Discover why your photography business should be an LLC below!
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You started your own business as a photography firm because you love taking photos are really good at it. Here are all the reasons why your photography business should be an LLC to keep it and you safe. As you think up a great photography business name learn about business risks and how forming an LLC will protect you and your assets.
Every day is different. You get to express your creativity and capture special happy memories of family weddings and babies. Or perhaps your clients are businesses that rely on your creative talents to sell their products and services to expand their companies, build the local economy and provide jobs.
Whether you are a part-time wedding photographer or a commercial photography studio you need to protect both yourself, your personal assets and your company from the very real threats of lawsuits, taxes, and liabilities that you face in your profession.
Sure being a photographer is exciting and fun, but if you want to make money and succeed you need to remember first and foremost it is a business. So be smart and treat it with the respect and diligence a real business deserves.
Photography industry experts and business attorneys recommend setting up a simple LLC, Limited Liability Company, for both protection and tax advantages early in your company formation.
An LLC, abbreviation for Limited Liability Company, is a legal business structure that is recognized in all states in America. LLC’s are the most popular way to make your business an entity that separates you, and your assets, from your business and its debts and liabilities -which is a good thing in the case of a lawsuit.
These days as our society becomes more litigious, photographers are commonly getting sued for Breach of Contract, citing that the client understood your agreement differently than you. This can be substantive such as the number of photos and albums to the subjective such as not “capturing the mood of the wedding”.
Another common claim in lawsuits involving wedding photographer is Misrepresentation. This means that you, the photo studio, can mean almost anything such as you claimed to be a member of the Chamber of Commerce and your dues lapsed and you were not an active member. Or maybe you exaggerated that you photographed certain celebrities and you actually did not. You could be sued for misrepresentation and lose not only the photo job income but many times that amount for general damages and pain and suffering.
Protect yourself from those crazy Bridezillas who wrongly accuse you of misdoings and try to take your photography business, equipment, house, car, and savings accounts because she doesn’t look like a supermodel in the photos. You know she isn’t beautiful so your camera could not change that fact.
The easiest, most flexible way to launch your business.
You commercial photographer don’t be fooled into thinking you are safe from damaging lawsuits. You may be an even greater risk since your clients are spending thousands on ads with your photos and may come back and accuse you of losing their money. Contract disputes are common in the advertising business. Many photographers have found out the hard, and expensive way, that clients get nasty when they think you did not perform and their sales suffered.
Also, there are a myriad of issues including gender, same-sex marriage, privacy, model releases, and copyrights. All that that could get you in legal trouble without you even knowing why! Don’t take the risk when the solution to protection is so easy and cheap – set up an LLC.
Think of your LLC, Limited Liability Company, as a thick wall or shield over your personal life and assets. It walls off your business, and its actions which could be the target of a lawsuit, and the person, you the photographer who did those actions. So if the unthinkable happens and a lawsuit wins a financial judgment against your firm that company can only collect assets from the business. Thus your car, savings account, IRA and 401K retirement funds and house are safe from collectors.
Just as your accountant and the IRS demands that you separate your personal and business monies, this LLC separates you, the business person from you the actual person.
Please be fooled into taking no action because you think a) you are safe because you only do small jobs on a part-time basis or b) don’t have a lot of assets, or they are in your spouse’s name. I promise you that many a photographer, who got sued regrets that type of thinking.
Remember just because you only charged $500 for the job, it does not mean you can’t be involved in a lawsuit, and be held liable in a court of law for 10X that amount $50,000! It has happened to many an unlucky photographer who was sued for a million dollars! Photographers even sue each other and these won a $750,000 verdict! Ouch! Hope they had their LLC in place! If their business was a sole proprietorship photography company they could lose their houses!
I strongly recommend that you set up your LLC at the onset of your firm – even if you are only part-time. Before you accept your first dollar for your photography services get yourself protected.
The reason I say this is because you never know when you are at risk – that is the nature of chance. Also, you are much more likely to remember to order your LLC setup when you are in the mindset of the startup. To form your LLC at the same time you are preparing your business launch such as opening a business checking account and choosing a name for your photo studio. Do it when you get a sales tax number, register your photography business and obtain your business license.
It takes less than 10 minutes to set up the LLC that protects you all year long. Costs are low starting at $50, dependent upon which state your business is headquartered.
If you wait until you are more established, or ready to go pro or full-time you are more likely to either forget to do it or postpone it and get caught in a risky legal situation with no personal protection.
Additionally the boost in confidence that taking your photography business seriously that setting up an LLC creates will help you book more clients and succeed as a professional photographer. Good luck and happy shooting!