Company Photography
Starting a small freelance photography company?
Can anyone point me in the right direction of what tax forms, etc. I need to file to get started? Thanks!
I live in TN if that makes any difference.
You'll want to track your expenses by category, such as advertising, film developing services, film, cameras (which I suggest you depreciate over time rather than writing off the first year.) Get a copy of a schedule c from the IRS web site.. www.irs.gov. It doesn't have to be a 2008 form for this exercise... just... look it over and see what categories they list for expenses so you'll know how to break it all down.
Also, keep a mileage log in your car, write down beginning mileage and ending mileages so you can figure your business miles. At tax time, you'll need to list the make and model of the vehicle used, total miles driven for the year, commuting miles, other miles, and business miles driven. You'll also need to decide - this year only - whether you're going to go with standard mileage deduction (so many cents per mile) or actual expenses. If you choose actual expenses in the first year, you'll be locked into that every year thereafter. If you go with the standard mileage rate, you can switch off if you have a year where actual expenses are more than that. If you use your vehicle less than 50%, you won't be eligible to depreciate it, and if you use it less than 50% in any given year, you'll need to recapture any depreciation taken on it. Also, you can't use depreciation and the standard mileage rate together.
Okay.. so.. let me re-wind my brain here....
I suggest you set aside 10% of the gross income you take in from the photography company for taxes. Just plunk it into a savings account and pretend it doesn't exist until tax time. That way, if it's not needed, you have a cushion, but if it is needed, it'll be there.
All you have to file in order to get going is what I call DBA papers, filed in the county where you expect to do most of your business. You'll probably have to collect sales tax on your work, so you'll want to check with the comptroller's office of the state where you're working. If it's more than one state, then there will be two offices, and two tax rates, and two tax forms, etc.
If you do contract work and get more than $600 for the year from a company, you need to file a W-9 form, providing them with your tax id number, so you won't be subjected to backup withholding.
As a sole proprietor, you'll need to file a schedule c with your 1040 form. That lists your expenses by category, and helps you figure out what your net income is for the year. If you show a net profit, which you need to do, most years, and that net profit is over $400, you'll be subject to self-employment taxes. That's the self-employed person's equivalent to employer-withheld social security and medicare taxes. Since you're self-employed, you have to pay a higher percentage than someone whose employer is paying part of theirs. Hence that 10% I mentioned earlier.
So, go out there, take lots of photos, make some money, and hopefully enjoy yourself.
Hope this helps.
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