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Question from Jorie: “I’m just wondering my photography started out as a hobby, but now I am doing it a lot more and making a profit from it, however I don’t make that much,
and would like to register my business so that I can legally own the name. However
in doing this would I have to claim it as a business and pay to the government? This is new to me so I want to take the correct steps toward what I am wanting. As well because I need to look into creating a contract for the few weddings I have booked.”
Melissa: Even as a hobby, you should be paying taxes.
Melissa: Get registered, and they’ll give you all the info you need on how to start paying taxes and being legal.
Madison: But how do you even take the step of getting registered? Any sites that walk you thru it?
Brandi: LEGAL ZOOM!!! They are affordable and help you step by step so you are completely covered. I just registered my business this past year and they’ve been the biggest blessing ever!!!!
Heather: You register your business through your state’s dept of revenue. You then start collecting sales tax from your clients and pass that along to the state.
Morgan: Such a touchy subject. Depending on how much you make-you can just add it to your taxes at the end of the year…
Melissa: Morgan, sales taxes generally have to be paid more frequently than that. Your federal income taxes can be paid at the end of the year.
Tyann: If doing as a hobby, you can add them to your personal taxes. When you get your tax id from the state, you will need to calculate how much income you expect, and they will tell you how often you will need to file sales tax. As for registering, follow instructions on your state’s small business website. Note that some banks will even register you with the state as a service when you open a business account.
Jeanne: I would talk to a lawyer – ideally a tax attorney. Set it up right to begin with. So much easieser than changing later.
IMHO: 🙂
1) decide if you’ll be a sole proprietor or LLC. (LLC may protect your other assets better in the unlikely event of a lawsuit.)
2) Register your business name with the state. (Your attorney might suggest a name other than your personal name)
3). Get some business software like quickbooks so you can show you are earnest in keeping business records – can be helpful if the IRS comes a calling.
4). Pay your taxes. The fines stink and it puts you on their radar.
5). Don’t assume your home owners umbrella policy will cover you if you’re operating a business in your home. You might need/choose to have additional insurance.
Every state is different so contracts need to reflect that. Make sure they say what you think they say and that they reflect the laws of your community.
The other bummer is roll fees like this into your overhead and your fees. Fewer financial surprises create stronger businesses that last for years and years 🙂
Do this and then go have some fun taking pictures!
Karen: Great advice Jeanne!
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