LLC for Photographers
Forming a photography business allows you to enjoy doing what you love while earning from it. Not only do you get to hone your skills in your craft, but you also get to offer your services to people who need it. After all, there are countless events to cover, making your services constantly in demand.
What’s better: starting a photography business isn’t difficult at all. All you need is the proper equipment (which you likely already have) and a formal business registration. For the latter, we recommend LLCs. Let’s talk about it.
What Is An LLC?
An LLC, short for limited liability company, is a hybrid business structure combining features from sole proprietorships, partnerships, and corporations. It takes less effort to form, and allows for as few or as many owners (called members).
One of its biggest advantages is how it prevents double taxation like most corporations. The structure also protects your personal assets from being used as payments in the event that your company ends up in debt, bankruptcy, or on the losing end of a lawsuit.
Because of its relative ease of formation/operation and flexibility, LLCs are the most popular legal business structure for startups right now. And it should be the structure you choose for your own photography business, too.
What Are The Advantages Of A Photographer LLC?
There are many advantages to starting your own Photographer LLC wherever your business might be located. Let’s go over some of the most important ones.
It doesn’t require a lot of paperwork to run
A Photographer LLC doesn’t need a lot of paperwork to form and run. While you will need to make the necessary reports from time to time, there’s a lot less documentation and administration compared to other business structures (specifically corporations). This allows photographers like you to focus more on what you love to do, which is taking photos.
It allows for flexibility in management
Because of its structure, a Photographer LLC can have as few or as many members as needed. It can be as small as a family-run business, or something as big as an agency with more than a hundred people working in it. Your company can be run any way you want. What matters is that you and the other owners all agree on how to divide the profits from the business.
It protects the owner’s personal assets
It’s common practice for business owners to start their company using personally-owned equipment like cameras and lighting. Once your business starts buying its own equipment, under its own, registered name, they can become owned by your company.
An LLC limits your liabilities to what the company owns, and makes sure that your personal assets are protected in the event that someone or something files a lawsuit against the business. For example, if a client comes to sue you for some reason, such as alleged discrimination, you won’t be pressured to pay fines or settlement amounts using your own money and possessions.
What Are The Disadvantages Of A Photographer LLC?
While there are some downsides to selecting LLC as a legal structure, these aren’t serious enough because they can be avoided when you factor them into your planning.
If you plan to form an LLC with single ownership, for instance, you might need to spend more on reports and documentation compared to a business with sole proprietorship status. If it’s a partnership, the transfer of ownership shares might require more work compared to a corporation.
The most important disadvantage to remember here is that once a member of your LLC passes away or files for bankruptcy, the LLC will be shut down—if it was formed without any business continuation agreement. A corporation, on the other hand, can continue to exist and thrive despite that.
How To Create A Photographer LLC
By now, you might be thinking of creating your own Photographer LLC. The process is easy enough. Here’s what you’ll need for it:
- Choose a unique name
- Hire a Registered Agent
- File an Article of Organization
- Create an Operating Agreement
- Get an EIN
Choose a unique name
A unique name helps your Photographer LLC stand out from other businesses offering similar services. Keep in mind that a good name can draw potential customers in.
Here are the things you need to remember when selecting a name for your business:
- The name of your business should communicate the kind of services your customers can expect to receive. Are you specializing in wedding photos? Are you planning to set up a portrait studio? Are you interested in covering wildlife or nature? Choose a name based on that.
- Make sure to use a name that hasn’t been taken yet. Some states offer ways to determine if a certain business name is available for use. You can visit the Secretary of State’s website, for example, or visit the office itself to do this.
- Depending on the state where your business will be located, your name might need to include “Limited Liability Company,” or an abbreviation of it.
If you find out that the name you want is available but you’re still in the process of filing other documents, reserve it. This might cost you a bit, but it will make sure that your preferred business name remains yours to use when you are ready. Your Secretary can hold onto the name for 120 days.
Hire a Registered Agent
Second, you need to choose a registered agent for your photography business. Registered Agents serve as the point of contact between your LLC and the government, and receive all legal documents pertaining to your business. The agent should be located within the same state where your business is based.
Registered Agents serve as your business’ representative, so make sure to take your time and carefully choose who it will be.
File your Article(s) of Organization
An Article of Organization serves as the charter document declaring your company’s existence and establishing your photographer LLC in your state. To file an Article of Organization, you will need to work on the required paperwork. Most states have blank forms you can fill-out for this purpose, which you can find on your Secretary’s website.
Then, visit their office to submit it and pay the necessary fees. The amount could be anywhere between $50 to $500 depending on your county.
Create an Operating Agreement
In order for your LLC to work effectively and efficiently, you need to have an Operating Agreement. While not required, this document sets the rules and guidelines for how your LLC will operate and ensures that everyone involved is on the same page. It helps prevent misunderstandings and provides a clear structure for running your LLC.
For example, your Operating Agreement should include your organization, and membership roles and responsibilities. It can also include details regarding the financial side of things, such as capital contributions, and details on profits and losses. Even if you plan to start your Photographer LLC on your own, an Operating Agreement can help you facility a smoother transfer in the future.
Get an EIN
Lastly, secure an EIN. This number is usually used to file for taxes and other transactions you have with the IRS.
An EIN even provides a way to separate your personal and business finances. By having an EIN, you can open a dedicated business bank account, making it easier to manage your money. This separation allows for a clear distinction between personal and business expenses, simplifying the tracking of income and expenses for tax purposes. You can also use it to apply for business loans!
How Are Photographer LLCs Taxed?
LLCs are passed through entities. This means the IRS won’t tax your company, as everything is treated like your personal income. The only tax you have to be concerned about are those on your “personal” income, which you file and pay taxes to the government directly.
Other states might mandate that you pay additional taxes though, so we’ll list down some of the important ones you need to be aware of.
Here are other taxes you need to pay with your new LLC:
This is the “personal” income tax we were talking about above. The amount is calculated based on your business’ profits. If you co-own the business with someone else, you split the profits and therefore split the tax.
It also includes Medicare and Social Service contributions that are commonly paid for by employers. But since you are self-employed, you have to pay for everything on your own and directly to the IRS.
Franchise Tax is a type of tax computed based on a percentage of your photographer LLC’s total assets or gross revenues. Not all states require companies to pay this, but those that do require that you do so annually. Check with your local tax office if this is something you need to comply with.
If your LLC is earning too much to justify the amount you have to pay through Self Employment Tax, you can also elect to have it taxed as a corporation. You can declare a salary for yourself and get taxed on that, plus earn shareholder income from being the owner of the company. The only catch is that your company will now have to pay for corporate taxes to your state, which is separate from personal income.
What Are The Costs Of Starting A Photographer LLC?
Forming an LLC in your state requires you to pay fees for permits, licenses, and other things mandated by your government. Here’s a quick rundown on the costs of starting your Photographer LLC:
(Between $50-$800 + around $50 for legal services)
Fees necessary when filing your LLC differs with state, but you can expect to spend between $50 and $800. Take note that some states require an annual report filing fee as well.
Registered Agent Fees
(Around $100 to $300)
Your registered agent provides valuable service to your business as its legal representative. Prompt payment will ensure continued service.
(Between $0 to $200)
While you can create an Operating Agreement on your own, paying lawyers to help you create it will help to make sure everyone is on the same page when the work begins. They’ll also help you word your document in such a way that benefits all parties involved.
(Depends on the newspaper)
LLCs in some states, such Arizona, Nebraska, and New York, are required to publish notices about their registration in the newspapers when they form. Some states even mandate that the LLCs publish notices daily for three consecutive weeks. Some are even required to publish for six consecutive weeks. The cost of publication depends on the newspaper, but it’s $50 on average.
You’ll need funds to sustain your Photographer LLC. These include money to pay federal and state taxes, if any, as well as reporting fees. The amount varies from state to state, so make sure to read up on them before starting out.
You will also need to pay for the cost of services used to run the business. These include the purchasing of parts and disposable components for cameras and other equipment, as well as repairs. They also cover rental fees, transportation costs, and so on.
Starting your own photographer LLC can be the fastest way to reach your dreams while profiting from it. The process is easy, cost-efficient, and could result in long-term benefits for you and others. You even won’t have to worry about losing personal assets in the event that something goes wrong with your photography business—something you’d have to think of if you start as a different entity.
However, we understand that the filing, formation, and registration can be a huge challenge for many. This is why you should let StartGlobal do the work for you. We will take care of the necessary paperwork for your photographer LLC, so you won’t have to.
For a more detailed overview of forming LLCs in various states, check one of our guides below:
Is LLC The Best Entity For Me?
Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.
LLC vs Corporation (C-Corp)
Sole proprietorships and Limited Liability Companies (LLCs) are two of the most common business entities for individuals and small businesses. Learn what differentiates the two today.
LLC vs S-Corp
Not sure what business structure to choose? Learn about the key differences between LLC and S-Corp today.
LLC vs Sole Proprietorship
The primary difference is that an LLC provides limited liability protection for its owners, while a sole proprietorship does not.
Frequently Asked Questions About Starting A Photography LLC
Here are the most commonly asked questions about forming an LLC for a photography business:
Yes. Unlike sole proprietorships and partnerships, LLCs provide its owners the same risk protection given to a corporation. LLC owners’ personal liability to the company are limited to what they have invested in it, and do not extend to what they personally own.
No. While fees vary depending on state, registering your LLC will require you to pay money regardless.
Yes, you can request an extension if you need more time to file your taxes correctly. StartGlobal also offers a tax filing platform that you can use to stay compliant. Never be confused by the taxes you need to file ever again. We’ll even do the computations for you!