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  1. #11
    billschwab's Avatar
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    Quote Originally Posted by Allen Friday
    Or, your can incorporate as a LLC, a limited liability corporation, most of the benefits of a C corp, but with relaxed requirements. It's run more like a sole proprietorship, but you still have the limited liability of a corporation.
    This is the way I went. As a single member LLC, your filings are the same as with a Sole Proprietorship... Schedule C and all that. As long as you are showing profit, I wouldn't worry about too much IRS scrutiny. As long as you follow the rules, there is nothing to worry about. I highly discourage anyone from doing this as a "hobby" business. If you're doing it to simply write-off film and expenses without showing a profit, you'll get red-flagged pretty fast no matter how small the numbers. Like others have said, unless you are making a significant amount of your income from your work, keep it a hobby.

    Bill

  2. #12
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    Quote Originally Posted by Early Riser
    I think Bill Schwab can really relate to this..
    I have had a lot of similar experiences, but you're much crazier than I Brian!! I used to put that kind of time in on the road, but have to admit being more successful staying close to home. Granted, I still travel a fair amount, but I am more excited by the things I do around my own environment these days. Those images seem to sell more anyway. I simply can't afford to spend that kind of time on the road and it is much more economically sound for me to eek out a living shooting in my haunts closer to home with a trip or 2 to places like Scotland or Iceland per year.

    I commend you for garnering the type of print sales you must realise to cover your expenses and make a living in only 4 years! That's a lot of prints! Well deserved. For most successful photographers in the fine art field that I know, including the big names, it is hard to make a living without commercial work and royalties. Myself, I do fine and consider myself very lucky. However, even with steady sales through my galleries that hover around the 100 print mark per year (no small task by the way), it is no way to provide for a family in this day and age. I would have to say that perhaps my most fortunate blessing is frugal living and having a wife who works full-time and supports me in my need to work! (As long as I bring in my share of the pie!)

    Bill

  3. #13

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    I think that the mention above of expenses and writeoffs is the point of determination which may or may not be the decision point for your interest in a full blown incorporated business. There are expenses, and requirements, both front end and back end to an incorporated business, that may or may not overide your percieved value in writeoff's. An accountant should be able to clue you in here. Certainly a true C corp has it pluses (writeoff's) and minuses both in required paperwork as well as a double taxation. LLC's and Sub S's have their own pluses and minuses. The other important point is sales taxes, and believe me that this can put the screws to you pretty fast if you do not keep up with it. I bought a book from Barnes and Noble on the different forms of corporations and requirements, and would not now incorporate unless absoutely necessary; I just don't want all the extra bs that goes with it. Make sure you read your State's online information concerning corporations and talk to a good accountant. My mention of perhaps a sole proprietership was not in respect to taking writeoffs, but just in appearing legitimate. But if you have a good accountant, and he or she knows their business, I would not worry about audits. That's what acountants are for. The most that could happen is that some writeoff's will not be allowed and, if your account doesn't know, you know what, a fine.

  4. #14

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    One of the primary advantages to a corporation is it basically isolates your personal wealth and assets from the business. If someone sues you relating to your business, product or business practices, only the business assets are at risk. (unless there is something more criminal involved in which case civil suits could go after all a persons assets.)

    In the case of selling prints or art work, there is little or no risk to your non-business assets. The other big advantage is a corporate structure allows more flexibility in how profit is treated with regards to compensation. Part of any profit can be returned as operating capital, put into an R&D account etc. In some cases you can work it out so as not to make a salary and thus avoid paying employee taxes on yourself. With a sole-proprietorship all net profit (over $400) is subject to self-employment taxes.

    As far as sales tax goes, a lot depends on where you live and how you sell your goods. Most small businesses that sell to customers out of state and over the internet do not collect sales tax on those transactions. That is one of the single biggest advantages to internet sales. (although congress and state governments are looking at ways to compel web merchants to collect and return sales taxes). The only thing that worries me about this is that the laws could be changed in the future and the state revenue department come back and require you to pay all the back sales tax that you never collected.
    "Fundamentally I think we need to rediscover a non-ironic world"
    Robert Adams

  5. #15
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    Isolation of personal assets was, indeed, one of the benefits of incorporating. My understanding, however, is that in recent years it has become fairly easy to "pierce the corporate veil" if all of the the stock is held by one or a small number of related people. But, I'm not a lawyer, and don't play one on the Internet. So, if that's an issue, it may be helpful to consult your attorney.
    [COLOR=SlateGray]"You can't depend on your eyes if your imagination is out of focus." -Mark Twain[/COLOR]

    Ralph Barker
    Rio Rancho, NM

  6. #16

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    A lot of the issues concerning how far a planitff can go in seeking damages has to do with proving the intent of the coroporation and its officers to willfully defraud or do harm to stockholders, clients or customers. When company officials conspire to cheat any of the above it moves from areas such as product liability (damages limited to assets of the corp) to crimes involving fraud and embezzelment ala Enron, World Com, Tyco etc. When you get into this area state and federal law determine fines and jail time. After that plantiffs can go after personal assets through various civil suit avenues.

    In the much smaller realm of selling fine art photographs I don't know what one could be liable for other then replacing a print that may have not been properly finished to archival standards. Most of those types of issues would be covered in purchase agreements with the work.

    Untill the amount of income you make would reach the threshold that incorporating makes sense, sole-proprietorship is the simpler and less expensive option.
    "Fundamentally I think we need to rediscover a non-ironic world"
    Robert Adams

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