Keep Things on the Up-and-Up
Now you’re a step closer to pro status, but there are still some things to consider. You could be opening yourself up to a world of complications if you don’t get the legal side of things organized right off the bat. The best course of action can vary quite a bit depending on where you’re located, but there are some standard measures you’ll want to take, beginning with naming your business.
If you’re using your own name for your business or operating exclusively as a freelancer, you’re in the clear. You own the rights to your own name. If you’re going with something a little more creative, however, you’ll need to confirm with the United States Patent and Trademark Office that the name is neither taken nor too close that of another business. Fortunately it’s as easy as using the search bar right on their website. It’s also a good rule of thumb to Google the name before registering it, since a more established business could still try and claim a trademark to their name, even if you are registered and they are not.
There’s not much sense in having a name if you don’t have a place to work from, so put some thought into a business address. If you’ll be primarily working out of your home, first of all you need to confirm that you are doing so legally. Zoning ordinances may be in place, or there may be restrictions if you live in a condo or belong to a homeowners association. Keep safety in mind as well. For some, it may give pause to hand a personal address out every time you take on a client, but a PO box doesn’t always convey the professionalism you may be looking for. If this is you, look into a business mailbox service that will allow you to receive business mail and packages at an actual street address without giving out your personal information.
Speaking of protecting your identity, another step to consider is applying for an Employer Identification Number (EIN). While you can use your social security number as a sole proprietor (you’ll definitely want an EIN if you set up an LLC), a separate tax identification number can protect your privacy, give you an air of credibility, and is a great first step for setting up a plan to pay the appropriate taxes.
You may even be required to have an EIN if you set up a business banking account. A separate banking account from your personal one (again, this is especially important for an LLC) is a good idea even if you are not doing a lot of business yet. If your personal and business finances get all mixed together it can be a very special kind of headache to get them straightened back out come tax season.
If you’re accepting payments via PayPal or PayPal Here (more about this later), you could consider the PayPal Business Debit Card as an alternative to a traditional business bank account. The requirements are simple, there’s no annual fee, and it’s accepted anywhere you can use a Mastercard because it is a Mastercard. By the way, depending on what kind of work you’re doing, you may be required to pay sales tax. Though you are providing a service by taking and editing the photos, the prints and digital files you supply your clients with can be considered products which you are—you guessed it—selling. This is another thing that varies by state and you’ll want to know for sure where yours stands on the issue.
In addition to this, per the IRS website: “As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly.” So be sure that you have your tax-related ducks in a row to avoid penalties and other general pains down the road.
Protect Your Investments
So now that your identity is safe, let’s think about your assets. If you are starting out with low-end equipment and low-profile jobs, insurance may not really be all that helpful. Once you’ve hit your stride though, you may find yourself in a place where, if all of your equipment fell prey to theft, accident, or some unforeseen event, you’d really be up a creek financially.
As a sole proprietor, if you are starting to take on higher-profile gigs with higher stakes, you are particularly vulnerable to lawsuits. Whether to obtain insurance or not is something only you can decide, and you may feel the need to reassess semi-regularly in the early stages of your photography career.
Another significant step you’ll need to take is to put together contracts for each type of photography job you do and have a client sign one every time. You can very easily type one up by yourself for free, and often this is all a photographer needs in the beginning. However there are a lot of subtleties to the language in a contract that you just can’t be expected to know about without some kind of legal expertise. There are a number of templates to be found online, but be sure to confirm that you’re downloading from a trustworthy source. This general photography contract from attorney and Improve Photography founder Jim Harmer is a good place to start.
You can, of course, also have one professionally drawn up. It will be an expense for sure, but you’ll have more peace of mind and the advantage of having your contract(s) written by a legal professional who knows your exact situation. Whichever route you choose, don’t forget to include copyright information and a model release so your clients are aware that you can use these images in publications or for marketing purposes.