Transition to Full Time

<p>Hi all, <br>

I just finished my second season of part time wedding photography. In this time, I have photographed 25 weddings with great success. I've learned and developed so much and have loved every bit of it. I am considering a transition to full time work yet am not sure of what unexpected cost will arise in the transition. I have been up'ing prices throughout the 2 years yet thus far this has all been funny money because it has been merely a hobby and I've had another job of full employment. One full time photographer that I respect a lot has said that I will need to have 3x the incoming sales of my current salary in order to maintain the same standard of living. Thus, if a person wanted to maintain a 70k lifestyle, they would have to have 210k sales in photography work. This seemed super high to me and I was curious as to what others thought. Thus, below are a few questions that I would love to read people's response to. <br>

1) What are some of the hidden financial cost of depending on a photography business as one's sole income?<br>

2) What are your thoughts that it takes 3x one's current salary in incoming sales to maintain current standard of living? If you agree, where is this money going?<br>

3) Any advice or opinions on transitioning from part time work to full time?<br>

Any thoughts and words are greatly appreciated. <br>

Thank you:)<br>

Ben</p>

 

<p>Things might vary from contry to country but: here I pocket lets say 1000 at an employed job. They come with a note reading that my employer had to withold 300 for tax worker's part of health insurance and nation wide official retirement system and and unemployment insurance. The note does not say the employer also paid their part of healt (& retirement?) + accidents at work & on my way insurance. Having an employee over here is about five thirds of what those get.<br>

Money sinks with being self employed:</p>

<ul>

<li>health insurance. - While you are just making ends meet its much cheaper to get it via a job.</li>

<li>retirement plan</li>

<li>business running cost (forced) here you'll face memebership in the industry & comerce chamber</li>

<li>Business liability insurance it isn't the 50or less per year an ordinary guy pays for private liability</li>

<li>Taxation related sillyness: While workers buy cars enterprises lease theirs. - is it really cheaper? - No way but it looks great on the corporate tax declaration and makes a lot of sense in the light of taxation.</li>

<li>Borrowing money is harder for enterprises! - prepare to see your credit cut down to 1/3.</li>

</ul>

<p>I'd say your "a third oif sales might become income" advice is sound and solid. The 2nd third goes taxation and wage side cost. I'd simply take the 3rd third as "production cost" materials, tools wear, tools insurance, and all the tax deductible stuff like advertising etc. <br>

Last not least: There is a risk involved in running a business. It has to be covered either with a rock solid plan or more income to face the related costs. How much does it cost you to hire Larry the substitute while you cure your broken leg or bounce around in a padded cell after facing Bridezilla? - Your personal health, no matter how great, isn't granted! - I suppose you'll pay a pretty penny to get a substitute shooter and 2 substitute editors to simply reduce losses during your sickness & vacation periods.</p>

<p>You need to develop a business plan. Yea, I'd believe you'd need to bill out $210k in order to walk away w/ 70k between taxes, health care, expenses, equipment amortization, etc etc. The list of expenses goes on and on.<br>

Many cities have organizations that connect new business w/ older/retired businessmen.</p>

<p>Thank you both! Josen, I like your break down of 1/3's and I think I will be thinking of this often moving forward. Howard, you're right. I need to work out more thought out business plan. All and all, i don't think I am quiet ready for the transition yet its good to know the direction that I need to head. </p>

<p>I guess most photographers don't make 70K. And those that do are well established businesses and probably have people working for them as well. They are not start-ups.</p>

<p>Being self employed means you need to do a lot of things, not just take pretty pictures. And you need a large buffer of money in your company so that you can ride out season variations and slumps on the economy.</p>

<p>How much you need to make depends on how big your business costs are. Your salary is just one of many costs. </p>

<p>If you are working from home I think you should be able to manage with 2.5 times your salary. But I don't think you can make 2.5 x 70K a year on photography without having people working for you.</p>

<p>Actually to be blunt, I think you need start at a 35K salary and work your way up. You need time to develop a business and working full time at the same time doesn't give you enough hours in a week. </p>

<p>I run a photography business and those numbers seem whacked to me. Taxes, travel, equipment, health insurance and accountants probably take 40% of my gross.<br>

On the transition, it will probably take longer than you think. For me it was three or four years until I was making my previous income as a consultant. You have to work incredibly hard the first few years, but you probably know that. Life without any type of safety net isn't for everyone, but i have been freelance for much of my life and prefer it. </p>

<p>Hi,<br>

You seem to be doing quite well part time, best advice is stay as you are.</p>

<p>Having to pay for your own health insurance and retirement plan are big factors. And keep in mind that there are no paid vacation days or paid sick days when working for yourself. No company expense account for business meals, travel expenses, etc.<br /><br />How much did you gross on those 25 weddings and what did you net? Can you double or triple that once you go full-time. Beyond weddings, what other work can you pick up once you have the time free to do it.<br /><br />One good friend of mine made the move from part-time to full-time photography when he found the income from jobs he had to turn down for lack of time exceeded what he was making in his day job. He already had in hand more work than he could handle as opposed to hoping that he would pick up more work when he went full-time. To me that seems a good test of whether to take the plunge.<br /><br />"I guess most photographers don't make 70K."<br /><br />How much it costs to get by varies widely according to where you live. There are areas in the U.S. where you could live quite comfortably on 70K and others where it would be a challenge.</p>

<p>Where you live and work will be relevant apropos:<br>

> the detail of the structure of your current employment <br>

> the detail of the types of business entities that can be established<br>

> the differences between the benefits that would typically be associated with an employee <br>

> the taxation, legal, insurance, registration and associated structures and conformities <br>

> the typical market; the ability and willingness of that market to purchase your service and product <br>

<br>

As a general answer, in my experience, most people who are employees and choose to leave their employ and go into their own business fail to realize three things:<br>

Firstly, as an employee, they are already in their own business: they are selling their time and skill to the employer for a salary or wage and often added benefits<br>

Secondly, they fail to make a complete list of the “added benefits” of being an employee and calculate the real worth of those <br>

Thirdly the do not reckon the actual costs of establishing and doing business<br>

<br>

I think you’re on the right track asking that first question – and as my SIMPLE and GENERAL answer to it: the main hidden financial cost of depending on a photography business as one's sole income are:<br>

> not reckoning the actual WORK TIME involved and subsequently accurately assessing one’s actual HOURLY WAGE as a comparison to when one is a paid employee<br>

> not reckoning the loss of holiday pay; sick pay; superannuation; long service leave; and similar, thus subsequently not accurately accessing the WAGE as a comparison to when one is a paid employee<br>

> not accurately (firstly) listing all and (secondly) accurately assessing the costs of the EXPENSENSES of the business and subsequently not (after adding these expenses to WAGES), not accurately assessing the necessary GROSS INCOME<br>

> when reckoning the expenses of a business, under-assessing the real costs of marketing <br>

<br>

As a general answer to the second question: the standard of living that you enjoy on a $70,000 salary will heavily depend on the added benefits of being a paid employee and my opinion is that it is both futile and also guessometry, <strong>.without you supplying the necessary details of your particular situation</strong>, to begin to try to equate how many times that salary you’d need in sales to keep a similar standard of living, because the latter will also depend of the BUSINESS ENTITY that you construct.<br>

As three simple examples – you might be on $70,000 salary and your employer supplies you with a company car –leave your employment and your new business needs to supply a car for you; you might be on $70,000 salary and your employer supplies 4 weeks annual holiday at full pay – leave your employment then your business has to supply the same; you might be in sales and employment contract might be for five years and you are at year two and in the contract is a bonus system based upon sales’ targets, which you met in year one and two and reasonably expect to meet in years three, four and five – if you leave your employment then your business will have to attain SALES to facilitate the INCREASE in your WAGES above the current $70,000 . . . etc.<br>

<br>

In answer to your third question, my general comment is: <br>

> firstly accurately assess and reckon into $ terms to the best of your ability ALL the income and benefits of your current employment<br>

> research the TYPES of business entities available to you<br>

> research the COSTS of establishing and running each of those<br>

> the three best expenses for setting up and running business are:<br>

- a smart lawyer who understands and is experienced in small business and tax law<br>

- a smart accountant who suggests<br>

- a smart and experienced insurance broker <br>

<br>

WW</p>

25 weddings in two years, wouldn't be enough for me.

 

Have you taken a course on owning a business?

 

<p>Expenses (US):

 

Taxes:

 

<p>Federal withholding

<p>FICA

<p>State

<p>Unemployment both federal and state

<p>Health Insurance

<p>Auto expenses

<p>Travel

<p>Equipment

<p>Trade association dues

<p>Office expenses

 

<p>Just to name some.

 

<p>Income to you?

 

<p>My recommendation, keep your day job.