income taxes

March 8, 2008 – 5:00 am

Photographers are creative people and customarily hate structure and dealing with the legalities of running a business. Well, if you’re going to earn income from your photography then you’re running a business and, as such, need to understand the legal requirements. In prior installments we talked about fun things like cameras, business cards, websites and cooking up marketing ideas. Those are all fun things because we can see how they directly benefit us. Now that photography is becoming your business and not just a hobby it’s time to recognize that you are accepting important obligations to others, also. These obligations include licenses, taxes and insurance.

* I want to remind you that this is an overview, I’m not a legal or financial expert. Below is a basic outline of things to consider when creating a business that sells photography. Check with local trade schools or libraries to see if they offer classes on setting up a business for your specific state or municipality. The Small Business Administration (SBA) also offers help and mentoring through SCORE. There’s lots of help out there, don’t hesitate to utilize it.

Taxes

You will be dealing with both income and sales taxes. Before you do anything else, set up a meeting with an accountant to discuss what you want to do. Seriously, even if you think you’ll only make a thousand dollars your first year it’s time to start thinking like a business person. Prepare yourself for success. If you don’t have an accountant then set up a meeting with the local chain accountant store - H & R Block comes to mind (this is not an endorsement for H & R Block). Tell them what you are doing and they will set you up with the paperwork necessary to file estimated quarterly income tax payments to the federal, state and local governments. Together you will estimate your earnings for the coming year. It’s then up to you to set aside the projected tax amounts and pay them in quarterly installments (estimated tax payments).

You see, the government wants you to keep sending them money each quarter that you’re earning income. If you’ve estimated your yearly income perfectly (let’s not worry about perfection, let’s just concentrate on obeying the law) then, when your income taxes are filed the following year, you won’t owe a penny. Good for you! Most budding young photographers just stick their earned income in a pocket and spend it quickly. There’s nothing left to pay Uncle Sam. Uncle Sam doesn’t like that.

Next up: Sales taxes

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