How to Transition From a Photography Hobby to a Business
Transitioning from a hobby to a business if you've been shooting weddings for awhile, if you shot maybe a half dozen justice fun for some friends, maybe for some family and you think, you know, this is more than just a hobby. I think I need to take this seriously, and by take it seriously, I mean, you either want take it part time on a more serious basis, or you're looking down the road to make this a full time job. There will be a point where you inevitably go. This hobby needs to be a business, I don't know a whole lot of wedding photographers who started out saying, I'm going to be a wedding photographer right now, and I'm going to be a business before I shoot my first wedding. Most of us have stumbled into this and there is a turning point where you say, you know, this thing that I've been doing for fun, I don't think I want to do this for fun anymore. I think I want to do this for profit, and also I want to take it very seriously as a business, so there are several steps that you ...
will need to take when you inevitably want to go from hobby to actual business, the first step is going to be to file for a business license, and I can't tell you how to do that? Because it's going to vary based on the country that you live in and the state that you live in and the city that you live in so you are going to need teo what I would recommend get online and start looking so I live in brooklyn, new york, I would go to my friend google and I would google hey file for a business license in brooklyn, new york, and start figuring out what my first steps were going to be because thing that you need to do to take your hobby to a business is to start legitimizing it as a business, and I can't tell you everything that you're going to need to do because, as I've mentioned, every country, every state and every city are different in the us you're going to need to apply for an e I in your employer identification number, other countries might not have an equivalent of that, but your guy in is basically the social security number of yours business like you have a personal social security number that you need when you file for things. Your business will have an employer identification number that you will use for everything from taxes to hiring to ten, ninety nines at the end of the year, so you need to look up what your business license requirements are usually they're much easier than you think um to become a business in new york I had to do some filings it cost a little bit of money there were some things I had to do for publishing in the paper it was very odd set of requirements I ended up hiring someone threw my accountant to help me with this but it was only because I didn't have the time to do it myself ah lot of times filing for a business license is something that is easily done even just online the next thing you're going to want to do no matter where you are located is going to be to talk to an accountant and the reason you're going to want to talk to an accountant is to make sure that you're financially set up in the right way. My accountant when I moved from florida to give you a little bit of background I started my business in florida I was in florida until two thousand eight and then I moved to new york when I moved from florida to new york I went from being a corporation because I had several employees in florida to being an l l c in new york now if you don't know what to be a corporation and llc a sole proprietorship that's where talking to this accountant is going to be very helpful here she will be able to give you advice as to what type of business you need to be now, if you watch my three day if you watch my thirty day course here on creative live, I go muchmore into depth about all of the different choices that you can make for the legal set up of your business and why one might be more important than the other. I also have several books that I've written about this is well, if you'd like to find those, they will be helpful. But the most important thing you can do is find an accountant and go talk to them. And the best way to find an accountant is too get good personal referral toe one. Yes, ma'am, is it ok to do or file your own taxes? No, sure, you can file your own taxes if in a couple of years you want to amend everything that you filed? Listen, when you shoot two or three weddings a year and you're just making some money for fun, it could be very easy to simply just include on your personal tax return without anything additional are crazy that has to be done when you start taking this very seriously. As a business, the actual filings for a self owned business, especially here in the us, are very complicated, they're very intricate, and I can't stand up here and say, listen, if you want a professional for your wedding, you need to hire a professional wedding photographer but then go home and do my own taxes I know that that's something that I need to actually hire a professional four if I paid out money toe only one other person during the year it would be my accountant because he makes sure that I am profitable he makes sure that my taxes are paid on time he makes sure that I'm paying the right amount of taxes he helps me to an income forecast for the next year so I know what my taxes will be for the next year and he just he keeps me in line. So isn't accountant going to cost you money? Yes will it cost you more then if you did your own taxes and kind of messed them up and had to pay some fees and penalties down the road in that instance the accountant is going to be much cheaper so I highly recommend finding someone to talk to and if you don't have an accountant start asking around ask your friends who they work with. Ask other small business owners where you live, who they work with if you are in the united states, you can ask the professional photographers association of america if you are a member you can ask them for recommendations you can get on yelp or facebook and start looking around but make sure that you read up on whoever you're goingto work with, make sure you they have good reviews, make sure they don't have any filings against them and go in and interview several different accountants. Hey, I'm starting up a photography business. Are you familiar with working with photography businesses? And eventually you'll find someone that you're very comfortable with who will be able to help you out? Because having someone make sure that the financial side of your business is running smoothly that's going to be so incredibly important and take so much stress off of you in the long run, I cannot recommend it highly enough, so talking to an accountant will help you get set up financially the right way and make sure that you're running your business financially the right way. The other thing that I would recommend doing is talk to an attorney. Now I'm not saying that you need an attorney on going, you don't need to talk to someone once a month or once a year, but when you start having clients hire you, you're going to need them to sign a contract and you're going to want to make sure that that contract is going to be legal wherever you live now, there's a wonderful woman, her name is rachel bring qi xi is the law dog. She's taught here on creative live you khun by template contracts from someone like rachel but if you do buy a template contract from someone I recommend you haven't attorney look it over to make sure that it is applicability to your city your state in your country and if you don't have an attorney either is it ok? Is there a contract that I could just download online or is that not recommended? You can and like I mentioned rachel the law talk she has she is an actual barred attorney who is also a photographer so she's a great resource but I would recommend paying once for a few hours of an attorney's time just to make sure that whatever contract you download online is something that can actually be legally enforceable where you live and also to make sure that it's tailored to your business so you just like you want to be able to be set up financially in the right way from the very beginning and it doesn't have complicated it can be very simple but just like you want to be set up financially correctly you want to be set up legally correctly also your accountant can advise you as to what type of business to be your attorney can also advise you as to that together so I would recommend meeting with each of those people just to make sure that you're gonna be smooth sailing from the very beginning another thing that I would recommend that you do the second you decide that you're seriously a business is to separate your business funds from your personal funds. So every single month, just like I was working a nine to five for a corporation, I take a paycheck from my business it automatically deposits into my personal funds and I operate as if that's the only money I'm going to get for my business every single month because if you go in and you start taking money from your business hey my mortgages do let me go take that and use it to pay my mortgage hey, I want to go on a vacation! Let me go take that and use it to pay for the vacation, then you don't really have a good understanding of what's your money versus what's your business is money and as time goes by and as your rolling along with your business, you're going to want money allocated to your business and that's not yours personally, so I get a paycheck every single month. Everything stays in my business that needs to be in my business and that way there's no confusion either for myself or for my family, what money is mine and what money is my business is yes, you know how much to pay yourself on how to separate that you know business and this is mind and that's that's a very you know, that's something that I could talk about for three straight days here on creative live, and I did I go into it on my three day course here I go deeply into it on my thirty day course here I also have a kind of a business and marketing workbook that I've written myself that helps you figure out those things. So just like you're going out to get a job, if you were going to get a part time job either to supplement income you're already making or if you have a spouse or a partner that works and you need to supplement the household income, you wouldn't go out to a job and just say, well, I mean, I guess I could make whatever you would go out knowing I need to make x amount of money. My goal is for my business to provide that x amount of money for me, so it first nose first starting out, I left a lot of money in my business because it needed a lot of operating funds, but over time you will realize this is how much money my business needs to keep in it so that it can keep operating, then I can take my paycheck knowing that I'm paying my own personal bills out of my paycheck, so for example, every time a client pays me if you're very new into business, this is what I did my first couple of years when a client would pay me I would take out the amount that I knew that I needed to make their collection happen so to pay my assistant I need this much and to make their album I need this much and to do x y z I need this much take that money out and put it in a savings account or put it in a separate account put it somewhere you don't touch it so when you actually physically need to make those clients products you've got that money set away in an account everything else you convince start budgeting how much twenty for advertising on I can't tell you how much you need for each of these things you can start off a business with five hundred dollars a year in advertising funds you can start it off with fifteen thousand dollars a year in advertising funds I would recommend going very slowly and go very easily, but at first your business isn't going to be making a lot of money but make sure that you're not losing money make sure that what you're charging for your services is actually going to turn a profit so these are things that if I were to go into them right now we would spend thirty days going over them so if you are very serious about wanting tio separate your funds and learn how much money I need to make and how much money I need to spend and what I should be spending on this I really recommend starting with my three day class it creative live and then moving on to my thirty day because it will just help you really get a handle on how to manage your money and there are lots of other money management classes out there as well it's something that I take very very very seriously the profitability of my business which is why on the thirty day class there are multiple days dedicated tio not losing money on business another thing and we talked about this very, very briefly just now don't touch your business money your business money has to be there for your business if you find yourself constantly going back to your business account and taking and taking and taking to fund your personal life, you need to sit back and take a good hard look at your finances and see if that's a smart decision more often than not it's probably not and you need to set a budget and for your first couple of years and being of being in business, your budget should be very modest your first year in business don't spend twenty thousand dollars on advertising don't even spend five thousand dollars on advertising take a hard look at all of the money you want to spend and then think how much of this is actually necessary. You know, you don't want to overextend yourself. You don't want to go into debt to start your business at all.