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business 101 PHOTOGRAPHY:

VIVID SPARK © 2010


STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

CONTENTS Business 101: The Master Checklist (Stay on Track!) ......................................................... 3 Getting Started: What’s in a Name + Business Licenses .................................................. 4 Business Permits + Sales Taxes ......................................................................................... 5 Business + The Federal Government .................................................................................. 6 Self Employment Taxes ........................................................................................................6 Protecting yourself + your gear ............................................................................................7 Getting Professional Help ....................................................................................................8 Action Plan! ..........................................................................................................................9 Resources ..........................................................................................................................10 Portraits + Weddings

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

Business 101: Master Checklist ITEM

DATE COMPLETED

Create your Business Plan! (This isn’t as scary as it sounds-use our Business Plan workbook to get yours done quickly + beautifully) Register your business name “DBA” (Secretary of State or County Clerk) Register with the State Department of Treasury for your Sales Tax ID or Seller’s Permit Register for your Federal EIN or for using your SSN as your business ID (Remember, you’ll need this BEFORE you open your business banking account!) Obtain adequate equipment insurance separately from your homeowner’s insurance (Remember, once your a business, your homeowner’s likely won’t cover your gear!) Obtain Liability Insurance Obtain any permits required (some are necessary if you have your business in your home) Open separate BUSINESS banking accounts (keep biz + personal separate!) Hire an accountant Retain a tax advisor Set your company policies Finish your website Get business collateral printed (business cards, postcards, etc)

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

Getting started RIGHT Where do I start? {START HERE!} This workbook is designed to walk you through the maze of getting your business started-legally. As a professional in business, you want to do everything above board so you don’t run in to trouble with the authorities later, right? This workbook should be completed AFTER you’ve created a living business plan to guide your decisions. If you haven’t done that, I recommend doing so before you go any further since part of that process is determining your legal business structure. We won’t be covering legal structure here but you need to know what your business structure is before completing the following steps since they may vary based on your business structure type. (Sole Proprietor, LLC, S-Corp, Corp)

What’s in a Name? If you’re calling your business by your name, you’ll be able to skip this step-although, there is no harm in registering your business name even if it is your name! If you’re calling your business by anything but your name, you’ll need to register your business name with the state. Often this is called filing a “DBA” Or “Doing Business As”. In some states this will be done through the Secretary of State; In others, you’ll handle this at the County Clerk. To check, visit your state’s business assistance website. Currently, you can

visit http://www.business.gov/states to access a quick link to your states page. Registering your business name ALSO prevent it’s use by someone else which is key to protecting your business. Business Licenses While these aren’t required in all states, if they are required in yours, you absolutely want to make sure you have one! Not having one can spell disaster for your business. In California, for instance, this license is the same as a Business Tax Certificate. In conjunction with a

TIP! Once you’ve been to your state’s page, you’ll want to bookmark that badboy! You’ll be visiting that site again to find out where to file various documents as well as confirming which documents you need to file. You might also want to bookmark the federal government’s business support site- http://www.business.gov because it has valuable information as you start the journey of owning a business. Page 4


STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE! license, you may also need a Sales & Use certificate. Again, you’ll need to contact your state government to file these documents. Filing all the appropriate documents with the correct state entity will save you headache and heartache in the long run!

government and collecting the sales tax for them. Paying your sales taxes early or on time *can* get you a discount (very small but hey, it’s something!) so make sure to file your sales taxes on time or early if you can!

Charging Sales Tax Just a small note here-you need to charge sales tax on anything that results in a tangible product. So if you Business Permits Just as your state may require one photograph a family and you deliver a or more licenses, you may need one or disc, the session fee needs to have more business permits. Permits sales tax charged. Of course, if your include zoning use if your studio will state doesn’t charge sales tax or be in your home; A “Sellers” permit doesn’t charge it on photographic which allows you to purchase from items, you won’t need to worry about. wholesalers (like your photo lab) Most states DO require you to charge without paying sales tax on the items sales tax on all purchases that are you will be re-selling. (A sales tax tangible items. exemption.) In other states, the sellers The only time you can not charge permit is covered by having a Sales sales tax is if you provide a service Tax permit/license. Please note that and it does not result in a tangible you will likely need to provide your item. So accountants who file your permit or license number to your lab tax return for you don’t charge sales for their records to prove that you are tax because you don’t get a physical a valid business and are eligible to be item in return for their services. Make exempt from sales taxes because you sense? are re-selling the product. This means Collecting Sales Tax the items won’t be double taxed. Trust Again, you should be collecting me, you don’t want to pay sales tax on sales tax which means you NEED to everything and then still need to be registered with the state treasury collect it from your clients! as a business so you can legally do

SALES TAX Ugh. No body likes sales tax. No one wants to pay it and who wants to collect it? Regardless, as a legitimate business, you need to collect sales tax on behalf of the state and forward it to your state treasury on the time table they provide. Depending on your annual sales and sales tax liability, you could pay yearly, quarterly or monthly. Did you know that when YOU pay sales tax at a store, the store DOES NOT get to keep it? The business is simply doing the work of the

that. If you’re a business, you should be registered and collecting sales tax! To do this, you need to get a Sales Tax ID. Again, you’ll need to consult with your state’s business website to find out where you need to register for this. Typically, you can access the necessary forms by visiting the business area of your State’s Department of Treasury site. One more thing-is your client in a another state? Then you DO NOT collect sales tax for your state. It is the client’s responsibility to pay the

appropriate amount of sales tax on the purchase when they complete their state income taxes. If YOU DO have a business name licensed in another state, you would collect taxes. Most photographers don’t so it’s a fair bet if your clients are out of state, you won't be be collecting sales tax. Paying Sales Tax Typically your state will provide you with the forms and ‘coupons’ necessary to pay your sales tax. Keep immaculate records of your sales and stash your collected sales tax throughout the year in a separate checking account just for taxes. This way, when taxes are due, you’ll have the money already set aside!

TIP! Have a separate account for sales tax and put the correct sales tax amount collected FROM EVERY SALE into this account. When tax time comes, you’ll be all set to pay what you owe without any headache!

For instance, in Michigan, we have a 6% sales tax. To make sure I have all the money I’ve collected on behalf of the Department of Treasury, I put the amount I collect from EVERY sale into a separate checking account just for sales taxes. So 6% of every sale is transfered from my general account to my special sales tax account. Then when tax time comes, I simply transfer the amount I owe and write a check to the department of treasury! Win!

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

Take a break… Checking In! How are you doing? You holding in there? I know this is a LOT of information but you’re doing awesome! Remember, you’re now a business owner who owns a photography studio. Moving on... I hope you’ve been taking notes and are getting these items taken care of, one by one. Remember to use the checklist provided at the front of the workbook to ensure you’ve got all your bases covered!

BUSINESS + THE FED’S Before you can get your business banking squared away, you’ll need to make sure you get your FEIN (Federal Employer Identification Number) or register your SSN for business use. I recommend getting a FEIN if you think that you might EVER hire an employee. It’s quick and easy so it’s very worth it! You’ll do this through the IRS and it can be done right online at http:// www.IRS.gov Here’s a link to more EIN information: http://www.irs.gov/businesses/ small/article/0,,id=98350,00.html

15.3% If you are self employed (and chances you are if you’re using this workbook!) you’ll need to make estimated payments to the IRS as you earn money throughout the year otherwise you could face underpayment penalties. Yuck! Currently, if you earn a net of $400 or more you must pay self employment taxes. So you *might* not have any tax liability in year one or two, but if you’re planning to earn a living from your business, you WILL be paying this tax so it’s better to prepare for it NOW and be in the habit of setting aside funds to cover this tax liability.

TIP! Have a separate account for self employment tax and put the correct SE tax amount collected FROM EVERY SALE into this account. When it’s time to make your estimated payment, you’ll be all set to pay what you owe without any headache! YAY!

Self Employment Taxes The current rate for self employment taxes (Dec. 2010) is

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

INSURANCE 101

Tip!

FOR YOUR GEAR

FOR LIABILITY

Cover your gear!

Protect yourself!

When you are in portfolio building mode, your homeowner’s insurance will likely cover your gear but check with your insurance agent to verify!

Good to have in the event your camera hits a guest or a flash falls on a client-you don’t want to be left without coverage in these events.

Going Pro

Required for some locations

Once you’ve officially started your business, you’ll want to insure your gear with an INLAND MARINE POLICY. You’ll also want to make sure this policy covers NEW REPLACEMENT (not an adjusted rate-you need to get the cash to replace lost, broken, or stolen gear). You also want the insurance to cover damage (yeah, remember when the ringbearer snatched your flash and dropped it in the punch bowl?) as well as loss and theft. You can typically get this insurance from either your preferred photography association’s referrals (PPA, WPPI etc offer membership benefits which include great rates with their selected providers) or with your own insurance company.

Most universities as well as premier wedding locations typically require a special rider for the day you’ll be shooting at their location. Your insurance company can provide the document which lists the location as the “additional insured” for that date. There is typically a charge for this service but if it’s required by the location, there is no getting around it. The location will inform you of the amount required and whom the additional insured should be listed as. Make sure to request this from your insurance company well in advance of the event date because this doesn’t happen quickly.

Protecting your gear

Taking care of your gear doesn’t end with having adequate insurance coverage. When shooting, maintain your gear by replacing lens caps as you swap lenses, turn off the camera before you change lenses and keep all your gear in a safe location while you shoot. It is important that if you are a digital photographer that you keep your memory cards on your person AT ALL TIMES. Theft can and does occur so keeping the most important item (memory cards) on your person is essential to protecting your business. Gear should also be kept close to you, away from exits and locked when possible. Theft at wedding receptions happens-and often from underpaid staff. Be careful of where you store your gear. Out of sight (beneath a covered table) and cabled to something is a great way to protect your gear. Your car is NOT safe either. Be wary of keeping your gear in your car especially if you advertise your business anywhere on it!

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

Hiring Pros Surrounding yourself for success! It’s easy to think you can do this all on your own when you get started. While this is largely true in the beginning, it’s important to begin to surround yourself with competent professionals. From accountants to tax advisors, having a trusted pro on your side is essential for confidently growing your business. Having an accountant means that you’ll have a thumb on the pulse of your business. You’ll also have someone to help you make better business decisions (including when to make new equipment purchases!). Hiring a tax advisor means that you’ll be deducting the correct expenses, lowering your total taxes due to only what you truly owe, and ensuring that you’re paying all the taxes you do owe.

Trust me, you do NOT want to owe the IRS more than what you paid! Coaches, Mentors + More When you surround yourself with successful people, you have a much greater chance of being successful yourself. Take the time to seek out those you admire and build a relationship so you can approach them when you need outside assistance. Don’t feel limited to just photographers. Having trusted people from various businesses and disciplines will help you gain a rounded perspective on your own business.

Approaching awesome people Be straightforward, open and honest! Take them out for coffee or lunch and don’t hide your reasons for asking. If you’re just building the relationship, let them know that you’re not looking for advice right now but that you look up to them and would love to have their support. Make sure to reach out individually to each person-don’t send a mass email! Take the time to get to know the person’s business-dive deep into their business website, blog and twitter. Mention specific things that you like about them and their business when you make your initial contact-it shows that you have done your homework! Yay!

who will protect your heart. Your husband may mean well when he says he thinks it’s a great idea but he may simply be trying to spare your feelings because you’ve worked so hard on something. Having an outside perspective from someone you trust is invaluable! Make sure to build relationships with people who also have successful businesses and home lives. You want to have awesome role models whom you can observe for good habits. After all, you want a business that supports your life-not a life that supports your business! Choose people who have found ways to balance home, family and business as you’ll learn some of their systems to protect your life from falling Paying for Coaching Sometimes you need a fresh apart at the seams. perspective and you can’t get it from Starting a business is stressful and your inner circle. Maybe you’re still can be immensely so for your building your inner circle, maybe immediate family. Make sure to set you’ve already exhausted them. Either boundaries that the business doesn’t way, hiring a great business coach is a interfere with your marriage or great way to clarify things, build relationship with your kids! momentum, or take things to the next level! Growing your Inner Circle Get involved! This is the number one way to meet people whom you can build awesome relationships with who will support your new endeavor. Family and friends can certainly play a part in your inner circle but remember to create a diverse group so you get a balanced view on your important questions. You need people who will be honest with you first and foremost rather than people

TIP!

Keep home + biz separate by maintaining business hours-even if you’re working from home. You’ll get more done when you have a limit set on the time you have available to work on and in your business. Set boundaries and maintain them!

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

Business 101: Action Plan!

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

GOALS

GOALS

GOALS

GOALS

January

April

July

October

February

May

August

November

March

June

September

December

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STARTING YOUR BUSINESS: EARN A LIVING DOING WHAT YOU LOVE!

RESOURCES PHOTOGRAPHER’S IN BUSINESS RESOURCES Vivid Spark http://www.vividspark.com Designed to aid photographers in going pro and beyond! Banana’s EDU http://bananasedu.com/ Run by the fabulous Liana Lehman-Hall, you’ll find a great resource for building a successful business through her blog and products PPA http://www.ppa.com A fantastic resource for all photographers!

GENERAL BUSINESS RESOURCES The Small Business Administration http://www.sba.gov The Official Government Business Site http://www.business.gov The IRS http://www.irs.gov SCORE Service Core Of Retired Entrepreneurs From webinars, workshops and online tools, SCORE is an AMAZING resource for not only starting but growing your business! http://www.score.org

Great “Starting Your business” links: http://www.business.gov/start/start-a-business.html http://www.business.gov/industries/self-employed/

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Business 101  

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