Anyone here use their photography as a source of income?

[Hickeroar]

My wife and I are thinking of (down the road someday when we're experienced enough) doing photography as an additional source of income (weddings, engagements, parties, portraits, etc). Until then we're just doing it for people on a "we'll charge you for cost of materials/production" basis.

If we were just doing this on a cash/check basis would we have to consider ourselves as "small business owners" and jump through the IRS hoops included in that or would we be able to just claim that income as "additional income" on our 1040 when filing our taxes? I'm just wondering how easy/hard this could be.

Thanks for any info you can give!

[JSPhoto]

If you go at as a business you better get ready for audits because the IRS just "loves" photographers. Keep every reciept because you'll need it sooner or later. I think just putting photography down as a source of income raises red flags for the IRS. Freelance photogs seem to have it a tad easier, but still get hammered on occasion. I keep track of all mileage and gas/repair reciepts. No problems yet......


JS

[Hickeroar]

So simply putting down money earned into the "additional income" on a standard 1040 isn't acceptable?

When it comes time, would it be wise to get some small business pre-paid legal or something for advisement purposes? At this stage I haven't the first clue as to where to go with all this. I'd just like to get it planned out in my head for when the time comes.

Thanks!

[another view]

I'd definitely talk to a tax professional about this. I did a little bit of work for awhile but was advised (by other photographers, mainly) that the IRS is mainly out to get the person who buys a bunch of equipment and is looking for a way of writing it off rather than someone who is really trying to start a business.

[payn817]

Since you likely exceed the minimum income that requires you to file taxes, I would register a "sole proprietorship". It isn't costly, and requires only a local (city, county) license. Then as suggested, keep receipts relative to the situation, and you shouldn't have problems.

You can read more on starting small business in Texas here:
http://www.roninsoft.com/states/tx.htm

[racingpinarello]

My wife and I have, and although I did everything by the book I still got audited. Not once, but twice and it cost me $6500 in back taxes.

Keep every receipt, and make sure expenses are actually expenses and to equipment. They will get you there.

For me the key factor was my income from my real job is over $100k so they don't think that photography business is full time. Even though I made good money doing photography it wasn't enough.

They disallowed most of my travel, but my CPA did a horrible job representing me at my audit.

Be careful... on another note. Doing photography for money made photography less fun and took away from my artistic eye.

Loren

[Hickeroar]

Thanks very much for the insight. I'll definitely check into that site and I had a feeling someone would suggest that the "sole proprietorship" option. I think my main concern is the tax forms that come from owning a business. I just hope they aren't mind boggling. I guess the key to that would be keeping good records and stashing away 25% of what you make for tax backup.

I definitely have no desire to write off equipment or anything. We just both really love taking pictures and the money we might make on the side someday definitely couldn't hurt. If i bought more equipment I'd probably buy it as a person and not as a business anyway. :-P

Thanks again!

[Hickeroar]

Be careful... on another note. Doing photography for money made photography less fun and took away from my artistic eye.

Hmmm... Interesting, I'll think about that one.

Question: If we only did a couple (2-4) gigs a year for people, and not as a BUSINESS, would it be a big deal to put that under additional income on a 1040? Kinda like the guy paying his average neighbor electrician to do some work for him. Can someone explain how that would (if it would) differ from starting an actual business?

Thanks!

[Janie]

If you do weddings and events like that, be sure to get insurance. I belong to PPA which offers great coverage. I have equipment insurance now too which covers broken or stolen equipment.

[Hickeroar]

Janie- Thanks for the hint.

Question: If we only did a couple (2-4) gigs a year for people, and not as a BUSINESS, would it be a big deal to put that under additional income on a 1040? Kinda like the guy paying his average neighbor electrician to do some work for him. Can someone explain how that would (if it would) differ from starting an actual business?

Thanks!

Anyone have any information regarding this question?

[another view]

The new issue of Studio Photography magazine was in my mailbox last night, and there was an article about being audited. It's online here.

[racingpinarello]

You will never get in trouble for ADDING income to your 1040. It's the expense side that will get you in trouble.

Form C is quite easy, and TurboTax does a good job with it. A hobby income is what you are facing. If you are only doing 2-4 gigs a year and you are not writing off a lot of expenses then you should be fine. The IRS rep told me that if you do your taxes with TurboTax or with a professional you will have less chance of getting audited. By the sound of it you should be pretty clean. It's when you have a net loss that you will be black flagged Just don't buy 4 D2Xs's and try to expense them.

[Hickeroar]

Thanks. I called the IRS about it today as well and a guy in the self employment dept pointed me at the Schedule C/C-EZ and the Schedule SE as well as some publications. He was a really nice fellow and very helpful. I've decided that "Self Employed" might be the way to go at first when I do this and later start a full-fledged business.

I've also considered in the immediate future just doing photography work for the cost of materials. He said since THAT would be not-for-profit, I should just keep records of all expenses (paper, photo ink, DVDs/CDs) and fill out the schedule C for MY records and keep all that together. He said the Schedule SE is only for people who make more than $400 a year in their self employment. He basically said if I decided to go profit based later, I would already have stuff laid down from previous years so I'd be used to it.

I have an aunt-in-law who's a CPA, so I'll probably run a few questions by her as well. I hate to hit up family for this type of advice though. I don't want to make them feel like I'm using them. I guess if I make a business out of it later, I can pay her to handle the records or something...?

[freygr]

I've made money yearly and it all goes on a Schedule C, but most of the money is not from photography it's mostly from handyman and woodworking stuff.

[Hickeroar]

After the schedule C, do you fill out a Schedule SE to go with it? (if you've made more then $400)

[freygr]

After the schedule C, do you fill out a Schedule SE to go with it? (if you've made more then $400)

Oh yes, I did it by hand before the (some times free) on line services. Last year was a big year.