Understanding Insurance Responsibilities and Liability
So when I was getting ready for this next section, which we're calling Business Meat & Potatoes. That title only happened a couple minutes into my work with Jim yesterday, because I had been calling it nuts and bolts, and I'm like, what is wrong with me? I'm a food photographer. Bread and butter, meat and potatoes, anyway, there they are. The meat and potatoes of the business aspects is this is this is the dry stuff, this is the stuff that is the underbelly of business is what we're gonna talk about. You already know you like to take food pictures, soon you'll be asking yourself, is this the kind of business I wanna be involved in? Do I want to do all these things too? You'll know them now, and you'll be able to make an informed decision as to whether or not this level of involvement on the business end is something that you wanna handle, you can handle, you feel comfortable with, or, can you get a partner, and work with some other people. All of those things are all valid in the c...
onversation about how to handle a business, 'cause some of the most successful businesses out there as food photographers are pairs. There are couples, I work with my partner, we clearly need other people in this environment to help us do this work, so it's not unusual to think about dividing up some of these duties. So let's talk about 'em a little bit. As a business person, you need to understand your responsibilities, and those responsibilities include those to yourself, those to the people who work with you and for you, your taxes, your liability, all of the things that are involved in running a business because you don't wanna run afoul of the law, you don't wanna run afoul of getting sued, you wanna be protected in case something happens, all of those things are important to understand, and how we can operate as business people. What are the different ways to be called a business? So as individuals we could all be called sole proprietors, which is usually the entry level into the way we're going to do business with other people. When you are working as a sole proprietor, you are assuming more personal liability, so you're not given the same protections as somebody who is incorporated on some level. And there are very different levels of this, and if you are interested in forming, let's say an LLC, which is sort of a lower level corporation or something like an S corp which is a higher level corporation, all of these things are things you should consult both your accountant and your lawyer and get set up, and you can find these kind of papers and other things, online resources, and research what they mean. But I would encourage you to do certain things to set yourself apart from other people as well, so by forming a corporation or forming an LLC, you're also indemnifying yourself against lawsuits, you don't wanna lose your house, you don't wanna lose your personal wealth if something happens, plus you also need to have things like insurance, insurance on your gear, insurance on your sets, and that insurance isn't exorbitant in price. You can get two million dollars of coverage for something like 800 dollars a year. That's a lot of coverage. Now clearly you also need to be mindful of safety on your sets, that's your responsibility as well, you see people climbing ladders, I can't tell you how many times I've yelled as assistants for not sandbagging stands, like all of those things are really important to be aware of, so if somebody's setting up a light and there's no sandbag on that stand you need to correct them. That's your responsibility because if somebody gets hurt on your set, that's a problem. So because it's your business, it's your liability. All those things are important, so backing up just a little bit, the experience I was saying that I plugged into this presentation just 24 hours ago because it was something that arose in my business, was I was hiring a producer who is normally connected to a production company. But because the production we were working on didn't fit the category of what she normally works with, that production company wasn't going to back the job, but I still wanted her to work on the job. Now, she automatically defaults to being a sole proprietor now, because she's not an LLC and she's not a corporation, and she's not backed by a corporation like the production company. Now she's an independent person, taking on things like renting refrigerators, trucking. There's a tremendous amount of moving parts when it comes to a big production, and she doesn't have personal liability or workman's compensation. So the production company that is producing the job set, well unless that person has workman's comp, or is an LLC or an S corp, she can't produce the job. That's a problem, because now you're talking about at the highest levels of advertising, losing a job, because you're not set up properly. And you don't ever wanna be in that position, you don't, you wanna be able to manage all of those things ahead of time, know about them, deal with them, so that when somebody comes to you and says you're gonna work on this and we're gonna issue you a 1099 which is what we do for freelancers at the end of tax season, but I need you to have your own workman's comp because I can't provide that from our company. And you say no problem, I've got my own worker's comp, or no problem, I'm an LLC, oh no problem I've got my own corporation. Now the idea of having a corporation at the highest levels as an independent business, you run the risk of paying taxes twice. You pay tax on the money as a business, and then when you issue yourself a salary, you pay money on that. So that is a bit of a complication that you need to be aware of. But there are benefits that override that sometimes, like personal indemnification from lawsuits and bankruptcy and all of that, because if your business goes under, you don't wanna take your whole life with it, and it happens, businesses fail. That's sometimes the way it is, or sometimes you need to close a business and reopen a different business or a smaller business, it's all things that you need to be aware of. Now I obviously can't teach a course in business law in 90 minutes, but the idea is that just being aware that these are things you should be thinking about, you should be consulting with people about, are important to understand. That workman's comp issue is the first one on your list I would say when you leave here, you need to make sure that you're either covering yourself, because you don't wanna ever be Xed out of a job because you're not prepared as a professional, that's unacceptable. That insurance on your gear and that liability insurance is also really important because God, man, when you lose a camera, it's just such a huge investment, and speaking of the investment you put into your gear, I would say from a nuts and bolts, bread and butter, meat and potatoes perspective is, when I was a younger photographer, I poured money into my gear, because nothing speaks to a client when you're on set than working with good gear. They see it, they understand that you've spent money on it, they understand that you're real and you're professional because you put money into your gear. It doesn't have to be a lot, but it should be high quality, and I've spoken to this before, you can make great pictures with everything, you can make great pictures with your phone. But when you're on that set it's a pony show, right, you need to make the pictures that are going to be translatable all across every platform. Another thing is about being reliable, and I don't mean just personally reliable, I mean professionally, monetarily, reliable. When people work for you, pay them on time. Nothing is worse than having freelancers wait around for their money because you know as a freelancer you hate waiting for your check and you need to communicate, go back a few slides in our minds, you need to communicate what your timetable is. And also with your clients, when you are asking them what their pay structure is, do they direct deposit, do they take the taxes out, if you're a corporation they shouldn't. You should be mindful of when they pay, is it a 30, a 60, a 90 or even 120 day lead time? If it's 120 day lead time you need to prepare for that, 'cause I can't tell you how many photographers I know that lived off their American Express card 'cause they were putting all their expenses on 120 day contracts, and getting themselves in all sorts of trouble, all the time, because you can't front that kind of money unless you have a bankroll, and not every young photographer has a bankroll so they're using their credit cards, and they're putting out money that they don't have yet, and they're constantly overlapping jobs, so what happens is you end up in the hole, and you say to yourself I just worked six jobs, how come I don't have any money? Well you don't have any money because you didn't communicate with your client that they're gonna pay you in three months. So it's important to know that, and it's also important to turn around the people who work for you and understand if they're working for you what their responsibilities are, like, 1099 forms, like workman's comp, all of those things are important to know. But if you tell your assistants and you tell your PAs and you tell your producers or anybody who's working for you, you're gonna pay them in 30 days, pay 'em in 30 days. If you have vendors that you use regularly like prop rental or food services or any of those things, pay those people on time, because what happens if you can't rely on those people anymore, your jobs are gonna go down the drain. So be really reliable, and lastly, no surprises, again speaking to communication, but if you communicate to everyone in the arena, whether it be vendors, assistants, producers, your agency, anything, it all needs to be out on the table, you can't drop surprises on people in business because the last thing they need is a headache. One of the most important things for the clientele that I've experienced in my career is, I'm easy to work with, I get it done, I don't complain, I stay positive, I pay people on time, and you build a lot of good will around that, and what happens is, when things go sideways, and eventually they will on a job, you have a lot of good will in the bank, because you've done all the right things. But when you're not that person, and you don't do all the right things and something goes sideways, everybody's looking to burn you at the stake, because there's a lot of money at stake and there's a lot of time at stake, so you wanna buy yourself a little bit of wiggle room on the job, make sure you always handle your business, and no surprises. Sir?
A couple questions before we move on. I don't know if you have the answer to this but I'm gonna throw it out anyway. I know you're not a lawyer even though you do play one on TV.
I do, often.
Do you know, does workman's comp requirement apply to me if I'm working alone and I have health insurance?
No, of course not, because there's nobody else in the equation. You may run into the problem with the client who hires you may want you to have it, but the reality is that's probably not gonna happen, I think ultimately it really works when you're hiring other people, or being hired by a company that is much bigger in the midst of a production. So I would say that if you're kind of working on your own and you're doing all those things, I would still, 'cause you never know when you're gonna branch out and grow, and get bigger, you never know when you're gonna take the next step, so you should prepare yourself.
So wanting to know about Americans trying to work abroad, do the liability, does the insurance change, do you work abroad and do you know if those rules change?
Well that's interesting because in order to work in other countries you need to get work visas, and depending on the country they may have different requirements, so like, just when I entered into Canada with a camera bag, I was basically interrogated about, who you working for, what are you doing, do you have your paperwork, this that the other thing, I was like, I'm just going to teach class man, I'm not actually shooting here. And that was acceptable at that point but the reality is those rules no matter where you're going are gonna be different, and if you're working commercially abroad, then you need to consult with whoever is hiring you, and if the production is an American based production that's flying abroad, or is it a foreign production that's bringing you in, 'cause all those rules are gonna be different and every country's gonna be different, so I'm not even sure if you buy an insurance policy that covers you globally, that shouldn't be a problem with your gear, or your liability insurance, but those thresholds might be different depending on what country you're in. Some countries might have a much higher threshold, they may need you to have more liability insurance, some countries might not care. But if you're working for a production company, that production company should have insurance. And they should be covering anybody under the umbrella of the production, so that's I guess the best answer I can give in general terms.
Great, and speaking of insurance as part of that conversation, can you talk about your physical equipment insurance, do you keep duplicates of equipment?
Yes, whenever you're on a set, and when I talked about gear I should have mentioned this, was you should always have backups because if you're on set with one camera and that camera fails and you're in the middle of a job you're in trouble, and you don't want to have to send somebody out for another camera. So you should always have at least one backup plan, there are times when things fail on set and you need to send people out to the store to get them, it's gonna happen, but the reality is that the more you can guard against, especially body failure, camera body failure, the better you're gonna be, and file back up clearly, we're gonna talk about that later. But depending on what the job is, I have, well it's not there anymore, the picture of me shooting that's on the front page of this with the tether cord coming out, we're gonna talk a little bit about that, yep. I wasn't always really comfortable shooting tethered because I felt like it restricted my movement around the table, but I have become more and more and more comfortable with it for a couple of reasons, and one being the most important one, every time I pull the shutter, I get two copies. I get a copy in the camera and I get a copy in the computer, and that means that I am already backed up the second I pull the shutter, 'cause that's really important because if you've ever lost a CF card, you feel like you just can't, that's unrecoverable, and it's heartbreaking, and it's terrible to a production, and looks really unprofessional even though you can't control it. So, that's a way to control it.