How to (Legally) Become a Professional Photographer

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A Guest Post by Scott Bideau from capturedbyscott.com

Image by Roberto Carlos Pecino

Image by Roberto Carlos Pecino

A common question asked by an amateur photographer looking to turn professional is, “what equipment do I need?” I’ll skip the discussion around skill and experience being more important than equipment, but before you rush out and buy any equipment or start offering your services to others, you should consider the various liability issues and the options for operating as a legal entity that are available for your business and obtain the proper insurance for both your equipment and liability. I’ll cover specific options available in the United States in this article, although similar concepts are available in other countries.

Legal Entities

The most common mistake for beginners is to operate a business as a sole proprietorship, meaning there is no legal distinction between the owner and the business. This may sound easy and convenient, but it also means that you have unlimited personal liability for the actions of your business, and this includes the actions of your employees or even volunteer assistants. Operating as a general partnership is even riskier because all the partners are personally liable, even if it is for something done by the other partner that you didn’t know about. Even if you have liability insurance coverage for yourself, an accident caused by one of your partners or assistants (paid or not) could significantly expose you to liability.

Imagine you invite a friend to be a voice activated light stand at a wedding and he accidentally drops the boom on the bride. Worse yet, imagine he misplaces an electrical cord and someone is electrocuted. Even if your friend drives their personal car on an errand or trip for your business, such as on the way to the church for the wedding, and causes a bad accident or injury, they are liable for their negligence, but so are you since they were acting as an agent or employee of your business. If you are doing business as a sole proprietor then you are in essence personally guaranteeing everything that the business and any agents or employees do. Your spouse likely won’t appreciate you etting sued for something an assistant did which results in a judgment lien against your house because you didn’t have proper liability coverage.

A much better idea is to separate your personal matters from the business by forming a Limited Liability Company (LLC) or a corporation. In most instances, the LLC (not you) bears the responsibility for the liability of its other workers (paid or unpaid). You cannot escape liability for your own acts or negligence through an LLC, including possible claims for negligent supervision or training of employees or helpers, but you can significantly limit exposure for the acts or omissions of employees, agents or other members of the LLC. Filing as an LLC is a fairly simple process in most states and after the initial setup requires only a small fee and annual report to be sent to your state each year. Under current IRS rules, you can even include your single member LLC income and loss on your “Schedule C” form on your personal tax return.

Some photographers choose to form their business as a corporation, including making an election to become a “Sub S” Corporation (which eliminates the double taxation issue found with the C Corporation). While organizing as a corporation does provide certain benefits under unique circumstances, including the ability to carry forward a net loss from one year to the next (such as using the high startup costs for equipment this year to offset your profits next year) and has a longer track record of liability protection going back hundreds of years, often times the additional complexities outweigh the benefits. A corporation will require a separate tax return for the corporation even if there is only one stockholder. Either way, you should seek the initial advice of an attorney and an accountant to ensure your business entity is setup to your greatest benefit and protection.

Insurance

Once you’ve created the correct business entity for your operations, you should always obtain an adequate amount of liability insurance. Otherwise, you may be one accident away from financial ruin…even if you are setup as an LLC or corporation or were not even the one who caused the accident. General Liability policies can often be purchased for a very reasonable premium and if properly written can provide you and any of your employees, assistants, or even volunteers with adequate coverage. Be very sceptical if your insurance agent advises you that protection is already provided under your homeowner’s policy or tries to sell you a personal umbrella policy: personal policies almost always exclude liability or property protection for any commercial or business purposes…even part-time ventures. Always check your policy documents and get confirmation from your agent in writing! If you have filed as an LLC, both the LLC and you as the Member should be listed as “named insured.” Often times your employees, assistants and other non-members or non-officers of the company are not insured.

Finally, consider insuring your equipment. Many insurance companies who offer a commercial liability policy also offer inland marine policies, which is a strange name for a plan that protects your camera equipment from theft and accidental damage. These policies are often more expensive than the options available for personal equipment on your homeowners policy, but again, most personal policies exclude any commercial use. One exception to this rule is the popular “Personal Articles Policy” offered by State Farm, which in most states provides a “professional use” option to waive the commercial use exception specifically for camera equipment, but at a much lower in price than a full inland marine policy.

Scott Bideau is a management consultant with a strong passion for photography. You can view his photographic work at capturedbyscott.com.

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  • daniel mollino

    You know i can agree with the article 90%, However if you are just starting out using your rebel t1 and just shooting basic shots by yourself with no employees or in some cases your sibling this could a futile waste of money. Insurance can cost 1k a year, LLC file can cost 150 + $50/yr + more money come tax time because you have to file a partnership return for the llc then carry over that info to your schedule c on your tax return. As for a s or c corp you are going to pay the same 150 + 50/yr + 500/yr corprate min tax

    Now if your doing small work on a cash basis, as in only shooting with a camera and minimal lights if any at all well it most likely wont be worth the money. If you get in an accident you obviouslly werent using the vehicle for buisness at the time in fact you were using it to get to work, which is like driving to work in the morning – Your company is not liable for you till your on the job- and on the other side if they are not driving a commercial vehicle your protected more because when the officer takes the accident report on your personal vehicle and he asks were you using the vehicle for work and you say yes, Your insurance will drop you immediatly. (atleast in nj)

    Not to stand as legal or any type of influence your a big boy and can make up your mind but if your not making over 20k a year with your own buisness sometimes it might be better to shut up never say your working when something happens in terms of a car accident especially since it could have happened not working, and deal in cash, If you want to protect yourself further do what I did and still do, Make every customer sign a holds harmless agreement that includes a cause for everything you can think of – eg, client trips over an extension cord within defined set area. and **** Photography or its employees will be liable for no more than Medical Expenses and loss of income related to negligance on **** photograph or its employees part,

    These are not bulletproof however I had a clients child trip over a cord in their home and when they tried to sue i faxed their lawyer the signed waiver and that was the last I heard, Now i got lucky he was not a snake who was going to try to claim negligence however he probably wouldn’t get far with it hence why it disappeared.

    If you want a holds harmless get an attorney in your area it cots me 350 to get it made – And that is a one time cost. Otherwise go to a local dropzone (skydiving) and get one of theirs- They are some of the best written and most bullet resistant, and modify accordingly =P oh and tell no one that is where you got it it could be considered thieft in some states use it as a guide and nothing else

  • My philosophy on business is leverage your strengths while minimizing your weaknesses. This article has a lot of good information but Daniel also makes some great points. Take an honest look at where you are with your business and act accordingly.

    I am in the process of publishing a book of concert photos where all the proceeds go to a non-profit organization here in AZ (USA). My biggest legal concern with this project is making sure the photographers submitting their works to me are the actual owners of the photo rights. Many times in order to photograph music there are limitations on usage and I don’t want to open myself up to litigation.

  • As an example of the low costs of running a professional business entity, my LLC filing costs me $50 per year for the annual report, $200 per year for a $1m general liability policy, and all my equipment is protected under State Farm’s Personal Articles Policy (with commercial photographer add-on) for $69 per year. This is one client session worth of revenue for most photographers.

    As I mentioned in the article, a single member LLC does not require a separate tax return for the company. You can simply file the Schedule C on your personal return.

    Even if you believe a hold harmless agreement is adequate, consider the bystanders who haven’t signed one but could easily cause an accident or get hurt.

    The point of the article is to get photographer’s to think about the “what if’s” and make sure they’re protected. If you’re going to be paid in cash and lie to your insurance company, this article won’t be valuable for you. If instead you’d like to protect your assets while also providing your clients with an adequate amount of insurance should the improbable ever happen, it will hopefully give you a good, economical starting point.

  • Scott is dead on here, and not just because we share the same first name. I think the problem is that too many people are doing this as a hobby and not as a business. As a secondary income, and one that many take tax-free under the table, perhaps you don’t want to carry insurance or have yourself labeled as an LLC. However, for someone like Scott or myself who does this full time, the small amount of money it costs to have yourself setup correctly (LLC, PPA liability policy and equipment rider) is VERY worth it. Another thing he doesn’t mention directly is that if you aren’t an LLC and you DO happen to have an incident where someone could sue you, they can come after your business and then your personal property in certain situations. I have heard horror stories of photographers who lost their businesses, then their house because of a silly legal document that would have run them less than $5/mo to have, making them an LLC. If you’re gonna be in the biz, follow what Scott says and do it the right way.

  • daniel mollino

    While the instances you put in place are true, I understand what your saying, And as I did say i agree 90% with the article, This is one of those articles that relates to similar posts in forums. The problem with these articles is they scare people, and lately in this world there is alot of this going around. If someone is doing this as a hobby and starts taking photos for a few people they may one day be doing it full time and if you are full time ect you should be protecting yourself. But an article like this while it does achieve your point to some like a family member of mine this will put the nail in the coffin and they wont try. Because they don’t have the money to start with all this fluff (for the ammount and type they are doing it is fluff). And to them they wont go without and then we will have lost another potential new excellent photographer, I hope my relitave is reading this she needs to commit because she is good

    Hell when i started i had a rebel xt with a kit lens and nothing else (And I took some damn good photos with natural light) if someone fell in that state park because they wanted the photo It would not have mattered because my first 3 years were family and friends and associates. And the first commercial shoots were for my friends swimsuit company on her property, Guess what in commercial shoots when you contract with the company you have 2 options well so do they either they hire you and umbrella you under their insurance or you get yours and umbrella them. Its an insurance liability clause, Now if they are covering you for the shoot get a letter from their insurance declaring you as insured, if it goes the otherway they will want one from yours.

    Basicly I just wanted to make sure people realize despite what your saying which is true if your just shooting for fun and very small client base friends and family type you probably don’t need it right off build a portfolio and when you go larger and are making the money then take the next setp

    Oh and as for the llc , In new jersey where I live you have to file a partnership return for an llc every year even if you are the sole owner, This is how my attorney and tax pro put it to me.

  • For this type of topic, could the author please indicate which country they’re talking about. In this case I following links to find it it relevant to the USA. I would be interested in an article for Australia.

  • Interesting article. I did a quick check and it would cost me about $300 to register an LLC in South Carolina (using Legalzoom.com). I’m sure if I shopped around some I could find it cheaper….

  • A terrific overview. Sometimes it easy to forget the business side of things. Thanks for sharing your knowledge.

  • TheBing

    Scott, thanks for the info. This is exactly what I needed. Who did you choose for your general liability policy?

  • Good points to consider. If I could add one thing it would be to make sure that, if you live in a state with sales taxes, you file the proper forms with the state and collect (and pay) sales taxes for all appropriate items. All it takes is one report to the state to find yourself in hot water and subject to an audit. Ditto for reporting all income.

    @ Daniel mentioned that articles like this can scare people — this is true, and I think that’s a good thing. Deciding to charge for your services is a big step to take, and shouldn’t be taken lightly. It grates on me a bit when I see a photographer “just doing a job as a favor for a few bucks” undercut another photographer because, in all likelihood, the photographer doing the “favor” isn’t reporting the income, isn’t collecting sales tax, and doesn’t have overhead expenses of insurance, etc., from doing things the “right” way.

  • Thank You all. This is very helpfull.

  • Hello, I really enjoyed the article as I have made some of these steps recently in the U.K. Does anyone know if the proceedures for setting up a LLC in England are the same or similar as in the U.S.? This article is so important for those of us who are finding their way in the dark whilst shooting professionally. Many, many thanks for the informative article and comments.

  • Rob

    This is helpful but unless your are doing it full time or making significant amounts of money it can become a money losing situation. If you are doing this as a primary career or making is excess of $500/gig on a regular basis this is a no brainer.

    On another note, if you run as a sole proprietor make sure you have at least $2-3 million in liability. While some people think of $1 million is enough -and it is for many locations that require insurance-, juries often award more than that amount in the event of a death (and you have think in worst case scenarios). The author uses an excellent example of an assistant driving a car to your gig. He/She is an employee which makes you the employer and ultimately responsible if they get hurt driving.

  • Very good article. I’m planning to run a business as a sole proprietorship (knowing that means I’m liable) while I build my portfolio and do some sub-contract work for someone more established.

    In BC, Canada where I live sales tax does not need to be collected until you make 10k in saleable good sand services and maintain a regular business location.

    However, all income I make through my business (for now, sub contracting) has to be reported on my personal tax return, which can be offset by business expenses (ie. new lighting purchases)

    I had not thought about hold-harmless waivers and insurance yet – this is something I will have to look into more fully.

    Thank you Scott, and Scott. Thanks also Daniel – you have some good valid points, and I respect that you say you agree with the business but that all these things may not be needed for someone starting out – however, I do feel that anyone, even starting out, should do so with some trepidation and a solid amount of research to make sure they are in fact doing things correctly.

  • I’m really enjoying and appreciating all the comments.

    Keep in mind that if you’re a sole proprietor and get a personal liability policy only covering your actions and your assistant causes an accident, your policy won’t cover your assistant or your business. Your assistant will be personally liable and your business liable as well. Since your business is you, and your policy only covers your actions (not those of the employees or agents of the business), you’re not covered. I know this is confusing, but most personal liability policies cover your personal actions, not the actions of your business. Even if you cause the accident, if the insurance company for your personal policy finds out you were acting in a commercial venture and they only cover personal liability, they won’t cover you.

    My opinion has always been that if you’re doing photography as a hobby, make sure it’s a hobby (don’t charge, don’t represent yourself as a business, etc)…and make sure your personal liability coverage through existing insurance is sufficient. The minute you decide to start a commercial venture, the costs I mention are simply part of your startup costs, not unlike any other costs. I know it’s hard to spend these costs, but most people spend far more per year on their cable television, coffee shop trips, etc 🙂

  • PamC

    Sorry, but I’m confused. More likely just ignorant of the laws. But why would the employer of someone going to a job be liable for anything? If I worked at Taco Bell and got into an accident on my way to work, TB wouldn’t be liable. I apologize for what you probably consider a stupid question.

  • pamc: If Taco Bell had you running an errand for them during work hours and you got in accident, they would be liable. It’s tricky. Most likely if you have a studio and your assistant is driving to/from the studio (commuting), you aren’t liable. However, asking them to show up on-location somewhere, run errands for you, etc. means they’re doing it on behalf of the business, on business time, and hence the business is liable.

  • PC

    I learned the hard way about business insurance. When my camera gear was stolen, State Farm would only give me up to $1000 because they considered it business equipment. How did they make the determination that my camera equipment was business equipment? Because I made money from it. Doesn’t matter if it’s $1 or $100,000. Money is money in their eyes.
    So, either get business insurance or never tell them that you made any money from it. In my case, I got business insurance.
    Side Note: If you become a business, you also have to worry about paying sales tax on prints or other items you sell if your state requires it.

  • Rick Verbanec

    Scott B’s remarks may sound scary, but they’re good advice. Anyone on the brink of going pro should be completely aware of the potential troubles they may encounter. Don’t do it unless you’re serious, and if you’re serious, do it right or you may suffer some catastrophic consequences.

    An appropriate old saying: “Just because you’re paranoid doesn’t mean they’re not out to get you.”

  • In Australia, the formation of a Proprietary Limited company, limited by shares, serves a similar purpose (in relation to the insulation of the company’s activities from your personal affairs and assets) as an LLC does in the U S.

    AFAIK, Nevada is the best state to register an LLC in (I went through this process recently in an attempt to get a U S work visa); Nevada has the best price point and the least onerous reporting requirements of the 49 states.

    The reasons one is well advised to take this route were outlined perfectly by Scott: the limiting of personal liability that can come about as the result of an accident involving an employee (casual or not) or yourself in the pursuit of your business. If you own a house, or any substantial asset, it needs to be protected by a Pty Ltd or an LLC; the alternative is that any action taken against you may well involve you having to sell that asset to pay the bills/fines/damages. And insurance is mandatory, too, in my view, for the same purpose: in our increasingly litigious societies, a claimant can sue the person, the company they work for, and (if the accident happens on someone else’s property) the property owners. If this is successful, you do not want to have to foot the bill.

    And I am not sure that not taking money protects you from being sued, either, BTW, in the case of a boom being dropped on the groom.

  • So basically what you’re saying, to legally be a “professional” photographer, you need to have a legal business properly licensed by the state or city in which you operate.

    Let’s take out the title photographer, and substitute it with any other profession. Everything still holds true, right?

    Because there are so many amateur photographers and some very good at what they do, they are not professional unless they have a business. So by that definition, I am not a professional photographer. Although, I do have a URL, and an account to a site that enables you to sell photos, lets say SmugMug, where I can sell my work. I do not have a business and I am not a professional, correct?

    So with all the talk of insurance and liability, do fall in that category of needing the coverage?

  • cicely

    hey – good article and discussion, i’m bookmarking it – thanks to all who’ve given their input. 🙂

  • There have been several suggestions to hide information from or outright lie to your insurance company about your commercial purposes. I would highly advise against this, as you don’t want to be sharing a cell in Leavenworth for insurance fraud 🙂

    I like using Zenfolio (or similar service) for selling my prints since they handle the sales tax for me. Keeps it simple.

    Paul Miller: It sounds to me like you are a commercial entity (since you’re selling your work on SmugMug). This likely means that your equipment and liability protection isn’t covered under your personal homeowners policy.

  • Man you totally just ruined the image of a photographer for me. USE YOUR CAMERA. Wheres the creativity “capturedbyscott”.

  • please reply on what you think because I DONT GET YOUR PICTURES AT ALL

  • While the business liability is a big issue in the US, TAXES are a bigger issue. If you are registered as a Sole Proprietorship, you suffer the dreaded 50% self employment tax. As an LLC you get a much more lenient brake in the neighborhood of 20%. Even if you only make a grand in the first year, you have saved the cost in taxes, and separated yourself from your business in the event you get sued. $300 bucks is well worth the cost of becoming an LLC, and you can cover other ventures within the same realm if you are careful about how you title what your LLC does.

  • I started my business in 2008, and I don’t (yet) have a client base to speak of; however, I started right out of the gate with an LLC. For about $700/year, I have my LLC. I have not gotten insurance yet, but once I start to build a client base, you can bet I will be doing that before I step foot at my first client location!

    My figures are $300/year for the LLC, roughly $400/year for my accountant to file for me. I don’t want to make any mistakes, so it’s worth it to me to pay him to do the paperwork for me.

    This was a very good article. Thanks for the info!

    Jennifer Moore
    JenniferLynn Productions, LLC

  • I forgot to add: I am in Maryland.

  • Excellent discussion all around on this topic. I’ve learned a lot, I was dreading doing this research, but not as much now. While Daniel makes some valid realistic points, I think it’s good that the legality and possible worst-case scenarios scare people (including myself), as it ensures they take the possibilities seriously.

    Thank you all for the advice.

  • I was looking for some decent advice on making a living with digital photography. Thanks for the info on LLC’s and liability insurance.

  • Mellissac

    Hello I love this article but I am very confused on many things can someone please explain to me? I’m new at everything but I do love taking photos I will be purchasing my very first camera well not exactly I already own a Kodak easy share but I have upgraded to a Nikon coolpix l120 i do plan on purchasing lights and umbrellas and I’m gonna purchase backdrops for my home studio I do plan on only taking photos for just friends and family for free as a hobby and then as I get better I do plan on charging. What exactly do I need to do to officially make my photography name and have a legal copyright on my photos?

  • I found your article so helpful as I am looking for the details of starting a business legally.

  • Thanks! It’s really nice to have some guidance for my new photography business.

Some Older Comments

  • Mellissac May 23, 2012 04:06 pm

    Hello I love this article but I am very confused on many things can someone please explain to me? I'm new at everything but I do love taking photos I will be purchasing my very first camera well not exactly I already own a Kodak easy share but I have upgraded to a Nikon coolpix l120 i do plan on purchasing lights and umbrellas and I'm gonna purchase backdrops for my home studio I do plan on only taking photos for just friends and family for free as a hobby and then as I get better I do plan on charging. What exactly do I need to do to officially make my photography name and have a legal copyright on my photos?

  • Beth December 29, 2011 11:56 pm

    I was looking for some decent advice on making a living with digital photography. Thanks for the info on LLC's and liability insurance.

  • Allison Jane September 4, 2010 08:14 am

    Excellent discussion all around on this topic. I've learned a lot, I was dreading doing this research, but not as much now. While Daniel makes some valid realistic points, I think it's good that the legality and possible worst-case scenarios scare people (including myself), as it ensures they take the possibilities seriously.

    Thank you all for the advice.

  • Jennifer Moore April 2, 2010 05:40 am

    I forgot to add: I am in Maryland.

  • Jennifer Moore April 2, 2010 05:38 am

    I started my business in 2008, and I don't (yet) have a client base to speak of; however, I started right out of the gate with an LLC. For about $700/year, I have my LLC. I have not gotten insurance yet, but once I start to build a client base, you can bet I will be doing that before I step foot at my first client location!

    My figures are $300/year for the LLC, roughly $400/year for my accountant to file for me. I don't want to make any mistakes, so it's worth it to me to pay him to do the paperwork for me.

    This was a very good article. Thanks for the info!

    Jennifer Moore
    JenniferLynn Productions, LLC

  • Xtlman March 7, 2010 08:00 pm

    While the business liability is a big issue in the US, TAXES are a bigger issue. If you are registered as a Sole Proprietorship, you suffer the dreaded 50% self employment tax. As an LLC you get a much more lenient brake in the neighborhood of 20%. Even if you only make a grand in the first year, you have saved the cost in taxes, and separated yourself from your business in the event you get sued. $300 bucks is well worth the cost of becoming an LLC, and you can cover other ventures within the same realm if you are careful about how you title what your LLC does.

  • kylewein March 7, 2010 02:03 pm

    please reply on what you think because I DONT GET YOUR PICTURES AT ALL

  • kylewein March 7, 2010 02:01 pm

    Man you totally just ruined the image of a photographer for me. USE YOUR CAMERA. Wheres the creativity "capturedbyscott".

  • Scott Bideau March 5, 2010 11:46 am

    There have been several suggestions to hide information from or outright lie to your insurance company about your commercial purposes. I would highly advise against this, as you don't want to be sharing a cell in Leavenworth for insurance fraud :)

    I like using Zenfolio (or similar service) for selling my prints since they handle the sales tax for me. Keeps it simple.

    Paul Miller: It sounds to me like you are a commercial entity (since you're selling your work on SmugMug). This likely means that your equipment and liability protection isn't covered under your personal homeowners policy.

  • cicely March 5, 2010 11:22 am

    hey - good article and discussion, i'm bookmarking it - thanks to all who've given their input. :)

  • Paul Miller March 5, 2010 09:34 am

    So basically what you're saying, to legally be a "professional" photographer, you need to have a legal business properly licensed by the state or city in which you operate.

    Let's take out the title photographer, and substitute it with any other profession. Everything still holds true, right?

    Because there are so many amateur photographers and some very good at what they do, they are not professional unless they have a business. So by that definition, I am not a professional photographer. Although, I do have a URL, and an account to a site that enables you to sell photos, lets say SmugMug, where I can sell my work. I do not have a business and I am not a professional, correct?

    So with all the talk of insurance and liability, do fall in that category of needing the coverage?

  • Kit Laughlin March 5, 2010 08:51 am

    In Australia, the formation of a Proprietary Limited company, limited by shares, serves a similar purpose (in relation to the insulation of the company's activities from your personal affairs and assets) as an LLC does in the U S.

    AFAIK, Nevada is the best state to register an LLC in (I went through this process recently in an attempt to get a U S work visa); Nevada has the best price point and the least onerous reporting requirements of the 49 states.

    The reasons one is well advised to take this route were outlined perfectly by Scott: the limiting of personal liability that can come about as the result of an accident involving an employee (casual or not) or yourself in the pursuit of your business. If you own a house, or any substantial asset, it needs to be protected by a Pty Ltd or an LLC; the alternative is that any action taken against you may well involve you having to sell that asset to pay the bills/fines/damages. And insurance is mandatory, too, in my view, for the same purpose: in our increasingly litigious societies, a claimant can sue the person, the company they work for, and (if the accident happens on someone else's property) the property owners. If this is successful, you do not want to have to foot the bill.

    And I am not sure that not taking money protects you from being sued, either, BTW, in the case of a boom being dropped on the groom.

  • Rick Verbanec March 5, 2010 06:18 am

    Scott B's remarks may sound scary, but they're good advice. Anyone on the brink of going pro should be completely aware of the potential troubles they may encounter. Don't do it unless you're serious, and if you're serious, do it right or you may suffer some catastrophic consequences.

    An appropriate old saying: "Just because you're paranoid doesn't mean they're not out to get you."

  • PC March 5, 2010 06:03 am

    I learned the hard way about business insurance. When my camera gear was stolen, State Farm would only give me up to $1000 because they considered it business equipment. How did they make the determination that my camera equipment was business equipment? Because I made money from it. Doesn't matter if it's $1 or $100,000. Money is money in their eyes.
    So, either get business insurance or never tell them that you made any money from it. In my case, I got business insurance.
    Side Note: If you become a business, you also have to worry about paying sales tax on prints or other items you sell if your state requires it.

  • Scott Bideau March 5, 2010 05:46 am

    pamc: If Taco Bell had you running an errand for them during work hours and you got in accident, they would be liable. It's tricky. Most likely if you have a studio and your assistant is driving to/from the studio (commuting), you aren't liable. However, asking them to show up on-location somewhere, run errands for you, etc. means they're doing it on behalf of the business, on business time, and hence the business is liable.

  • PamC March 5, 2010 05:39 am

    Sorry, but I'm confused. More likely just ignorant of the laws. But why would the employer of someone going to a job be liable for anything? If I worked at Taco Bell and got into an accident on my way to work, TB wouldn't be liable. I apologize for what you probably consider a stupid question.

  • Scott Bideau March 5, 2010 04:46 am

    I'm really enjoying and appreciating all the comments.

    Keep in mind that if you're a sole proprietor and get a personal liability policy only covering your actions and your assistant causes an accident, your policy won't cover your assistant or your business. Your assistant will be personally liable and your business liable as well. Since your business is you, and your policy only covers your actions (not those of the employees or agents of the business), you're not covered. I know this is confusing, but most personal liability policies cover your personal actions, not the actions of your business. Even if you cause the accident, if the insurance company for your personal policy finds out you were acting in a commercial venture and they only cover personal liability, they won't cover you.

    My opinion has always been that if you're doing photography as a hobby, make sure it's a hobby (don't charge, don't represent yourself as a business, etc)...and make sure your personal liability coverage through existing insurance is sufficient. The minute you decide to start a commercial venture, the costs I mention are simply part of your startup costs, not unlike any other costs. I know it's hard to spend these costs, but most people spend far more per year on their cable television, coffee shop trips, etc :)

  • Jeff March 5, 2010 04:21 am

    Very good article. I'm planning to run a business as a sole proprietorship (knowing that means I'm liable) while I build my portfolio and do some sub-contract work for someone more established.

    In BC, Canada where I live sales tax does not need to be collected until you make 10k in saleable good sand services and maintain a regular business location.

    However, all income I make through my business (for now, sub contracting) has to be reported on my personal tax return, which can be offset by business expenses (ie. new lighting purchases)

    I had not thought about hold-harmless waivers and insurance yet - this is something I will have to look into more fully.

    Thank you Scott, and Scott. Thanks also Daniel - you have some good valid points, and I respect that you say you agree with the business but that all these things may not be needed for someone starting out - however, I do feel that anyone, even starting out, should do so with some trepidation and a solid amount of research to make sure they are in fact doing things correctly.

  • Rob March 5, 2010 03:48 am

    This is helpful but unless your are doing it full time or making significant amounts of money it can become a money losing situation. If you are doing this as a primary career or making is excess of $500/gig on a regular basis this is a no brainer.

    On another note, if you run as a sole proprietor make sure you have at least $2-3 million in liability. While some people think of $1 million is enough -and it is for many locations that require insurance-, juries often award more than that amount in the event of a death (and you have think in worst case scenarios). The author uses an excellent example of an assistant driving a car to your gig. He/She is an employee which makes you the employer and ultimately responsible if they get hurt driving.

  • Scott McNealy March 5, 2010 03:03 am

    Hello, I really enjoyed the article as I have made some of these steps recently in the U.K. Does anyone know if the proceedures for setting up a LLC in England are the same or similar as in the U.S.? This article is so important for those of us who are finding their way in the dark whilst shooting professionally. Many, many thanks for the informative article and comments.

  • bigd March 4, 2010 04:27 pm

    Thank You all. This is very helpfull.

  • Jeff W March 3, 2010 02:33 am

    Good points to consider. If I could add one thing it would be to make sure that, if you live in a state with sales taxes, you file the proper forms with the state and collect (and pay) sales taxes for all appropriate items. All it takes is one report to the state to find yourself in hot water and subject to an audit. Ditto for reporting all income.

    @ Daniel mentioned that articles like this can scare people -- this is true, and I think that's a good thing. Deciding to charge for your services is a big step to take, and shouldn't be taken lightly. It grates on me a bit when I see a photographer "just doing a job as a favor for a few bucks" undercut another photographer because, in all likelihood, the photographer doing the "favor" isn't reporting the income, isn't collecting sales tax, and doesn't have overhead expenses of insurance, etc., from doing things the "right" way.

  • TheBing March 2, 2010 08:19 am

    Scott, thanks for the info. This is exactly what I needed. Who did you choose for your general liability policy?

  • Whalebone March 2, 2010 07:17 am

    A terrific overview. Sometimes it easy to forget the business side of things. Thanks for sharing your knowledge.

  • Zack Jones March 1, 2010 11:19 pm

    Interesting article. I did a quick check and it would cost me about $300 to register an LLC in South Carolina (using Legalzoom.com). I'm sure if I shopped around some I could find it cheaper....

  • Sarah March 1, 2010 07:12 pm

    For this type of topic, could the author please indicate which country they're talking about. In this case I following links to find it it relevant to the USA. I would be interested in an article for Australia.

  • daniel mollino March 1, 2010 04:22 pm

    While the instances you put in place are true, I understand what your saying, And as I did say i agree 90% with the article, This is one of those articles that relates to similar posts in forums. The problem with these articles is they scare people, and lately in this world there is alot of this going around. If someone is doing this as a hobby and starts taking photos for a few people they may one day be doing it full time and if you are full time ect you should be protecting yourself. But an article like this while it does achieve your point to some like a family member of mine this will put the nail in the coffin and they wont try. Because they don't have the money to start with all this fluff (for the ammount and type they are doing it is fluff). And to them they wont go without and then we will have lost another potential new excellent photographer, I hope my relitave is reading this she needs to commit because she is good

    Hell when i started i had a rebel xt with a kit lens and nothing else (And I took some damn good photos with natural light) if someone fell in that state park because they wanted the photo It would not have mattered because my first 3 years were family and friends and associates. And the first commercial shoots were for my friends swimsuit company on her property, Guess what in commercial shoots when you contract with the company you have 2 options well so do they either they hire you and umbrella you under their insurance or you get yours and umbrella them. Its an insurance liability clause, Now if they are covering you for the shoot get a letter from their insurance declaring you as insured, if it goes the otherway they will want one from yours.

    Basicly I just wanted to make sure people realize despite what your saying which is true if your just shooting for fun and very small client base friends and family type you probably don't need it right off build a portfolio and when you go larger and are making the money then take the next setp

    Oh and as for the llc , In new jersey where I live you have to file a partnership return for an llc every year even if you are the sole owner, This is how my attorney and tax pro put it to me.

  • Scott Elder March 1, 2010 02:51 pm

    Scott is dead on here, and not just because we share the same first name. I think the problem is that too many people are doing this as a hobby and not as a business. As a secondary income, and one that many take tax-free under the table, perhaps you don't want to carry insurance or have yourself labeled as an LLC. However, for someone like Scott or myself who does this full time, the small amount of money it costs to have yourself setup correctly (LLC, PPA liability policy and equipment rider) is VERY worth it. Another thing he doesn't mention directly is that if you aren't an LLC and you DO happen to have an incident where someone could sue you, they can come after your business and then your personal property in certain situations. I have heard horror stories of photographers who lost their businesses, then their house because of a silly legal document that would have run them less than $5/mo to have, making them an LLC. If you're gonna be in the biz, follow what Scott says and do it the right way.

  • Scott Bideau March 1, 2010 05:55 am

    As an example of the low costs of running a professional business entity, my LLC filing costs me $50 per year for the annual report, $200 per year for a $1m general liability policy, and all my equipment is protected under State Farm's Personal Articles Policy (with commercial photographer add-on) for $69 per year. This is one client session worth of revenue for most photographers.

    As I mentioned in the article, a single member LLC does not require a separate tax return for the company. You can simply file the Schedule C on your personal return.

    Even if you believe a hold harmless agreement is adequate, consider the bystanders who haven't signed one but could easily cause an accident or get hurt.

    The point of the article is to get photographer's to think about the "what if's" and make sure they're protected. If you're going to be paid in cash and lie to your insurance company, this article won't be valuable for you. If instead you'd like to protect your assets while also providing your clients with an adequate amount of insurance should the improbable ever happen, it will hopefully give you a good, economical starting point.

  • Greg Taylor March 1, 2010 02:05 am

    My philosophy on business is leverage your strengths while minimizing your weaknesses. This article has a lot of good information but Daniel also makes some great points. Take an honest look at where you are with your business and act accordingly.

    I am in the process of publishing a book of concert photos where all the proceeds go to a non-profit organization here in AZ (USA). My biggest legal concern with this project is making sure the photographers submitting their works to me are the actual owners of the photo rights. Many times in order to photograph music there are limitations on usage and I don't want to open myself up to litigation.

  • daniel mollino March 1, 2010 01:09 am

    You know i can agree with the article 90%, However if you are just starting out using your rebel t1 and just shooting basic shots by yourself with no employees or in some cases your sibling this could a futile waste of money. Insurance can cost 1k a year, LLC file can cost 150 + $50/yr + more money come tax time because you have to file a partnership return for the llc then carry over that info to your schedule c on your tax return. As for a s or c corp you are going to pay the same 150 + 50/yr + 500/yr corprate min tax

    Now if your doing small work on a cash basis, as in only shooting with a camera and minimal lights if any at all well it most likely wont be worth the money. If you get in an accident you obviouslly werent using the vehicle for buisness at the time in fact you were using it to get to work, which is like driving to work in the morning - Your company is not liable for you till your on the job- and on the other side if they are not driving a commercial vehicle your protected more because when the officer takes the accident report on your personal vehicle and he asks were you using the vehicle for work and you say yes, Your insurance will drop you immediatly. (atleast in nj)

    Not to stand as legal or any type of influence your a big boy and can make up your mind but if your not making over 20k a year with your own buisness sometimes it might be better to shut up never say your working when something happens in terms of a car accident especially since it could have happened not working, and deal in cash, If you want to protect yourself further do what I did and still do, Make every customer sign a holds harmless agreement that includes a cause for everything you can think of - eg, client trips over an extension cord within defined set area. and **** Photography or its employees will be liable for no more than Medical Expenses and loss of income related to negligance on **** photograph or its employees part,

    These are not bulletproof however I had a clients child trip over a cord in their home and when they tried to sue i faxed their lawyer the signed waiver and that was the last I heard, Now i got lucky he was not a snake who was going to try to claim negligence however he probably wouldn't get far with it hence why it disappeared.

    If you want a holds harmless get an attorney in your area it cots me 350 to get it made - And that is a one time cost. Otherwise go to a local dropzone (skydiving) and get one of theirs- They are some of the best written and most bullet resistant, and modify accordingly =P oh and tell no one that is where you got it it could be considered thieft in some states use it as a guide and nothing else

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