Business of Photography - Group 1

01/06/2006 08:30:14 AM · #26

I don't really have any system set up yet, because I don't have a business. :)

I'm going to spend this weekend looking into the best way to form the business... One question I have is regarding liability. Do you have a clause in your standard contract limiting relief to the cost of the session? So the bride whose wedding you ruin can only sue you for the amount you charged her? What about if some nutcase sues you for taking pictures of his house for your stock portfolio?

It's for this reason that I'm seriously considering incorporating... it's a little more work and cost, but definatley not hard.

Sorry if I got ahead of myself. We plan to be a Mac based studio, so I'll be looking for software packages that are Mac based, and preferably cross platform. I'm a big fan of PHP and SQL, and do a lot of other data recording/retrieval tasks around the house with web based data-bases (kinda like Megatherian) so I'll probably look for something like that for scheduling and appointments. Office for Mac doesn't include Outlook, so that's out. ACT seems to have discontinued MAC support too, so if anyone knows any CRM software for Mac, I'm all ears. Basically for both contacts and scheduling I need to find out what's out there and pick something. We will incorporate a rather large white board into the design of our office space. :)

(BTW: Skyarcher: I wouldn't be suprised if ABS gets a call from Microsoft's lawyers... that looks an awful lot like outlook.) :)

One word of warning for those in the group who plan to keep paper agenda books and computer agendas. Don't. I took a class in personal efficiency that was offered through my office, and that's one of the biggest lessons I took out of that class. I used to cary around a big 8.5x11 portfolio that had about 3 months worth of calendar in it. Whenever I went to a meeting, I figured, I'd have all my upcoming appointments with me. I'd scribble appointments in the portfolio, and then generally forget to enter them into my PC based system (outlook). However I relied on outlook to remind me when to go to a meeting.

I now carry a small pad and a printout of that day's agenda only. If somebody wants to set up a meeting I tell them to send me an e-mail and I deal with it directly through Outlook. You'll have to decide for yourself if it's worth putting potential clients off by saying "I don't know if I'm free that weekend, can you call my office on Monday?" but at the same time, you can take their contact information and call them yourself on Monday. I doubt they'll find another photographer on Sunday.

Just my $.02, take it for what it's worth.

Edit:

I figured I'd publicly state some goals for this weekend, so that y'all can hold me to them on Monday...

*I'm going to decide what form of company to create, and barring needing legal or tax advice, fill out the paperwork for same.

*I'm going to find CRM software, even if I build it myself.

*I'm going to finish the architechural drawings for our studio space, with the intention of starting to bid the job next week.

Howzat? :)

Message edited by author 2006-01-06 08:35:56.

Nusbaum

Fujifilm X-T1

Canon EF 50mm f/1.4 USM

01/06/2006 12:05:43 PM · #27

Originally posted by livitup:

ACT seems to have discontinued MAC support too, so if anyone knows any CRM software for Mac, I'm all ears. Basically for both contacts and scheduling I need to find out what's out there and pick something.

I'll say this once because it may be helpful, but I don't want anybody to think I'm pushing or selling my non-photographic work through dpc... I started an online scheduling service called SchedulesPlus.com a little over a year ago. I was going to target workforce scheduling for small businesses but I ended up doing event planning for non-profits. The framework is there for online appointment scheduling as well. If some photographers wanted to provide input I would certainly consider adding capabilities to SchedulesPlus, but it might take a month of so to get it all in there. Not trying to sell here, but if there is a need I would definitely be interested in trying to fill it.

cwyou

Nikon D3

01/06/2006 06:04:08 PM · #28

Not enough work yet to need anything other than a notebook for now as business is still VERY part-time. I have owned and run my own company for 7 years and used QuickBooks and ordering/tracking software specific to the Transportation Industry. I will use Quickbooks again for my accounting software and use Outlook for scheduling in the beginning until I get busy enough to afford specialized software. Business cards are done and I plan to register the business name in the next couple of months.

oOWonderBreadOo

Canon EF 16-35mm f/2.8L USM

01/06/2006 06:38:12 PM · #29

Well, I've worked the past 10 years as a photo editor for a photographer here so I pretty well have the business organization down. All my scheduling is on paper. I guess my contacts leave something to be desired. I do have ACT but never kept up with it. I don't know where/how to keep & organize my CD's that's something new for me so any suggestions would be helpful. I suppose I should number them and then keep that # with the job folder?
My system is basically every job gets a job folder. It stays in the active files section until all prints are out & it is paid in full then it gets filed alphabetically. Boring but it works for me.

What I really need to do is get off my butt and form an LLC or something! and then set up a seperate bank account to go with it. I don't know what's stopping me- I think I have some kind of mental block when it comes to paperwork!!!

rjkstesch

Nikon D700

Nikon AF-S NIKKOR 24-70mm f/2.8G ED

01/08/2006 12:56:04 AM · #30

I had a chance to go to a Bridal Expo today. It really gave me a chance to see multiple wedding photographers and their products in a short time.

Style showed up immediately. It ranged from a very classical look to a very artistic look with lots of stylistic processing. In many ways the work spoke for itself. I can definitely see the bennefit of having specific photographers with portfolios of their work. I would be very upset if I thought I was getting a particular style and quality, only to get a photographer from the pool. (BTW, I was told by one such group that they're always looking for part-time photographers and to let them know when I'm ready.)

It was a bit intimidating to see the massive sized images of their best work over years. I have a tendency to compare my worst with their best. But, I'm getting over it!

The marketing was interesting. I took brochures from each company, which I'll look over later. The photographer's (or worker's) personality seemed to be a big part of the presentation. One guy was soooo "icky" that I couldn't see how he could get any business.

There were many displayed wedding book; Rembrandt, LeatherCraft, some Illumina type demo books and a type I hadn't seen before. They were small bound books that remind me of the children's board books for preschoolers. Each page was thick cardboard with composite images going to the edge. Evidently, that is the "thing" here now. One photographer indicated he had them printed through the local pro lab.

Now, I'm off to read their literature. Over the next while, I'll be looking at my own style and marketing. I am sure of a few things I DON'T want to do.

Becky

Nusbaum

Fujifilm X-T1

Canon EF 50mm f/1.4 USM

01/08/2006 11:29:35 AM · #31

Originally posted by rjkstesch:

... Style showed up immediately. It ranged from a very classical look to a very artistic look with lots of stylistic processing. In many ways the work spoke for itself. I can definitely see the bennefit of having specific photographers with portfolios of their work. I would be very upset if I thought I was getting a particular style and quality, only to get a photographer from the pool. ...

I'm very glad you posted this Becky. I've always thought of a portfolio as a way to sell myself (which I'm not very good at) but I completely overlooked the idea that a portfolio also helps to document your style so you can match up with the right clients. I had always assumed that with enough experience I could adjust to almost anything a client wanted but now I can see that this assumption was far from the truth. Next time I try to build a portfolio I will try to make it a little deeper so it shows my style rather than being too broad and shallow

rjkstesch

Nikon D700

Nikon AF-S NIKKOR 24-70mm f/2.8G ED

01/08/2006 11:47:53 AM · #32

Originally posted by Nusbaum:

Originally posted by rjkstesch:
... Style showed up immediately. It ranged from a very classical look to a very artistic look with lots of stylistic processing. In many ways the work spoke for itself. I can definitely see the bennefit of having specific photographers with portfolios of their work. I would be very upset if I thought I was getting a particular style and quality, only to get a photographer from the pool. ...

I'm very glad you posted this Becky. I've always thought of a portfolio as a way to sell myself (which I'm not very good at) but I completely overlooked the idea that a portfolio also helps to document your style so you can match up with the right clients. I had always assumed that with enough experience I could adjust to almost anything a client wanted but now I can see that this assumption was far from the truth. Next time I try to build a portfolio I will try to make it a little deeper so it shows my style rather than being too broad and shallow

I had not realized how strongly the style showed through, either. My daughter is getting married (one reason for the Bridal Expo) and I want to be a part of the festivities instead of working it, so she'll have to have another photographer. I also know that she is very picky about what she likes. I doubt she would be satified with my work in bulk.

There was clearly one photographer at the Expo that consistently (as much as was there) had work my daughter admired. I think that is when it clicked for me that style must be matched.

I believe a photographer can shoot many types, formal, classical, PJ, candid - but the style of image and processing will follow them all.

It was definitely an "Ahh Haa" experience for me.
Becky

Skyarcher

Canon EF 70-200mm f/4.0L USM

01/08/2006 01:56:29 PM · #33

Originally posted by rjkstesch:

*snipped*
I believe a photographer can shoot many types, formal, classical, PJ, candid - but the style of image and processing will follow them all.

It was definitely an "Ahh Haa" experience for me.
Becky

This is interesting and it definitely gave me an 'Ahh Haa' moment. I don't remember what the coversation was right now, but was talking with Matt (mavrik) and he said something about my stuff being mostly about nature. At the time, I was like noooo.. but the more I think about it, I guess that really is my style. Nature. So, thanks Becky and David for making me think! :)

-Christine

01/08/2006 02:25:25 PM · #34

@mandy - My to do list isn't usually workflow related (though it sometimes is). It's more growing the business related or things like "create new business card" which gets crossed off for "order new biz cards" or "send new biz card to all vendors" once they come. :) So then my list becomes my business plan - a working goal list sort of. I keep track of my workflow stuff sort of separately. It sounds like you're busy enough for you right now - could you do the same volume of work and make more $ at it somehow?

@lentil - I keep a lot in my brain, but that only helps when I remember it. :) Usually I do, but usually isn't a good business plan for me. The filing cabinet sounds like a good idea as well. You may not be making much yet on your ebay sales, but how much? Is it going up, down? How are sales if you put one up at a time? How about if you put 5 up at once (5 auctions, but all ending the same time) is there more or less competition for them that way? More or less recognition? If you shoot for a client, how will you record their name, contact info and such?

@m--E You should definitely figure out a way to 'tag' the photo stuff in your budget so you know whether it's good or bad. Nobody minds spending $ on their hobby, but we all should mind losing money on our business. I suppose that's what separates some of us from the others - we either want to MAKE money doing this or we "don't want to lose too much." If you track it, at least you will know what direction you are going and whether that is acceptable.

@rjkstesch - Your new calendar idea sounds perfect for what you need to do! Seeing the whole picture is exactly what we're talking about here too. You need to know "well I am free photographically next weekend, but the kids have soccer practice." Well, then you can't take that job! How are you organizing your to-do list and figuring out "what needs to be done next to push the business forward"?

@damian - Keeping all receipts is very vital once you want to track your expenses. An address book and phone book is good - not very searchable/useable but it's a start. If I want to email one of my clients, it's very quick. I type their first name, double click them and type the email. If you want to do it, you have to find the book, find their name, type their addy, type the email. Not horrible, but could get unworkable fast if you meet a lot of people.

@megatherian You sound very organized - that will take you very far on what you're trying to do. Just knowing what you should know is important. :)

@sky - As far as the dry erase board - could anything happen to it? What if it did? How far behind the 8 ball would you be?

(will finish the others in a bit - have to step away right now)

livitup

Nikon D70

01/09/2006 01:23:31 PM · #35

Happy Monday gang!

I wanted to give a couple nifty updates.

* I did a lot of research over the weekend, and even took a good friend of mine who is a real estate investor out to dinner. He's got several businesses set up so his was a good brain to pick. He suggests a LLC, which after my independent research is definitely the way to go. So I went to the Virginia Corporation Commission's website and downloaded the forms. My wife and I are going to sleep one more night on the name we chose and then mail the form off tomorrow. If anyone else is interested in why we chose a LLC, let me know and I can write a little summary.

* I did not get anywhere with CRM or blueprints for the office/studio.

Oh well, one for three ain't all bad. On the good side I did get a commitment for my first job. One of the guys I work with is head coach for a girl's softball traveling team. He usually pays a local photog to do team pictures. I was telling him about starting a business and he said "oh yeah, that reminds me... I need to schedule my team photos." A led to B and I got the job. Details haven't been straightened out yet, but it'll happen in late February or early March. I'm really excited!

-A

lentil

Canon EF 135mm f/2.0L USM

01/09/2006 04:28:15 PM · #36

Originally posted by mavrik:

@lentil - I keep a lot in my brain, but that only helps when I remember it. :) Usually I do, but usually isn't a good business plan for me. The filing cabinet sounds like a good idea as well. You may not be making much yet on your ebay sales, but how much? Is it going up, down? How are sales if you put one up at a time? How about if you put 5 up at once (5 auctions, but all ending the same time) is there more or less competition for them that way? More or less recognition? If you shoot for a client, how will you record their name, contact info and such?

With my ebay sales, I usually put around 8-15 photos at once. I am having an ok time sales wise, I do sell quite alot but here is where I come unstuck. I take into account when setting up the minimum I would take for them, the insertion fees, cost of printing etc.. but what if i only sell one and the other 7-14 dont.. then i am technically behind because i have paid for insertion etc for them as well.. i need to find a way that even if i only sell one that i am still ahead. I think this is where one of my main problems is.
I have a client coming up next week.. Really my first.. so far i have only recorded him on my calender. (really need to buy a diary). At this stage i will never knock back some work but i would rather sell something that i have already produced than something someone wants. Maybe it is just a matter of confidence at this stage.

Skyarcher

Canon EF 70-200mm f/4.0L USM

01/09/2006 04:49:04 PM · #37

Originally posted by livitup:

Yes, I would like info on the LLC.

I'll have my fingers crossed for you for your first job. That is exciting!!! :D

DjFenzl

01/09/2006 04:53:25 PM · #38

Originally posted by livitup:

I'd appreciate any info you could give me as well (I'm also in Virginia even ;) )

Damian

Nikon D200

Nikon AF-S NIKKOR 24-70mm f/2.8G ED

01/09/2006 05:51:39 PM · #39

Originally posted by mavrik:

@damian - Keeping all receipts is very vital once you want to track your expenses. An address book and phone book is good - not very searchable/useable but it's a start. If I want to email one of my clients, it's very quick. I type their first name, double click them and type the email. If you want to do it, you have to find the book, find their name, type their addy, type the email. Not horrible, but could get unworkable fast if you meet a lot of people.

I got hanging folders for cash ins and cash outs with a diff. folder for each month.

As for finding different contacts. I would probably trust a rollodex(whatever they call it) more than my computer, Im just afraid of the hard-drive crashing and then being in big crap haha.

rjkstesch

Nikon D700

01/09/2006 06:28:55 PM · #40

Originally posted by mavrik:

@rjkstesch - Your new calendar idea sounds perfect for what you need to do! Seeing the whole picture is exactly what we're talking about here too. You need to know "well I am free photographically next weekend, but the kids have soccer practice." Well, then you can't take that job! How are you organizing your to-do list and figuring out "what needs to be done next to push the business forward"?

I'd really like to keep within one system. Outlook is working well for calendaring and daily "To Do" work. I was thinking of using the paper/file folder idea for each client, but I tend to miss things. A check list within my system would work the best. I found a way to create such a thing within the Contacts section of Outlook. I can customize a form that will keep all the contact info - date, location, etc in one place and also let me use a basic checklist for the workflow details.

I'm thinking I'll use the Journal for the "Big Picture" plans, with the steps going on to my ToDo list.

All of these work together and travel on my palm. It will also let me carry it across both computers.

Becky

m--E

Canon EOS-350D Rebel XT

Canon EF 28-70mm f/2.8L USM

01/09/2006 11:30:37 PM · #41

Originally posted by lentil:

I would be interested in hearing more about eBay sales. This is something I have wanted to do and have gone as far as comparing prints from different vendors. I have an eBay and PayPal account and have sold some stuff - but I have never put any of my photos out there.

lentil

Canon EF 135mm f/2.0L USM

01/09/2006 11:32:35 PM · #42

Originally posted by m--E:

Originally posted by lentil:

With my ebay sales, I usually put around 8-15 photos at once. I am having an ok time sales wise, I do sell quite alot but here is where I come unstuck. I take into account when setting up the minimum I would take for them, the insertion fees, cost of printing etc.. but what if i only sell one and the other 7-14 dont.. then i am technically behind because i have paid for insertion etc for them as well.. i need to find a way that even if i only sell one that i am still ahead. I think this is where one of my main problems is.
I have a client coming up next week.. Really my first.. so far i have only recorded him on my calender. (really need to buy a diary). At this stage i will never knock back some work but i would rather sell something that i have already produced than something someone wants. Maybe it is just a matter of confidence at this stage.

I would be interested in hearing more about eBay sales. This is something I have wanted to do and have gone as far as comparing prints from different vendors. I have an eBay and PayPal account and have sold some stuff - but I have never put any of my photos out there.

if you go to my portfolio, i have a direct link to my ebay site. See how i do it if you like.
Lisa

m--E

Canon EOS-350D Rebel XT

Canon EF 28-70mm f/2.8L USM

01/09/2006 11:54:51 PM · #43

Do you find that framed or unframed prints sell better? Which size - I see you have 5x7 and 8x10. Also, do you find the profit margin is better on unframed prints? About how many do you sell in a month? Thanks!

lentil

Canon EF 135mm f/2.0L USM

01/10/2006 12:04:16 AM · #44

i think framed do sell better than unframed.
As far as profit margin here is an example of what i do.
5x7 matted unframed i sell for - $15.95AU. That is a clear profit of about $11.
6x8matted unframed i sell for - $19.95AU. That profit is about $13.

8x10 framed - i sell for $35 clear profit of $26.
6x8 framed $29.95 - profit is $23
5x7 framed $25.95 - profit is $22.

I have only sold a few unmatted and unframed so i dont really know how that goes yet.
Per month i sell about 6-10. Which isnt a real lot, i am hoping that will change. I am concentrating more on it this year.
Hope this helps you and answers your questions.

01/10/2006 11:40:18 AM · #45

Important update

Hi!

I was scouring the web for solutions to some of your problems and found this:

//www.dotproject.net

There is a calendar, contact management system, project and task organizer, etc - it's really huge. It's FREE and it's open source. If you have a website host that allows it, THIS IS what you want. This stuff looks GREAT. Login to the demo and you'll see what I mean. That takes care of SO many issues at once that I have to have to recommend it highly.

If you don't have a webhost yet for your domain, consider powweb.com as they allow LOTS of cool add-ons and actually help you set it up. You could set netproject up in about 10 mins on Powweb. Not sure bout other hosts...

M

livitup

Nikon D70

01/10/2006 09:10:05 PM · #46

WARNING! LONG POST ALERT!

Before I start I�d like to make the standard disclaimer:

I am neither an attorney, nor an accountant, I didn�t even stay at a Holiday Inn last night. This post is based entirely on my own research and conversations I have had with other people whom I consider to be experts in this area, but are also not attorneys or accountants. Please take this advice as you would any other posting on the Internet: as one possible interpretation of things. Do your own research and validation before you make any big decisions.

Pshew.

Why I chose an LLC for my photography business.

Advantages of an LLC

The biggest advantage of a Limited Liability Company (LLC) is, well, the limited liability. As Matt pointed out there are four main types of companies: sole proprietorship, partnership, LLC, and corporation. The sole proprietorship and partnership both treat liability the same: it transfers to the owner(s) of the company. In both the LLC and the corporation liability remains with the company.

Liability can take many forms. The most obvious is liability to lawsuits (Bridezilla, Nut Job who doesn�t like the fact his house is in your cityscape, etc.) In the case of sole proprietorships and partnerships, Bridezilla can sue you for a million dollars (or you and your partners, in the case of a partnership). If she somehow wins, then you will be forced to pay her. In the case of the LLC and the corporation, she sues the company itself. And when the company is found guilty, it has to pay her, not you. She can bankrupt the company, but there will never be financial harm to you as an individual.

Liability also comes into place in the case of damages to customer�s property (say an umbrella comes flying off a strobe and breaks a priceless church window), accidents (someone trips over your extension cord, or you get into an auto accident on the way to a job), and importantly, debt. Let�s say that you lease a computer from Apple, in the company�s name. Six months later, you realize you�re not making any money and you throw in the towel. Under a proprietorship or partnership you would personally be liable to Apple for paying off that lease. Under a LLC or corporation the debt is not transferable to the owner(s).

Taxation is another issue that favors forming a LLC, in my opinion. This is the area that I�m least sure about, and I highly recommend talking this over with an accountant. Sole proprietorships and partnerships operate with �pass through taxation.� They don�t exist in the eyes of the IRS. This means that income is passed through to the owner/partners to be recorded on their personal income taxes. Note I said income, not profit. We�ll come to this in a second.

LLCs can be taxed with pass through accounting, or, at the option of the members, can be taxed as a corporation. What this means is that the corporation will be taxed on it�s income, and the members will be taxed on their salary.

Example: Let�s say that this year you book 5 weddings at $1000 each. The albums, printing, and supplies for each of those weddings cost $250, for a total of $1250. You buy a new Power Mac for all your photo processing at a cost of $2000. You buy a couple new lenses, at a cost of $1500.

In the pass-through method, your income is $5000, and that�s all that matters. You would enter that as income on your personal tax returns and be done with it. Advantage: simplicity. For tax purposes you only need to track your company�s income. What you do with the money afterwards is irrelevant in the eyes of the IRS.

In the corporate method the corporation is taxed first on the income of $5000. However, the business itself bought all that stuff, so at the end of the year it pays you a salary of $250. Only that $250 gets entered on your personal income taxes. There are about a million things that a company can deduct, so it�s very possible to have your company end up with no taxable income, and you only get taxed on the cash you take out. However, this method requires a fair amount of paperwork and record keeping, so it�s not to be taken lightly. You�ll need to prepare two tax returns each year, and you�ll need to keep meticulous records in case you get audited.

There are a lot of other advantages to forming an LLC over a proprietorship or partnership: the business can be sold, it survives after the owner�s death, it has its own credit rating, etc. But for now, the liability and taxes are the big issue.

So for me, the sole proprietorship and partnership were out, which left it down to a LLC or Corporation. Corporations are a lot more difficult to set up, have strict governance rules, are expensive to set up, and worst of all, if you fail to follow any of the rules, then the corporation can be ruled invalid by the courts, and they can hold you personally responsible for the company�s misdeeds (see Ken Lay). It would suck a lot if Bridezilla sues your company and the courts rule that your corporation is invalid because you forgot to file the semi-quarterly moon phase recording minutes, or some other arcane form.

Disadvantages of the LLC

It will cost a little more than a sole proprietorship or partnership to set up. You can do all the paperwork and such yourself, negating the need for attorneys (see my disclaimer above), but states charge more for a LLC than the simpler company forms. It will be much less expensive, however, than a corporation.

You will be required to keep separate records for your company. I list this as a disadvantage, but it�s something that you should be doing anyway, no matter what kind of company you are running. However, if you commingle your LLC�s finances with your personal finances, you can get in legal trouble real quick. An offshoot of this is that you must open a separate bank account for your LLC, another thing you should be doing anyway, but this one needs to be in the company�s name. You are prohibited by law from cashing any checks made out to your LLC, they must be deposited. Since this will be for a company, most banks will charge you their corporate rates, which are usually higher than personal account fees.

There are a few tax disadvantages, but they are small enough that it�s worth it to me. They are that: you will have to pay unemployment tax on yourself, which you wouldn�t do if you were a proprietorship/partnership. Also when you pull out profits from your LLC you will need to pay social security tax on them, which you wouldn�t do if you had a full corporation. If either of these sound scary to you then do your own research or consult an accountant.

How to create a LLC:

There are generally only two documents that are required to form a LLC: Articles of Organization, and an Operating Agreement. Many states provide a fill-in-the-blank form that becomes your Articles of Organization. In Virginia, the State Corporation Commission provides form LLC-1011 on their website. You need to fill in the name of the company (which in almost all states must end in �Limited,� or �Limited Liability Company,� or �LLC.�). You also need the name and address of the registered agent, and the company�s address.

A registered agent is a person who is designated by the company to receive filings, communications from the state, and is the person who will be served with legal papers. If you are using a lawyer, most will agree to be the registered agent for a fee. If you are not using a lawyer, or don�t want to pay the fee, it is perfectly legal (at least in Virginia) for a member of the company to be the registered agent. (For my LLC, I will be my own registered agent.)

Some states do not provide a form, but instead require that you write your own Articles of Organization. Exactly what must be in them is a state by state thing, so your best bet is to check with your state corporation commission. I do have a reference book with a summary of all 50 states, so if anyone wants to know what the requirements are for their particular state let me know and I�ll look it up.

In Virginia the fee is $100 to file the Articles, and there is a $50 annual fee (first year is included in the $100).

The second document you�ll need is the Membership Operating Agreement. This is a lot like a contract. It spells out who the initial members of the LLC are, how long they serve, who will fund the business with capital, how the profits and losses will be distributed, who will manage it, how the company�s assets will be managed, sets forth rules for corporate meetings, etc.

It is VERY important that you execute a Membership Operating Agreement, even if you are the only member of your company. The lack of an Operating Agreement (even if it is with yourself alone) is a sure-fire guarantee that the courts will rule your company invalid. Sign it, stick it in a fire-proof safe or safe deposit box or something, and forget about it. But make sure it exists.

That�s it for now! Next step will be to get a Federal Tax ID number and a State Sales Tax ID number, which will also allow you to get stuff that you are going to resell (photo paper, frames, etc.) tax-free. Tune in next week for that bit.

---Andrew

01/10/2006 09:17:13 PM · #47

wait!

Pause.

I want to state for the record at the end of this that the reason we did not go with LLC is that it is (sort of) easy to "pierce the veil" in a single-member LLC.
----------
This is a common test for LLCs to be pierced:

(1) The corporation must be influenced and governed by the person asserted to be its alter ego;
If you're the only photographer and/or only owner, this part is met.

(2) there must be such unity of interest and ownership that one is inseparable from the other; and
If you use the same camera to go shoot a wedding as you shoot your family get-together, this is probably true. Unity of interest with yourself and your business wouldn't be too difficult to prove.

(3) the facts must be such that adherence to the fiction of separate entity would, under the circumstances, sanction a fraud or promote injustice.
If you injure someone or you royally screw up, they sue, the corporation goes bankrupt and you try to avoid liability, this is exactly what the court is looking for as far as piercing your LLC.

Unfortunately LLC is not a method without other significant disadvantages such as believing you have limited liability and NOT having limited liability.

Also, as far as the "pass through" method, I think you missed something - you CAN deduct expenses from a sole proprietorship and partnership. Keeping meticulous records is important either way AND $5000 isn't $5000 if you buy a cam later. That's a business deduction.

The difference in the two for income purposes is that if you run a corporation at zero profit for 10 years, you're just a bad businessperson. If you run a sole proprietorship at a zero profit for 3 years, the government assumes you are a hobbyist and removes the business deductions.

M

Nusbaum

Fujifilm X-T1

Canon EF 50mm f/1.4 USM

01/10/2006 10:38:23 PM · #48

So if their is a claim against you and the LLC is pierced, you are still liable as though it was a sole proprietership?

01/10/2006 10:46:57 PM · #49

right, no liability protection or very limited protection. the danger isn't in being susceptible (because you are anyway as a sole proprietor), the danger is in believing you have protected yourself when in reality you probly haven't. if liability protection is THE reason you choose LLC, be careful.

Damian

Nikon D200