Starting Out - required forms?

[greg-kennedy]

<p>Hey all - new user here, I've been shooting for a while but never sold any prints. I'm considering filing all the necessary forms with the local, state and federal gov't (my location is Conway, Arkansas, USA which is in Faulkner County) so that I would be legally able to sell prints, and possibly paving the way to a part time portrait studio based out of my garage : )<br>

I'm not quitting my day job to pursue this as a full-time, but since my expenses will be essentially nil (using all my hobby gear) as a sole proprietorship, I figure I may as well obtain the necessary licenses and hang on to them so I'm free to take a few clients and sell prints in my free time.<br>

That said, I've been trying to do the research on what I need to file in order to be 100% in the clear. Here's what I have worked out so far:</p>

<ul>

<li>Federal Level

<ul>

<li>As a sole proprietorship... nothing, really. File income taxes by simply adding a Schedule C to my 1040 every year.</li>

<li>(optional since I have no employees, but free, so it's already done...) Apply for an Employer ID number</li>

</ul>

</li>

<li>State Level

<ul>

<li>As a sole proprietorship in Arkansas... not a lot. There are rules about filing a DBA for LLCs and other corporations, but a localized sole proprietorship that does not sell alcohol / firearms or provide child care appears to be too small for the state to care. Again, file taxes with my personal income tax return.</li>

<li>File form ST-1 with a $50 fee: this is the State Sales Tax form, which requires me to charge sales tax for selling prints / CDs / frames / albums / other physical items, but also grants me a sales tax ID number which exempts me from sales tax when purchasing those items for resale from a store.</li>

</ul>

</li>

<li>Local Level

<ul>

<li>This one is the least clear for me. The county clerk has been less than helpful when I asked questions by email. Possibly I am contacting the wrong person. Here's what I have determined so far...</li>

<li>File a DBA ("Doing Business As") with a $25 fee: this properly registers my "fictitious" business name ("Greg Kennedy Photography") to my name ("Greg Kennedy") and allows me to do business as my business name. I'm having a hard time telling if this is strictly necessary, given that my business name _is_ my real name except with a "Photography" tacked on the end, but I suppose it couldn't hurt anything except my $25 to file.</li>

<li>Check zoning restrictions to see if I am legally permitted to run a studio in my garage and bring in paying clients... and if not, petition to get the zoning laws changed for my residence OR go rent a studio somewhere OR shoot on-location only. Ugh.</li>

<li>Business permit? I have seen people mentioning this in several places, but I can't find out who I might file it with, or if that is even necessary for my location. sba.gov's search engine appears to be non-functional right now so I can't use that to help.</li>

</ul>

</li>

<li>Other Stuff

<ul>

<li>Optional, but good ideas, might include...</li>

<li>Getting a lawyer : )</li>

<li>Getting insurance for my equipment, studio, business in case of angry or injured clients, etc.</li>

<li>Forms and contracts for actually shooting... but let's table that for another day.</li>

</ul>

</li>

</ul>

<p>How does that list look? Does everything seem in order here? There's a lot more to do if I wanted to e.g. apply for loans or financial assistance... I just want to have the bare minimum on record as a CYA in case I get audited.</p>

[acedigital]

<p>Sounds like you have it pretty well covered, check with a local CPA. My registering for Sales Tax you are registering your business with the state.</p>

[greg-kennedy]

<p>A little more research on the zoning restrictions: operating a home studio in Conway, AR in an R-1 residential district (where I am located) may be permitted as a "home occupation" as long as I get a Conditional Use permit, and fit the requirements on land usage etc. There are restrictions on size, number of employees, etc. but since the traffic would be light, it seems like this would be a good way to go.<br>

The downside? $325 non-refundable fee to even submit the application, a bunch of hoops to go through with notifying the neighbors, etc. And no guarantee that you actually get the permit.</p>

[Jerry_]

<p>"As a sole proprietorship... nothing, really. File income taxes by simply adding a Schedule C to my 1040 every year." Adding the *nice* thing that the IRS folks will likely require in your second year in business: Quarterly estimated income tax payments. They (the IRS) like to hold your money, so when you do your taxes, they don't feel left out.</p>

<p> </p>

[hjoseph7]

<p>You might want to read about the differences between sole proprietorship and LLC Limited Liability Corporation. Allot of independent and contract photographers opt for the later to reduce financial and legal entanglements. Regardless of what type of license you decide to purchase, you are going to have to file your assets(equipment) with your county government and you will have to register with the IRS as a business owner.<br>

<br />Once that is done, all the equipment you listed when you filed, is going to be taxed and therefore subject to repossession. The IRS will also require you to file quarterly statements listing your profit and losses and general business situation.<br>

The good thing is that you will be able to write-off your business related expenses when filing taxes. For the first few years, the IRS will look the other way if you do not record a profit. After about 4 years or so, if you keep filing a loss, you might get audited which might lead to the declaration of your business as a hobby forcing you to close it down. <br />Good Luck !</p>

[dds701]

I am considering doing this same scenario as Greg but in California, anyone here gone thru this process and any advice?

Thanks

Doug