Selling your work and taxes - DPChallenge Forums

Canon EF 100mm f/2.8 USM Macro

08/20/2004 09:15:30 AM · #1

Calling on all pro fotogs making $$ selling their work in the US... I'm curious to know how many of you obtained a business license. Do you write off any of your equipment on your taxes?

Spork99

OM System OM-1

08/20/2004 09:47:36 AM · #2

Originally posted by digistoune:

Calling on all pro fotogs making $$ selling their work in the US... I'm curious to know how many of you obtained a business license. Do you write off any of your equipment on your taxes?

I'm not currently working as a photographer, but I have in the past and my wife is self employed.

You should get a business license and a tax ID # so you can collect taxes (as well as not have to pay tax on items you will be reselling)

You don't write off your equipment, you need to depreciate it over time. Which means roughly that you are writing off the loss in value that the equipment has over time. There are different acceptable methods for doing this.

I'm not an accountant. I do recommend that if you are serious, you contact one that has experience with small business. You will have to pay business taxes to the IRS, possibly on a quarterly basis. They will be able to help you the most for your specific needs and keep you out of hot water with the IRS. And trust me, you want to keep them happy and out of your stuff.

Message edited by author 2004-08-20 09:49:48.

digistoune

Canon EF 70-200mm f/2.8L IS USM

08/20/2004 10:00:32 AM · #3

Thanks Spazmo! I appreciate the advise and yes, I do want to keep the IRS folks happy and out of my hair!

Marjo

Canon EOS-7D

08/20/2004 10:53:52 AM · #4

Yep, that's good info. I have a transient vendor's license (sounds like I'm homeless :D ), federal tax id number, pay quarterly and have an accountant to keep everything legitimate and accurate.

Prof_Fate

08/20/2004 10:58:49 AM · #5

I have been self employed and run some small business' from home. The tax advantages of a home based business are phenomenol, once youknow the system and how to work it...
things that can be tax deductible:
business phone bill, internet charges, a percentage of your home (utilities, maintenance, taxes, etc) if yo have a dedicated office there, you can depreciate business assets - computer, desk, cameras, and write off those things like film, paper, pens, ink, etc.

I have an accountant - worth every penny he charges me (about $125/year for all the tax forms and stuff). First year i sued him he got me an estra $800 back over what i thought/figured myself. Easliy paid for his services for years to come.

thatcloudthere

Canon EOS-1D

Canon EF 16-35mm f/2.8L USM

08/20/2004 11:06:29 AM · #6

...first year you used him or sued him?

:0)

cghubbell

Nikon D300

Nikon AF-S DX Zoom-Nikkor 17-55mm f/2.8G IF-ED

08/20/2004 11:13:24 AM · #7

Here's a similar themed, but probably dumb question... How do you determine when you should really care about that photography income (care = pay attention to taxes and biz license) vs. just treating it like garage sale money? Is there a magic threshold people use as a guideline?

Message edited by author 2004-08-20 11:14:11.

digistoune

08/20/2004 11:25:53 AM · #8

Originally posted by cghubbell:

Gee, I don't think that's a dumb question at all. I would like to know myself!

08/20/2004 11:47:28 AM · #9

Originally posted by digistoune:

Originally posted by cghubbell:
Here's a similar themed, but probably dumb question... How do you determine when you should really care about that photography income (care = pay attention to taxes and biz license) vs. just treating it like garage sale money? Is there a magic threshold people use as a guideline?

Gee, I don't think that's a dumb question at all. I would like to know myself!

it's called staying under the radar...

remember in Superman III, when Richard Pryor figured a way to collect half cents? when his boss realized he'd been ripped off, he knew either he was screwed, or the thief wouldn't be able to hide it. next thing you know, Richard's coming sideways into the parking lot in a new top-dollar sports car...

if it's a few bucks here and there, nobody cares. if you shoot a local swim team and use the money to buy a new lense, nobody cares. on the other hand, if you are taking tons of deductions and not showing income, the IRS cares a lot. and, if you want to really want to be a business, you gotta jump through the hoops accordingly.

all the same, there's no need to go out and raise a bunch of red flags unnecessarily. and yes, there is a magic number, but what it is today, i don't know. 10 years ago it was around $600...

Olympus 14-42mm f.3.5-5.6 ED Zuiko Digital Zoom

08/20/2004 12:09:05 PM · #10

Very interesting topic, thanks for the info to all.

In reply to "skiprow" I'd ask one other question... If you sell a couple of prints to local people/friends/etc. I can see nobody caring or noticing. But, what if you happen to sell one of your shots to the local newspaper, or some small local business for something? Does the fact that these people are THEMSELVES businesses mean that they are going to report the sale to the IRS themselves somehow? So that you will then "show up on the radar" as you say not due to the volume or price of what you sold, but just due to WHO you sold it to?

Does anybody know the answer to that question? Thanks for any info!

Doug

airatic

Olympus E-410

08/20/2004 12:18:21 PM · #11

When I was working as a student, I remember something about as long as you make less than $1000 a year, you aren't considered taxable as an employee. The same principle may apply for a personal business.

08/20/2004 12:51:43 PM · #12

Originally posted by dswebb:

what if you happen to sell one of your shots to the local newspaper, or some small local business for something? Does the fact that these people are THEMSELVES businesses mean that they are going to report the sale to the IRS themselves somehow?

usually, a business will have you fill out a form so that they can send you a 1099 statement of income. they are required to report payments to individuals that hit a threshold (ask an accountant for the number, i think it's in the neighborhood of $600-700 a year). if you are going to receive a 1099, so is the IRS...

a couple things to keep in mind:
1) the IRS only audits 1-3% of returns a year, and those are usually picked based on a formula that detects descrepancies between filing years
2) yes, you want to be legit, but you don't have to make mountains out of molehills. if your "hobby" is starting to turn serious, talk to an accountant experienced in the area you want to go, and get the real deal for where you live...do NOT rely on psuedo-experts like me!

Message edited by author 2004-08-20 12:58:41.

08/20/2004 12:58:26 PM · #13

Ahhhh. So, if the local newspaper buys one shot from you (like that will ever happen to me...but you never know I guess.) They are going to ask you to fill out this 1099 on the chance that they buy more thru the year and end up paying you more than the "magic number." So, does that elimnate your "average joe" like me from ever selling a picture to the local newspaper? As I have no Tax ID or any other business type info to put on this form... So I guess they just wouldn't want to buy your photo then? But that seems like it is a disadvantage to THEM too, as they may really want it for some reason... Ah, how complicated life gets when you add taxes and lawyers into it... :-)

Thanks for the info!

Doug

08/20/2004 01:00:57 PM · #14

Originally posted by dswebb:

As I have no Tax ID or any other business type info to put on this form...

if they are paying you personally, your tax id is your SSN. if you are a business, there is no 1099, and your are already on a different playground

08/20/2004 01:01:28 PM · #15

I'd be really interested to hear from any of you here who are like me, just a hobby photographer, that ever happed to catch anything of interest to the local paper on film/digital. Were they able to buy it from you? Was it a hassle? What (if any) forms did you need to fill out? I guess you could just give it to them. Maybe that's the way they work around the tax problem...

This seems like the only way I'd ever see anything of mine published, so interested in how much trouble it is in a "legal" sense...

Thanks!

08/20/2004 01:02:34 PM · #16

Ahhh, thanks for the info skiprow. I appreciate it.

Doug

Nikon AF Nikkor 50mm f/1.8

08/20/2004 01:03:19 PM · #17

Originally posted by dswebb:

Ahhh, thanks for the info skiprow. I appreciate it.

my bill is already in the mail

pcody

Canon PowerShot G6

08/20/2004 01:07:22 PM · #18

But then all you have to do is include that in your income to be taxed. You don't have to have a id or sales tax number to declare additional income. I'd say if 20% of your income is generated by photography, you might want to consider the tax advantages of going thru the hoops, but before that, just enjoy the extra income and pay at the end of the year.
But it always best to seek out a professional for advice about what would be best in your situation.
I have a question about sales tax though. How would one calculate that if all the sales were made on the internet? If they had to be paid, could they be paid on a yearly basis or quarterly? Example: DPCPrints sells many prints. Suppose someone sold enought to equal 2 grand. Woh pays the tax? DPCPrints or the owner of the prints?