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Setting up new business

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OortCloud said:
PenguinPhotoCo said:
To set up a subchapter s corp will run $600-800. then you need to do corporate income tax PLUS the individual you do now and comply with the laws for corp officers, meetings, etc. AND keep the funds and bank accounts very separate from your personal ones. Corp inc tax filing/ forms can cost you $400-600 a year on top of whateve ryou pay for tax prep and books now.

AND you ahve to be an emplyee of the corporation..so you'll need workers comp insurance and payroll (taxes, filings, W2, etc). More costs ($600-800 a year).

So you spent THOUSANDS of dollars to get setup and will spend $1500-2k a year to keep it going.

For what?
IF you have income of 40k and up you MAY save that on FICA taxes...take some of your salary as dividends and not paycheck.
Michael Fryd said:
PenguinPhotoCo said:
...

The only benefit to being LLC is POTENTIALLY liability - but in your case, sorry, its a waste o fyour time an dmoney. IF you had employees it would be worth it. See, if you screw up a wedding and a client sues they'll sue your LLC and the photog that screwed up...YOU in this case. So the LLC gives you no protection.

And no judge is gonna take your house or car or cameras because a bride is unhappy. Have good contracts and do the job as promised and you'll be fine.

...
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A Sub-Chapter S corp can offer tax benefits in addition to liability protection.

.

Liability protection is not just for brides unhappy with your work.

While clients may sue if they are unhappy with your work, the real danger is that someone will get hurt or that property will be damaged. Imagine you have a light on a stand at a wedding reception. The light falls and hits someone in the head. A judge may very well take your car or camera to pay the medical bills of the injured person. If you are a Sole Proprietorship, you may lose other assets, completely unrelated to the business (i.e. the savings account for your son's college education).

A business structure such as a Sub-Chapter S offers an additional level of liability protection.

While a client might try to sue you personally, if their contract was with the business, then they may not have a legitimate claim against you.
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Yes and no... Say a truck driver for a big corporation runs over your kid. You're gonna sue the corporation AND the driver, right? I've seen it happen (made the news a few years ago when a driver didn't hook up a trailer right and it came off, crossed teh center line and killed a family in a minivan). Sorry, but the driver was sued (and went to jail). Corp or not he did the deed and is the one being held responsible.

So youre light stand falls on the flower girl...they're gonna sue your photo corp AND you - YOU are the responsible party so you will be added to the lawsuit. GUARANTEED. If they win against YOU then yep, you're gonna lsoe that college savings account (unless its in his name..then it's not your assett). Now your CORP has insurance...do YOU have any PERSONAL liability that covers things you do at work? I doubt it. As a sole prop my biz insurance does that though.

Some depends on the state where you are - my state a married couple is like a corp -my house, cars, etc are in BOTH names - sorry, no judge can take them away (maybe lien them against future sale of the asset). And here you can declare bankrupty- and the state WILL NOT let your 'tools of the trade' be taken in bankrupty...aka, your camera - your ability to earn a living!!

So there isn't much that can be taken...ASSUMING your insurance company can't cover whatever the issue is. Or you can't settle out of court in the first place. Or that it even gets that far.

What is most likely (as insurance agents) is that you'll damage a house or venue (knock over a lamp in the brides house, etc). A local venue here now demands proof of insurance from all vendors because a DJ dropped soemthong on their new marble dance floor and damaged it and had no insurance - so YES, he's being sued by the VENUE. No contract he had with a bride will protect him from that (see another recent thread about contracts). No corp will save him from having to pay. It's not the sort of lawsuit that will (or should) bankrupt him and no judge is gonna take his kids college fun and the house over a broken dance floor.
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OortCloud said:
Hi Mark,

Thanks a lot for sharing! I think I'll follow your advice and contact the local BC. But I won't need DBA since I do not intend to use an assumed name, and therefore I won't need a separate account.

I fact I've been filing taxes as Sole-P working for other companies and I don't sell prints, so Illinois didn't tell me anything about being behind on sales tax. I'll probably continue to file the same way working for myself. I use TurboTax Small Business and it practically leads me through everything and in the end I send everything off via Intuit's website.

What i wanted to ask you is that how did you set up those free meetings with your SBDC.

And what do I need to join PPA and apply for that insurance.

Thanks a lot?
Click to expand...
I just used Turbo Tax small business, and I loved it as well. I particularly appreciate how Turbo Tax will maintain a log of my depreciating assets over time. That alone will keep me coming back.

For the SBDC, start here : http://www.illinois.gov/dceo/SmallBizAssistance/BeginHere/Pages/SBDC.aspx

Find one in your area and give them a call. They'll work out the rest with you and schedule an appointment. They'll meet with you quite often if you like. I used the College of Lake County location since I'm in Lake County, but they have locations all over.

For the PPA, Just go to PPA.com and join. It will cost somewhere over $300 for the year, but it gets you $15,000 of equipment insurance. Once you're a member, you can then upgrade your insurance through the same company to get liability coverage. Put in your details, and you'll get a quote. Check it out here:

Loading…

ppa.locktonaffinity.com

Good luck!

Mark
 
Michael Fryd said:
PenguinPhotoCo said:
To set up a subchapter s corp will run $600-800. then you need to do corporate income tax PLUS the individual you do now and comply with the laws for corp officers, meetings, etc. AND keep the funds and bank accounts very separate from your personal ones. Corp inc tax filing/ forms can cost you $400-600 a year on top of whateve ryou pay for tax prep and books now.
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You can pay that much to setup a Sub-S Corp., but you don't have to. Legal Zoom will do it for $150. Incfile.com will do it for as little as $50. If you are good at reading instructions, and filling out forms, you can do it on your own.
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Plus state fees...plus advertising in paper of record...plus you need a corp record book...been down this road in my state.
Michael Fryd said:
Michael Fryd said:
AND you ahve to be an emplyee of the corporation..so you'll need workers comp insurance and payroll (taxes, filings, W2, etc). More costs ($600-800 a year).
Click to expand...
The payroll taxes paid by a Sub-S Corp, work out to be identical to the Social Security, Medicare and Self-Employment taxes that a Sole-P pays. A Sub-S does not pay "extra" taxes.
Click to expand...
No, but you have to file quarterly CORPORATE returns, not just the annual one you're used to (sched C/1040).
You have to pay payroll...in MY state a sole prop does NOT need workers comp insurance and you don't pay SUI (supplemental unemployment insurance).
If you have employees you MUST have workers comp ($550 min, it's a function of total payroll so if you get paid more than $20k ish a year it will go up).
SUI is paid by the EMPLOYER and EMPLOYEE. 3% each, give or take (depends on industry and company history).
Michael Fryd said:
In terms of tax prep costs, again it depends. You certainly can pay someone a lot of money to do your taxes, but you can also buy TurboTax and do it yourself.
Click to expand...
I do tax prep for jackson hewitt...the more forms the most it costs. PERIOD. It's the ONLY way the IRS lets tax folks charge customers (well, by the hour works too).

TT has issues...it's basically a data entry device - you can do that for free at irs.gov. so why pay TT?
They WILL NOT go with you to an audit. they will not pay fees and penalties and interests for mistakes. Not sure how much 'advice' they give you...but not nearly as much as a tax pro that has experience. I do more tax returns in a week than you probably have done in your lifetime...and I'm only working part time.
There are all sorts of things you need to know to get the maximum refund and min chance of being audited.

And will TT do corporate returns for fed, state and local? (i don't know, never used TT..just get customers that can't make it work for them)
Michael Fryd said:
Taxes for a Sub-S are not that much harder than taxes for a Sole-P. The difference is that the business stuff goes on the corporate return, instead of a schedule C. The corporation issues a K-1 with the totals to put on your personal return. Generally a Sub-S can avoid the added paperwork of the "office in a home" worksheets.
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Agian, haven't done corp returns (that's a diff dept..i will ask though). Do you still get your home office ded? I saved about $3900 this year with it.
Michael Fryd said:
My understanding is that being a Sub-S lessens the likelihood that you will be audited. If you are audited, the audit is limited one entity (i.e. personal or business). With a Sole-P, they look at both. More chances for them to find something they don't like.
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With an audit they look at ONE THING, not everything. So it may be your home office expenses or biz expenses or EIC, etc. they do not audit everything on the return.
Michael Fryd said:
Many accountants charge much more for personal returns when you have a Sole-P. Spending $300 on a simple corporate tax return isn't an issue if it saves you $300 on preparing your personal return.
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My CPA has been charging me $450 (2 sched C, home office, 1040, fed and state, 2 W2) JH and HRBlock charge a sliding scale...if that's the proper term. They have a peak season (now) and a slow season (march). Fees in march are 1/2 what they are now. and april they go back up. JH charges more than my CPA.
I did a return today - sched c, 1040, state and local, EIC - $726 fee. EIC is expensive.
Michael Fryd said:
Michael Fryd said:
So you spent THOUSANDS of dollars to get setup and will spend $1500-2k a year to keep it going.
Click to expand...
No. You would spend thousands. Some people would spend more, but many would spend less.
Click to expand...
So $450 once a year. Corp needs 4 quarterlies and the annual PLUS payroll costs (can you do it yourself? VERY few people do..very time consuming to make all those payments of taxes to every tax org out there - we here have fed, state, local (for where you live) plus another local tax for where you work). Workers comp insurance (and they DO audit that ever year - so figure 2 hours of your time for that).
Michael Fryd said:
Michael Fryd said:
For what?
IF you have income of 40k and up you MAY save that on FICA taxes...take some of your salary as dividends and not paycheck.
Click to expand...
FICA taxes are about 15.3%. If you are able to shift $20K into dividend income you will save about $3,000 in taxes for the year. If you make more than $40K a year in profit, than you can save even more in taxes.
Click to expand...
IRS is watching for that. Used to be a 1099 meant a sched SE. Not a big deal. Now? They demand a sched C - you MUST show expenses on a sched C....so now A) your income is lower so you can't cheat on tax credits and obamacare as easily) and B) you must pay the FICA/self employment tax.


So what they're watching for is folks payrolling themselves at $15k (min wage say) and div themselves at $50,000 to avoid fica and max out on EIC. (in case you're not aware EIC is a refundable tax credit for low income folks over 24 or with kids under 19...at about 18k in income yo ucan get $7500 back in your refund even if you paid no taxes into the system. it is probably the number one most abused/cheated thing there is)


So the IRS wants you to be paid what an 'average photographer' is paid according to them...which as some here often go look up is what, $36k (depends on your official title and state of course).

You can do whatever you want....just be prepared to defend your position should the IRS come a' asking.
 
PenguinPhotoCo said:
Michael Fryd said:
PenguinPhotoCo said:
To set up a subchapter s corp will run $600-800. then you need to do corporate income tax PLUS the individual you do now and comply with the laws for corp officers, meetings, etc. AND keep the funds and bank accounts very separate from your personal ones. Corp inc tax filing/ forms can cost you $400-600 a year on top of whateve ryou pay for tax prep and books now.
Click to expand...
You can pay that much to setup a Sub-S Corp., but you don't have to. Legal Zoom will do it for $150. Incfile.com will do it for as little as $50. If you are good at reading instructions, and filling out forms, you can do it on your own.
Click to expand...
Plus state fees...plus advertising in paper of record...plus you need a corp record book...been down this road in my state.
PenguinPhotoCo said:
PenguinPhotoCo said:
AND you ahve to be an emplyee of the corporation..so you'll need workers comp insurance and payroll (taxes, filings, W2, etc). More costs ($600-800 a year).
Click to expand...
The payroll taxes paid by a Sub-S Corp, work out to be identical to the Social Security, Medicare and Self-Employment taxes that a Sole-P pays. A Sub-S does not pay "extra" taxes.
Click to expand...
No, but you have to file quarterly CORPORATE returns, not just the annual one you're used to (sched C/1040).
You have to pay payroll...in MY state a sole prop does NOT need workers comp insurance and you don't pay SUI (supplemental unemployment insurance).
If you have employees you MUST have workers comp ($550 min, it's a function of total payroll so if you get paid more than $20k ish a year it will go up).
SUI is paid by the EMPLOYER and EMPLOYEE. 3% each, give or take (depends on industry and company history).
PenguinPhotoCo said:
In terms of tax prep costs, again it depends. You certainly can pay someone a lot of money to do your taxes, but you can also buy TurboTax and do it yourself.
Click to expand...
I do tax prep for jackson hewitt...the more forms the most it costs. PERIOD. It's the ONLY way the IRS lets tax folks charge customers (well, by the hour works too).
TT has issues...it's basically a data entry device - you can do that for free at irs.gov. so why pay TT?
They WILL NOT go with you to an audit. they will not pay fees and penalties and interests for mistakes. Not sure how much 'advice' they give you...but not nearly as much as a tax pro that has experience. I do more tax returns in a week than you probably have done in your lifetime...and I'm only working part time.
There are all sorts of things you need to know to get the maximum refund and min chance of being audited.
And will TT do corporate returns for fed, state and local? (i don't know, never used TT..just get customers that can't make it work for them)
PenguinPhotoCo said:
Taxes for a Sub-S are not that much harder than taxes for a Sole-P. The difference is that the business stuff goes on the corporate return, instead of a schedule C. The corporation issues a K-1 with the totals to put on your personal return. Generally a Sub-S can avoid the added paperwork of the "office in a home" worksheets.
Click to expand...
Agian, haven't done corp returns (that's a diff dept..i will ask though). Do you still get your home office ded? I saved about $3900 this year with it.
PenguinPhotoCo said:
My understanding is that being a Sub-S lessens the likelihood that you will be audited. If you are audited, the audit is limited one entity (i.e. personal or business). With a Sole-P, they look at both. More chances for them to find something they don't like.
Click to expand...
With an audit they look at ONE THING, not everything. So it may be your home office expenses or biz expenses or EIC, etc. they do not audit everything on the return.
PenguinPhotoCo said:
Many accountants charge much more for personal returns when you have a Sole-P. Spending $300 on a simple corporate tax return isn't an issue if it saves you $300 on preparing your personal return.
Click to expand...
My CPA has been charging me $450 (2 sched C, home office, 1040, fed and state, 2 W2) JH and HRBlock charge a sliding scale...if that's the proper term. They have a peak season (now) and a slow season (march). Fees in march are 1/2 what they are now. and april they go back up. JH charges more than my CPA.
I did a return today - sched c, 1040, state and local, EIC - $726 fee. EIC is expensive.
PenguinPhotoCo said:
PenguinPhotoCo said:
So you spent THOUSANDS of dollars to get setup and will spend $1500-2k a year to keep it going.
Click to expand...
No. You would spend thousands. Some people would spend more, but many would spend less.
Click to expand...
So $450 once a year. Corp needs 4 quarterlies and the annual PLUS payroll costs (can you do it yourself? VERY few people do..very time consuming to make all those payments of taxes to every tax org out there - we here have fed, state, local (for where you live) plus another local tax for where you work). Workers comp insurance (and they DO audit that ever year - so figure 2 hours of your time for that).
PenguinPhotoCo said:
PenguinPhotoCo said:
For what?
IF you have income of 40k and up you MAY save that on FICA taxes...take some of your salary as dividends and not paycheck.
Click to expand...
FICA taxes are about 15.3%. If you are able to shift $20K into dividend income you will save about $3,000 in taxes for the year. If you make more than $40K a year in profit, than you can save even more in taxes.
Click to expand...
IRS is watching for that. Used to be a 1099 meant a sched SE. Not a big deal. Now? They demand a sched C - you MUST show expenses on a sched C....so now A) your income is lower so you can't cheat on tax credits and obamacare as easily) and B) you must pay the FICA/self employment tax.

So what they're watching for is folks payrolling themselves at $15k (min wage say) and div themselves at $50,000 to avoid fica and max out on EIC. (in case you're not aware EIC is a refundable tax credit for low income folks over 24 or with kids under 19...at about 18k in income yo ucan get $7500 back in your refund even if you paid no taxes into the system. it is probably the number one most abused/cheated thing there is)

So the IRS wants you to be paid what an 'average photographer' is paid according to them...which as some here often go look up is what, $36k (depends on your official title and state of course).
You can do whatever you want....just be prepared to defend your position should the IRS come a' asking.
Click to expand...
Yes. The work involved, and the costs vary by state. Furthermore, whether or not the benefits outweigh the costs depend on the nature of your business and how much money you make.

There is not one business structure that is best for everyone. This is why it is important not to jsut copy the structure that worked for someone else. You need to talk to a local tax/legal professional to understand what the benefits and costs will be in your particular situation.
 
tax / cpa is pretty cut and dried.

Law..that's ALL opinion. Ask 3 lawyers the same question and you're likely to get 3 different answers.

A lawyer will talk S corp or LLC from a liability standpoint, a CPA from a tax stand point. BOTH are liekly to want to charge you for their advice and time.

If you know some and can quiz them over dinner do that! Much cheaper.
 
exactly.

My CPA suggests my wire incorporate in some fashion to save on FICA. 2014 we ended up about even on taxes (thanks to the ACA PTC). So incorporating would have been a cost with little to no benefit.

2015? we'll see.

Doing payroll is a PITA to do yourself (maybe easy once you get it started and figured out) go read Pub 15 http://www.irs.gov/pub/irs-pdf/p15.pdf and let me know when your head stops spinning.
And then your state has similar rules..not identical ones though. And local tax authority is in there too in many jurisdictions.

Miss one deadline and you face penalties and interest. And there are number of deadlines. And last I checked they don't email reminders.
And things change...often.
I used ADP the past 3 years with 1 or 2 employees (depending on the year). Did some by hand before that, used surepayroll.com (prefer them over adp). They handle all the PITA payments, figuting out deductions, generating deposits and stubs, etc.

and don't forget...to be in compliance you need all those fun 'work' posters...https://www.laborlawcenter.com/c-2-complete-state-federal-labor-law-posters.aspx?gclid=CJfpqKKwzsMCFUsR7Aodrw4A5Q

sure, you're the only employee...but the rules are the same until you hit 50 employees..so are the fines and costs.

IMO if you can avoid it so much the better!
 
PenguinPhotoCo said:
tax / cpa is pretty cut and dried.
Click to expand...
But the impact on a particular business can vary.

Some businesses will have employees, some will not.

Some businesses will make a small profit, some will bring in over $100K in profit.

Some CPAs will charge thousands of dollars for a simple S-Corp return, others will do it for a few hundred, and some people will handle it on their own.

What state are you located in and how do they tax S-Corps?

The answers to these and many other questions will determine which business structure is financially best for a particular business.

PenguinPhotoCo said:
Law..that's ALL opinion. Ask 3 lawyers the same question and you're likely to get 3 different answers.
Click to expand...
While there are many grey areas, there are many that are clear cut. If you are 22 years old with no assets to protect, there may be very little benefit to a business structure that protects your assets.

If you own a boat, have a retirement account, and/or are saving up to put a child through college, there may be a desire to choose a business structure that provides some protection for these assets.

PenguinPhotoCo said:
A lawyer will talk S corp or LLC from a liability standpoint, a CPA from a tax stand point. BOTH are liekly to want to charge you for their advice and time.
Click to expand...
As a business owner you should understand the both the liability and tax implications so that you can make an informed decision.

PenguinPhotoCo said:
If you know some and can quiz them over dinner do that! Much cheaper.
Click to expand...
You could also trade them photographic services for their advice.

PenguinPhotoCo said:
--
I don't like nice people. I like tough, honest people.
Woody Hayes
Click to expand...
 
they're expensive...to get $35k in gear coverage is more than i pay for that much PLUS all my general business and liability coverage with Erie.
 
I saw that you planned on not doing a DBA. I'm here in the Chicago area as well, and unless you're going to do business in your exact name and nothing else, you have to do a DBA. Add "photography" or "studios" to your name, and you have to do a DBA. If you have a website, it can only be in your name if you're going to do business as a DBA.
 
markhayphotography said:
markhayphotography said:
Hi Mark,

Thanks a lot for sharing! I think I'll follow your advice and contact the local BC. But I won't need DBA since I do not intend to use an assumed name, and therefore I won't need a separate account.

I fact I've been filing taxes as Sole-P working for other companies and I don't sell prints, so Illinois didn't tell me anything about being behind on sales tax. I'll probably continue to file the same way working for myself. I use TurboTax Small Business and it practically leads me through everything and in the end I send everything off via Intuit's website.

What i wanted to ask you is that how did you set up those free meetings with your SBDC.

And what do I need to join PPA and apply for that insurance.

Thanks a lot?
Click to expand...
I just used Turbo Tax small business, and I loved it as well. I particularly appreciate how Turbo Tax will maintain a log of my depreciating assets over time. That alone will keep me coming back.

For the SBDC, start here : http://www.illinois.gov/dceo/SmallBizAssistance/BeginHere/Pages/SBDC.aspx

Find one in your area and give them a call. They'll work out the rest with you and schedule an appointment. They'll meet with you quite often if you like. I used the College of Lake County location since I'm in Lake County, but they have locations all over.

For the PPA, Just go to PPA.com and join. It will cost somewhere over $300 for the year, but it gets you $15,000 of equipment insurance. Once you're a member, you can then upgrade your insurance through the same company to get liability coverage. Put in your details, and you'll get a quote. Check it out here:

http://ppa.locktonaffinity.com/

Good luck!

Mark
Click to expand...
Thanks, Mark, but you mentioned something else. You said you are paying around $600 for some additional coverage. Could you go in a bit of more detail about that?

Thanks!
 
FriscoRon said:
I saw that you planned on not doing a DBA. I'm here in the Chicago area as well, and unless you're going to do business in your exact name and nothing else, you have to do a DBA. Add "photography" or "studios" to your name, and you have to do a DBA. If you have a website, it can only be in your name if you're going to do business as a DBA.

--
Ron
www.ronmckinneystudios.com
Click to expand...
This does vary with location as well as the type of business. In our location one does not even get a business license - the towns don't issue them. Don't see the need. You do need a State Resale Tax number tho and they watch that.

Small population State and small towns can be different in many ways.
 
OortCloud said:
markhayphotography said:
OortCloud said:
Hi Mark,

Thanks a lot for sharing! I think I'll follow your advice and contact the local BC. But I won't need DBA since I do not intend to use an assumed name, and therefore I won't need a separate account.

I fact I've been filing taxes as Sole-P working for other companies and I don't sell prints, so Illinois didn't tell me anything about being behind on sales tax. I'll probably continue to file the same way working for myself. I use TurboTax Small Business and it practically leads me through everything and in the end I send everything off via Intuit's website.

What i wanted to ask you is that how did you set up those free meetings with your SBDC.

And what do I need to join PPA and apply for that insurance.

Thanks a lot?
Click to expand...
I just used Turbo Tax small business, and I loved it as well. I particularly appreciate how Turbo Tax will maintain a log of my depreciating assets over time. That alone will keep me coming back.

For the SBDC, start here : http://www.illinois.gov/dceo/SmallBizAssistance/BeginHere/Pages/SBDC.aspx

Find one in your area and give them a call. They'll work out the rest with you and schedule an appointment. They'll meet with you quite often if you like. I used the College of Lake County location since I'm in Lake County, but they have locations all over.

For the PPA, Just go to PPA.com and join. It will cost somewhere over $300 for the year, but it gets you $15,000 of equipment insurance. Once you're a member, you can then upgrade your insurance through the same company to get liability coverage. Put in your details, and you'll get a quote. Check it out here:

http://ppa.locktonaffinity.com/

Good luck!

Mark
Click to expand...
Thanks, Mark, but you mentioned something else. You said you are paying around $600 for some additional coverage. Could you go in a bit of more detail about that?

Thanks!
Click to expand...
Sorry, the break down for what I'm doing is:

$323 - 1 year subscription to PPA (which gets me the indemnification trust and the $15,000 of equipment insurance as part of the subscription).

$315 - Additional Liability insurance with Lockton (through PPA) - 1,000,000/2,000,000

This totals a shade over $600.
 
Deardorff said:
FriscoRon said:
I saw that you planned on not doing a DBA. I'm here in the Chicago area as well, and unless you're going to do business in your exact name and nothing else, you have to do a DBA. Add "photography" or "studios" to your name, and you have to do a DBA. If you have a website, it can only be in your name if you're going to do business as a DBA.
Click to expand...
Click to expand...
 
markhayphotography said:
OortCloud said:
markhayphotography said:
markhayphotography said:
Hi Mark,

Thanks a lot for sharing! I think I'll follow your advice and contact the local BC. But I won't need DBA since I do not intend to use an assumed name, and therefore I won't need a separate account.

I fact I've been filing taxes as Sole-P working for other companies and I don't sell prints, so Illinois didn't tell me anything about being behind on sales tax. I'll probably continue to file the same way working for myself. I use TurboTax Small Business and it practically leads me through everything and in the end I send everything off via Intuit's website.

What i wanted to ask you is that how did you set up those free meetings with your SBDC.

And what do I need to join PPA and apply for that insurance.

Thanks a lot?
Click to expand...
I just used Turbo Tax small business, and I loved it as well. I particularly appreciate how Turbo Tax will maintain a log of my depreciating assets over time. That alone will keep me coming back.

For the SBDC, start here : http://www.illinois.gov/dceo/SmallBizAssistance/BeginHere/Pages/SBDC.aspx

Find one in your area and give them a call. They'll work out the rest with you and schedule an appointment. They'll meet with you quite often if you like. I used the College of Lake County location since I'm in Lake County, but they have locations all over.

For the PPA, Just go to PPA.com and join. It will cost somewhere over $300 for the year, but it gets you $15,000 of equipment insurance. Once you're a member, you can then upgrade your insurance through the same company to get liability coverage. Put in your details, and you'll get a quote. Check it out here:

http://ppa.locktonaffinity.com/

Good luck!

Mark
Click to expand...
Thanks, Mark, but you mentioned something else. You said you are paying around $600 for some additional coverage. Could you go in a bit of more detail about that?

Thanks!
Click to expand...
Sorry, the break down for what I'm doing is:

$323 - 1 year subscription to PPA (which gets me the indemnification trust and the $15,000 of equipment insurance as part of the subscription).

$315 - Additional Liability insurance with Lockton (through PPA) - 1,000,000/2,000,000

This totals a shade over $600.
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Thanks, Mark. It looks like something worth considering.
 
Michael Fryd said:
PenguinPhotoCo said:
tax / cpa is pretty cut and dried.
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But the impact on a particular business can vary.

Some businesses will have employees, some will not.

Some businesses will make a small profit, some will bring in over $100K in profit.

Some CPAs will charge thousands of dollars for a simple S-Corp return, others will do it for a few hundred, and some people will handle it on their own.

What state are you located in and how do they tax S-Corps?

The answers to these and many other questions will determine which business structure is financially best for a particular business.
Michael Fryd said:
Law..that's ALL opinion. Ask 3 lawyers the same question and you're likely to get 3 different answers.
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While there are many grey areas, there are many that are clear cut. If you are 22 years old with no assets to protect, there may be very little benefit to a business structure that protects your assets.

If you own a boat, have a retirement account, and/or are saving up to put a child through college, there may be a desire to choose a business structure that provides some protection for these assets.
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True..BUT it's up to lawyers and a court on whether or not your LLC protects those assetts. If youre employee screwed up they probably will. YOU screwed up? Maybe not as you may be personally sued as well as your photog inc.

And if your inc. looks to be created solely to isolate you...then it may be pierced and do you no good.
Michael Fryd said:
Michael Fryd said:
A lawyer will talk S corp or LLC from a liability standpoint, a CPA from a tax stand point. BOTH are liekly to want to charge you for their advice and time.
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As a business owner you should understand the both the liability and tax implications so that you can make an informed decision.
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And I've talked with several lawyers and they each give their OPINION - not FACTS. Taxes should be more cut and dried..but as a tax preparer this year I can tell you A) tax rules change every year and B) people's situations change just about as often.

Single now..married next year...then kids...then a separation then divorce..or some mix of them (mom moved in, your GF has 2 kids you can claim as dependents, etc).

Last year my mother in law died...all sorts of things affected us, her son, her ex husband, tax wise. You never know.

Look at healthcare...you gotta have it these days - you can get it through a job but if you are self employed then you have other options, if incorporated you have more yet as you'll be an employee of the company. ALL have implications on cost and tax liability issues.
Michael Fryd said:
Michael Fryd said:
If you know some and can quiz them over dinner do that! Much cheaper.
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You could also trade them photographic services for their advice.
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really? You know people that PAY for photography services these days? LOL
 
you can buy additional insurance from PPA - it's not cheap based on the quotes I've gotten.

You own a business so consider BUSINESS INSURANCE. It's got a lot more coverage than most 'photographer' insurance.

Erie https://www.erieinsurance.com/business-insurance

there is also state farm, liberty mutual, wausau, the hartford and many many more. Not all sell insurance in all states.
Google 'business insurance your town' and I"m sure you'll find a lot of choices.

A local venue I shoot at and now DJ has begun demanding proof of insurance from vendors. they've been remodeling all their ballrooms (3 of them) and putting in marble dance floors. A DJ dropped something on the floor and broke part of it and had no liability insurance...so now you can't work there as a vendor (of any kind) without proof of insurance.
 
I just got my bill for 2015 - $712 for $35k of gear (listed by serial number), $1m/2m liability, my studio building is covered, teh props/lights/Bgs, samples, furniture in it, samples/displays on location (be that a bridal show or mall display, from theft, damage to it and it damaging something else), advertising liability, 'digital' coverage (data loss), theft by employees, cash and similar at the studio, on location (reunion, sports league, etc), on the way to the bank and a number of other items.

I also have commercial car insurance, a tad more than 'normal' but I am covered if an employee drives the car, if I have clients in the car, my gear in the car, my cargo trailer is covered. My homeowners is with the same company since I work from home.

This way there isn't 3 companies pointing fingers at eachother saying 'no, WE dont cover THAT issue, YOU do' sorta thing. (been there done that and it sucks).
 
RhysM said:
I am not fully versed in the US practices/issues in this area, but I'd guess they are relatively similar so to that of the UK, so take this advice as a starting point on topics you might wish to consider/discuss with an advisor in your country, as opposed to verbatim advice.

In the UK the vast majority of photographers in your position are sole traders. This means they can call their business anything they like i.e. it can have an actual business name, but are still trading as individuals, i.e. there is no legal separation between them and the business.

Some do set up a limited company as to have the business as a separate legal entity. This means that if the business went downhill and couldn't pay its debts or got sued, etc. the personal assets of the photographer would (in the majority of cases) be safe and separate to the business.

Now, if you have appropriate insurance cover, for a one man business the reality is it doesn't make any difference whether you are a sole trader or incorporate in the form of a privately owned company. It would have to be a pretty drastic, disastrous and contrived chain of events that would need to take place where the protection of a limited company would be needed over and above that of an appropriate insurance policy(s) sufficiently indemnifying you against. And if such a chain of events/situation did take place a judge could remove the protection anyway, this is referred to as piercing the corporate veil (though as alluded to I can't imagine how a one man photographer could ever get themselves into any such serious hot-water as for this to materialise as a real world issue).

In more practical terms if you set up as a limited company for the first few years you may have trouble getting credit/finance to buy gear, rent premises, lease a vehicle, etc and would be asked for a personal guarantee or refused point blank, as the company has no credit history or accounts to examine to check it financial health status. Secondly, the book-keeping/accounting aspect becomes a bit more complex and depending on your proficiency in this area may have to pay someone to do it. Also for a single person business with a moderately low turnover the difference in taxation liability/savings between the two would be of limited if any benefit.

So in short, I think that for you, forming a company vs just trading as an individual (provided you have insurance) is probably more hassle than it's worth.
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Insightful, relevant, well-written. Thanks for sharing.
 
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