Feeling overwhelmed when you think about starting your photography business? Here’s our step-by-step guide to keeping things clean and organized when you start a photography business.
So, how do you start a photography business? Deciding to transform your hobby into an actual job is no easy task! But having to research, and know exactly what is required to become a legal business entity, can be enough to make your head spin! These initial business decisions can have a tremendous impact on the future of your photography business (and your personal life as well). It’s vital to make sure you learn exactly how to start a photography business.
In this article, I am going to break down the overwhelming amount of business information and give you the exact initial steps required to make an official and legal business. More specifically, how to start a photography business and get your photography up and running quickly (and working for you)!
Let’s get started…
Step 1: Write a Business Plan
Although there are no legal requirements for having a business plan, it is a valuable document! Having a written plan will help guide you and get your photography business started on the right track, and on the way to success. Putting together a business plan is no easy task, but running a successful business isn’t easy either. This is meant to be a framework you can reference when you start to feel overwhelmed.
A well thought out, and comprehensive plan should include these topics:
- Description of Business – What type of photography business are you going to be? Large studio or small boutique? Are you going to focus on weddings or family?
- Market Analysis – What is your target market? Who is your ideal customer? What is the competition like in your market? What is the market price point/price range for what you intend on competing against?
- Competitive Advantage – How are you going to be different to gain market share?
- Operations – Who is going to run the business? What roles will be involved in day to day operation? Is the business scale-able?
- Financing – Is there a need to raise capital/money to get started? If so, how much is needed? How will you get it/who will provide it?
- Goals & Objectives – What do you want to achieve with the business? Write your goals down so you can track to them. Set goals that are of a challenge but yet still realistically attainable and set metrics to track your progress.
Step 2: Choosing a Business Structure
The first true step and one of the biggest decisions you’ll have to make is what type of business entity do you want to operate. There are significant differences amongst each type, so it is important to research and learn about which is best for you. The form of business structure you choose has direct implications on how much paperwork is required, how much or little personal liability is tied to the business, and lastly the amount and type of taxes you will have to pay. If you are unsure which is right for you, consulting with a CPA can be a good move to make sure you are making the best choice.
Types of Structures Explained:
- Sole Proprietorship: A sole proprietorship is set up as a single business owner. Profits are taxed at the sole proprietor’s individual tax rates, unlike corporations with other tax obligations and schedules.
Pros: Easiest to set up, run and operate
Cons: Owners are personally liable if a lawsuit occurs. Personal assets such as houses, cars, etc. can be lost in a lawsuit against the business.
- Partnership: Two or more persons as business owners. Partnerships (the business itself) is not separately taxed, so all profits and losses flow directly to its partners. Either a written or oral agreement must be in place for a partnership outlining the partners and their respective ownership/share of the company.
Pros: Similar to Sole Prop, easy to set up & get going. Pass-thru taxation, file taxes on individual tax returns.
Cons: No liability protection, personal assets at risk.
- Corporation: “A corporation is a separate, legal business entity owned by shareholders who enjoy protection from personal liability.” Corporations are taxed as a corporation rather than a single person or individual partners.
Pros: Prestige, personal liability protection, can reduce taxes.
Cons: Costlier to maintain & setup, more paperwork, can increase taxes.
- Limited Liability Company – An LLC can be set up for tax purposes to act and operate as a partnership or a corporation. Most often, LLCs are set up to function as a partnership, with multiple owners/partners. Because it’s unlike a general partnership, where there is no protection from personal liability, an LLC business structure offers each of the partners limited liability.
Pros: Liability coverage (like a corporation), taxed similarly to sole prop or partnership (individual tax returns).
Cons: More formality fees and expenses than a sole prop.
So which business structure should you choose? That decision differs from person to person. This is based on numerous factors, and you should do ample research before making a final decision. Let the above summary help guide you in your decision-making process. Click here for more details regarding the different business structure options.
Step 3: Creating & Registering a Business Name
Once you have the business plan in place, you’ve done your research and know which type of business entity you are going to choose, the next choice – what are you going to be named?! If you aren’t feeling creative at all and would prefer to go the “personal name” route for your photography business then you are all set and ready to register your name. However, if you would prefer to come up with a unique name, here are some of my tips on “what” makes a good business name.
Quick Tips for Naming your Business:
- Make sure it’s easy to pronounce and spell.
- That it’s easy to remember.
- It’s likable and unique.
- Make sure that it’s not too long, as people will get confused or forget.
- Check that the name is available (no one else has the name and available for web domain address).
Once you have picked out the perfect name for your photography business and you have already researched to know the name is available, you are ready to make it official. If you are choosing to use a business name that doesn’t include your name (i.e., “Cole Joseph Photography,”) you will have to register a “fictitious business name statement.” This is also known as “Doing Business As” or “DBA” with the county clerk of where you plan to operate. Please note that the actual person and place where you file your DBA and register your name is completely dependent on where you are located and will be different for everyone. Also, the fees in doing so will vary from county to county too. Please note, not all states require the registering of fictitious business names or DBAs.
Step 4: Obtain Business Licenses & Permits
Within every state, there are numerous business licenses and permits that may or may not apply to you. Here in San Diego, California, as a “photographic services” business, the following licenses and permits are required: sales and use permit, business tax certificate and many others. If you are in the US, this is a great resource to let you know which pertain to your photography business.
Step 5: Paying Taxes
Depending on where you are located and doing business, you may have different taxes that apply to you. The type of business structure you choose will dictate what type of taxes and what tax schedules are required. In addition to federal and state income taxes, you may be liable to pay sales and use tax. Also, consider that payroll tax is expected (if you have employees) or other individual taxes or fees specific to your county or state.
It is important to find out all the taxes required to run your business based on business type and location. If you have to register a fictitious business name with the county where you operate, make sure to discuss them about your tax obligations as they will be a crucial resource for you. Your best bet is hiring an accountant to make sure all of the tax liabilities are understood and accounted for.
No matter the direction you choose, having a plan for how to start a photography business is vital. The more organized you are, the more professional your business will be. This is a massive step in making your dream a reality, so congratulations!
I hope that this article is helpful to any of you looking for a quick rundown of the necessary steps to start a photography business. Make sure to subscribe to the website, not only to get your Cole’s Classroom toolkits, Lightroom presets and user guides but also so you can keep in the loop and learn more business tips, because lets face it, these are only the initial steps required to set up the business, next up will be tips and tools on how to best handle every day operations of running your photography business!