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Getting Started – Taxes, Permits & Insurance For The Studio Photography Business

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By Scott Bourne

I received a question from a GoingPro2010.com reader that I will answer here so it can benefit everyone. Tara Clark from Cincinnati, Ohio wrote:

“What steps do you need to do to get started in the portrait/wedding photography business such as liability and equipment insurance, sales tax ID (and how much money to set aside for taxes), business license, etc?

I have been doing photography for friends for fun and when I am ready to get serious I would like to know how to start properly. ”

Hi Tara. The fact that you are concerned about these issues shows me that you’re more likely to succeed than not. The photographers who think buying a camera is the most important step in starting a photography business have more trouble than those who consider important operational issues like insurance and taxes.

Let me start by saying I can’t give you legal advice, since I am not a licensed attorney. What I can tell you is the steps I took – on the advice of counsel – to get my own business going. You should consult an attorney in your area for more information. Some local, regional and state governments have laws regarding these issues that I woudn’t be familiar with. But generally, you need a business license for instance. Here’s the breakdown.

1. Decide what sort of legal entity you want to form. Your basic choices are listed in this document prepared by the IRS. http://www.irs.gov/businesses/small/article/0,,id=98359,00.html My company is set up as a Limited Liability Corporation.

2. Obtain a business license from your city, county and state governments – if needed. Some states have blanket business licenses that eliminate the need for local licenses. In other states, the opposite is true. I found this resource for you. The Ohio state government has created an online gateway that should get you started. http://business.ohio.gov/

3. In some states, your business license is also your sales tax ID. It used to be that way in Washington state where I live. However recently, in Washington, the law changed and now here you need to apply separately for a sales tax ID. This is necessary to collect and pay to government sales tax.

4. You will need insurance for both your business and your gear. Some policies will cover both. In general, most people can start with one million dollars worth of business liabilty insurance. If you have lots of assets, you may want to up that to protect yourself. If you obtain insurance for your photographic gear, make sure you obtain what’s called “inland marine coverage.” Without inland marine, you will only get “fair market value” for any loss. That translates to about 50 cents on the dollar. If you want to get REPLACEMENT value, you need inland marine. Also note that if you rely on your current renters or homeowners insurance to cover gear used for your business, you might be in for a very rude awakening if you make a claim. Most such policies specifically exclude business gear.

The good news is that most of these things are inexpensive. You’ll need to research how much each item costs. In my state, there are incorporation fees, license fees and insurance. Some of these fees are ongoing and some of them are one-time fees. You should initially budget around $1000 to cover setup. This figure may be higher or lower depending on whether or not you hire an attorney and what the fees are in your state.

I think it’s very important for professional photographers to take these steps. Operating without the proper licenses and insurance can not only cost you with local authorities, but if you have prospective clients who do their research and find out, they may not hire you fearing you’re somehow underhanded.

Congratulations on thinking these things through Tara. And good luck on your new business.

____
This post sponsored by WHCC – White House Custom Colour – Get Five Free 8×10 Prints From WHCC

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Written by scottbourne

June 9, 2010 at 5:36 am

Posted in Business

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2 Responses

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  1. […] out this article on taxes, permits, and insurance if you are starting your photography […]

  2. Do I need to take photography classes to obtain a photography licenses. I have been taking pictures of a little of everything and people love my photos. Now I would love to do it as a business but the courses costs so much

    dawin

    September 29, 2011 at 5:10 pm


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