment. As mentioned before, the tax fees wildly vary between locations and also if you decide to have employees or special conditions.
Be sure to consult a professional before registering the business name and type to know the taxing requirements in the area your establishment will be. Since, the taxing procedure added with the other transactions are so complicated, it is best to hire an accountant to keep track and manage the taxes, payments and liabilities in the best possible way for the firm.
8. Capital for a Start-Up
It is a given that all businesses need seed money in the beginning in order for the start-up to be established. Ensure that you have the funds needed for all the paperwork fees for legal procedures, taxes, equipment, location and an estimated miscellaneous expenditure. The amount of the fund will, of course as reiterated previously, will be different depending on the place or country you are in.
Either way, have preparations to spend a handful sum on the firm, and it is always recommended to have a bit extra separately as a precautionary amount in case of an emergency.
9. Photographing License
Whilst there is no specific ‘Photographer’s License’ per se, one still needs to gain certain licenses in order to make an establishment legally in the city or whichever location you decide to choose. You should get help from a lawyer or a reputable business development agency who will be able to explain everything and process the procedure for you.
With your photography business it is important to know the ins and out of the laws of taxes and finances and therefore hiring qualified tax professionals will save you more money than you can imagine. In addition, you would also know that everything is being done according to the law. Therefore, hiring a CPA is very helpful for your business.
All of this might seem overly complicated and very difficult to pull off, but we assure you that the real key is to have an organized plan and to follow the said plan through the end. If you have the passion and will to make your business successful, it is only a matter of time that you will start to see your art making its money worth.
However, you should also remember to make yourself well versed in using the machineries and working in post production, but that guideline is for another time. We hope that this article on how to start a photography business legally has helped you to understand or at the very least get an idea of what things to do or not to do for a photographer to establish a photography business legally.