The following is a guest post from Kara Jensen Zitnick of LaunchHER. This first article is part one of four and will set up the foundation of legal issues any photography business owner needs to address. In part two, Kara will discuss contracts; in part three, copyrights; and in part four, trademarks. Kara is a great resource, has affordable rates and is passionate about helping small business owners. Pleave your comments and questions below and check out her website: LaunchHER.com.
BEFORE YOU CLICK :: Important Considerations For Your Photography Business
Part One :: 3 Steps to a Solid Foundation
Your business means the world to you. Your heart and soul is in every shot, click and pose. Put your business on solid ground in three simple steps:
1. Make It Legal :: Choose a business entity for your venture. Whether you operate as a Sole Proprietor, Partnership or LLC (Limited Liability Company), creating a legal entity under which to operate your photography business can personally protect you from liability, as well as provide potential tax consequences, depending upon your entity choice.
A Sole Proprietorship is the easiest of the entity choices to form. Generally, you operate as a Sole Proprietor if you have not formed any other entity. Doing Business As (DBA) is a common form of Sole Proprietorship. When operating as a Sole Proprietor, your personal assets can be used to satisfy business debts and liabilities. If a law suit is filed against your photography business, the suit is, essentially, filed against you personally. Profits and losses are reported on the owner’s individual tax return.
Partnerships are formed between two or more people. While partnerships may be formed on a simple handshake and oral agreement, it is smarter to operate under the terms of a written agreement. Partnership Agreements govern how the entity will operate, how profits and losses will be shared, among other things. An attorney can draft a partnership agreement that reflects the role of each partner, as well as how the partners desire the joint venture be operated.
In general, LLCs give its owners (members) limited personal responsibility for business debts and liabilities of the company against creditors. This means your personal assets cannot be used to satisfy business debts. Profits and losses are reported on the owners’ personal tax returns, so no taxes are paid at the business level. LLCs are formed at the state level by filing the state-required documents and paying applicable filing fees.
