Setting up home-based business... paperwork?!

[raylene_hansen]

<p>I've been taking photos of friends' kids/families for years and just give them a disk of photos (free). With both kids in school all day I decided to make this hobby something that earns money. Basically I want to be able to pay taxes and bank the money in a business acct to keep it all separate.</p>

<p>Right now I have a website set up, and I asked friends to ask their friends & family if they wanted holiday photos done (so I can practice some more) and upgraded my equipment. I got better lights, a better lens, more backdrops, stands, updated software. I plan to do courses with NYIP and Better photo to make sure I know how to use all this equipment. I also worked out what I would charge for sessions/photos etc. I've ordered samples from Mpix, WHCC and Bayphoto. Even figured out how I would package the customers' photos. :)</p>

<p>I got an EIN - registered as a Sole proprietor, and went to get a Business certificate today so I can get a business bank account. Minutes later I am at the Assessor's office, then the Planning office filling out forms for the Zoning Board of Appeals, because my neighbours have to agree with people coming to my house, and advertising that points to my house (well, after the customer sets up a session). </p>

<p>I am feeling overwhelmed with all this. I doubt I will even make enough money in one year to cover all the fees! Is this what every photographer who works from home does? Is there a better way to do this? I live in MA. </p>

<p>thanks!</p>

 

[daverhaas]

<p>Don't forget the state licensing and exams / certificates if required. Also Chamber of Commerce and Better Business Bureau.</p>

<p>Also - find a good Lawyer, Accountant and Bartender...You'll need all of them at some point.</p>

<p>Yes - it's what we all go through to set up a business. It's part of the cost of changing from a "Hobby" to a business.</p>

[mrossi]

<p>All I can suggest is to start a good filing system. I find the paperwork and admin stuff overwhelming, but I file diligently and save the piles of stuff for my accountant to sort out. It's a pain but it's par for the course running any business.</p>

[raylene_hansen]

<p>I did download Quicken Simple Start (free) to keep track of the in and out stuff. I think I need to go talk to my lawyer...</p>

<p> </p>

[jpo3136b]

<p>Don't forget liability insurance (slips, trips, falls); and, remember that many businesses fail because they are under-capitalized. If you are going to talk with a lawyer, then you may want to begin outlining what you want for a model and a location release. I don't live in Massachusetts, but I hear that's a heavily regulated commercial environment. </p>

<p>I don't know how to tell you this, but if you are still in the class-taking stage; you may be better off researching now and activating your plan later. </p>

[raylene_hansen]

<p>I don't mind you telling me that. :) I know I need more experience, and I have always 'winged it' as far as lighting and editing photos. I just felt that if I was to charge people for photos I needed to be professional and look professional. <br>

thanks!</p>

[steve m smith]

<p>Start getting the work in first. Worry about all the paperwork stuff when you have enough work to start thinking about it as a business.</p>

[raylene_hansen]

<p>Steve, that is what I was looking for. My course can take 12 months so not likely I will be booking several clients every week for at least a year. I won't be marketing for that long either. I expect to make less than the IRS cares about (I think it is $600?). </p>

<p>Is it feasible to claim the income on my own SSN?</p>

[hjoseph7]

" am feeling overwhelmed with all this. I doubt I will even make enough money in one year to cover all the fees! Is this what every photographer who works from home does? Is there a better way to do this?"

 

================

If you have the time and money you can do all of this in about 6 monhs if your eally work hard. However if you are just trying to do this part-time it can take a hell of a long time, sometimes 2+ years to get all the paper-work, letter heads, business cards, clientelle, lawyers, accountants, zoning reqs etc inline with what you are doing. Like Steve said start getting the work first then everything will fall in place. Don't worry too much about equipment either.

[Leonard-just-Leonard]

<p>Steve Smith nailed it. The Catch-22 is it's very hard to legitimately report expenses retroactively. </p>

[justin_greene]

<p>I wouldn't work out of the house, having people come over. If your home owner's insurance company finds out, you'll loose coverage. Don't even call to ask.</p>

[raylene_hansen]

<p>I know my husband would prefer me to go to clients' homes, and for a lot of people (since I know the people I photograph, or they are friends of friends) it would be a lot more convenient. </p>

<p>I do have the time and money to get moving faster. Being a designer type person I have already designed my website, logo, photograph packaging for customers, business cards etc. <br>

I just intended this to be a part-time thing, and needed some way to report income tax and keep that side of things separate. I got way in over my head :)<br>

Like I said I am going to talk with my lawyer regarding the paperwork side of things. thanks all for your help.</p>

[justin_greene]

<p>You don't really need any of that paperwork above. You just file as a sole proprietor under your SS on your taxes. The local government won't know, or likely care, until you get huge. Same for licensing, etc. Just do your thing (away from your house) but report income as you get it for the year under your SS.</p>

[nathan_meador]

<p>You may also need to look at sales tax reporting...depending on the state. I'd suggest using local parks/landmarks for starting out, not your home; at least not until you've worked out insurance and zoning.</p>

[aimee_pieters]

<p>Raylene,<br>

Your own instinct and advise is better than some of the comments above about operating under the radar. It's potentially easier, less time consuming and less expensive to do it right in the first place. It's certainly possible to have insurance coverage for a home based business and much of the information you're seeking really varies from location to location, so YES, your attorney is the place to start. I'd love to see your logo and other things that you've designed.....-Aimee</p>

[justin_greene]

<p>Yes, go ahead and call your homeowners insurance and tell them you are going to have clients coming to your house multiple times a week. Be prepared to look for a new homeowner's policy after that.</p>

[Charles_Webster]

<blockquote>

<p>Start getting the work in first. Worry about all the paperwork stuff when you have enough work to start thinking about it as a business.</p>

</blockquote>

<p>I don't believe in that system. Mostly because when you get busy with paying clients, you don't have the time to set up business systems, and it's even more difficult to track down all the receipts you kept but didn't log/enter, etc.<br>

Build your business systems now, while you have time. Then as you build your business, the framework is already there. You can use the early clients to make sure everything works (model releases, contracts, invoices, etc.) and you will have time to fix any problems before the next session.<br>

And as Aimee says, get your insurance covered now, because as Justin says, you could lose your homeowners insurance coverage if they object to you running a home business.<br>

If you are in Calif, every bit of work you charge for is subject to State Sales Tax, not just materials or deliverables. You need to be prepared to comply with their requirements, and the best time to become prepared is in advance.<br>

I once taught a business practices class, and the advice I gave then, and still give, is that it's easier to grow a business if the skeleton (business practices) is in place before you start growing, not after.<br>

<Chas><br /></p>

[chris_donovan1]

<p>I live in Ma., started my photo business 12 years ago. At first I registered with the town hall - company name- then took that town certificate to the bank to open a business account THEN proceeded to make hundreds of sales calls to actually get business. To begin you cannot have all this paperwork bs on your mind- your a photographer not a desk jockey. Sure I understand you want to do things legal, but you are a speck on a dandelion to massgov. I would put all income under your husbands name and 1090 him at the end of the year. Under $600 do nothing , over $600 1090 your better half. Sales tax is easy <a href="http://www.mass.gov/Ador/docs/dor/Forms/Wage_Rpt/August%201%2009%20pdfs/st_9.pdf">http://www.mass.gov/Ador/docs/dor/Forms/Wage_Rpt/August%201%2009%20pdfs/st_9.pdf</a> this is the from I've used for ever. This form is a little tricky at first but after you do it once your set. </p>

[marc_felber1]

<p>I would find a mall and ask them to rent space. You can also rent space pretty cheap at the flee market. The liab ins is pretty cheap on photo.net if you are a full member. Running a studio out the house is just asking for trouble. The flee market option is your best bet if you are just starting out. </p>

[stephen_asprey2]

<p>A better way to do it?</p>

<p>Yes...come to Australia. All you need is an ABN (Australian Business Number) so the tax dept know about you...ten minutes on their web site; another 5 minutes on another website to get your small business insurance pack, and you are there. Finished. You can register your business name and put up your shingle.<br>

Then get on Yahoo Small Business and spend an hour using their hosting and email tool, and you are on the web with your own website for peanuts. Easy as.</p>

<p> </p>

[les]

<p>Agree with Stephen. Setting up a Pty Ltd business in Oz (not photography, though) took about couple of hours, all included. Also - keep your files in perfect order, receipts, correspondence, etc. - it makes life only unbeareble instead of pure hell :)</p>

[ted_raper1]

<p>Just finished registering my own home-based business (in North Carolina). The steps I had to follow:<br>

register the name of the business with the state as a sole proprietorship</p>

<p>get sales tax ID number and forms for filing sales tax from the state Dept. of Revenue</p>

<p>set up business bank account</p>

<p>Not too difficult, at least here in NC, and yeah, I'm working the business out of my home but I'm selling prints in galleries so I didn't have to worry about actually conducting business in my house. And keep absolutely everything - receipts, etc - if you plan on deducting your expenses on your taxes.</p>

[marefiala]

<p>Hello all! Raylene, I can definately identify with your post! I am glad to see someone ask this question and get some responses, as I am in the same boat right now. I have been researching my brain into a fog. I do portraits on location using just the bare minimum equipment. I want to know the exact steps (MN) I need to take for business start-up in my area so my ducks are in a row when I start booking more clients. I have seen so many different opinions and advice (all well intended and informed), but it still leaves me wondering which advise to take. Marketing is last on my list for right now (though i'm still researching); I just don't know what I really need for now and in what order..i.e. Insurance, Tax ID, License, Permits, Contracts, etc., expecially when I do on-location. Pricing? Now, that's a whole other can of worms!</p>

[aimee_pieters]

<p>In response to Justin (who sounds like he has had some type of bad experience),<br>

This is why there are umbrella policies that cover your home for everything and probably something you should consider. If you do photography for a friend and she slips on your sidewalk, was is personal or business? A proper umbrella will cover situations that a standard policy will not.<br>

Questions like this need to be properly answered by professionals. This is a great forum for business questions pertaining to marketing, advertising, techniques, networking, etc., BUT legal and financial questions should be addressed elsewhere.</p>

[justin_greene]

<p>You don't need a professional legal advisor. I can tell you that I called my homeowners company to inquire (just to inquire) if it was possible to cover a home based business where people occasionally came to my house for business purposes. I was told that no, it wasn't possible, and was I asking because I was doing it? I hemmed and hawed my way out of a positive answer.<br>

<br /> A week later, I get notice my policy was cancelled. I had to call and yell at them to get them back on. Umbrella policies are not meant to cover business at your home (part of the inquiry). Just really large lawsuits from idiot friends that fall on your steps.<br>

So, as I said, go ahead and inquire. Let us know what happens.</p>