Running a photography business can be overwhelming, scary and down-right frustrating sometime.
The goal here, at TheLawTog, is to help you protect yourself so you don’t have to be sucked into frightening and resource-sucking issues.
One of the biggest ways you can protect your photography business, and yourself personally, is through the formation of your business. Becoming a Limited Liability Company (LLC) is a perfect business structure for small to medium sized photography businesses to choose in order to gain liability protection and demonstrate professionalism to clients.
#1 Protect your personal assets
Perhaps the most common reason photographers choose an LLC is for personal asset protection. Yes. This is so important, especially in today’s litigious age of society. You never know when liability will strike. Liability, relatively, doesn’t care how much money you’re making or how many clients you have. Once an issue happens, it is done. The goal is to keep your personal assets, small amounts or large, protected from any potential judgment.
If you’re sitting there thinking “well, I have no assets”. You do. You are an asset. If you are successfully sued, judgments can be made personally on you. We don’t want that.
If you are sitting there thinking “omg, I have a house, car, etc”. Yes. Assets. You don’t want anything in your life to be touched by your business, except for reaping benefits of the income, of course!
Getting “separate-bucket-liability-protection” is a smart and responsible decision as a photography business owner.
#2 Formation is easy & cheap
For the most part, LLC formations are relatively quick, cheap and easy. I say relatively because there are a few States where the pricing can not seem so “cheap”.
The filing of the initial documents is often the largest cost investment. Some states do have yearly fees to maintain your LLC but are a relatively minor investment compared the potential of personal liability.
#3 Allows for expansion
Whether you’re starting out, or you’ve been doing this for a while – I’m sure you understand the need to expand eventually. This can be bringing on employees, independent contractors or gaining local business networking arrangements for referrals. The LLC structure sets up a formalized legal entity to enter into business with these different positions that can help you scale your photography business. (See also #1)
#4 Tax benefits
Tax benefits to being an LLC? Yes, sir/ma’am! As an LLC, you can gain the benefit of being taxed like a corporation but without the corporate formalities. Through specific tax elections, only provided to LLCs and Corporations, your income tax liability may be reduced, in turn, saving you money!
#5 Establishes legitimacy
This may sound odd, right? It’s not to say sole proprietorships are not legitimate businesses- they are. But consider should you seek to gain a loan, or business networking relationships. The demonstration of taking a legal step towards a smart-business formation adds strength and legitimacy to your position as an entrepreneur.
How do I set up my LLC?
- Choose a name
- Decide to be an LLC
- File with your State
- Get an Operating Agreement
- Don’t pierce the corporate veil
- Make money
- Have fun!
Do you still need help?
TheLawTog has an on-demand video series teaching you to DIY your LLC. Whether you intend to do the documents yourself, or merely want education into the process, this 24/7 immediate access video series is for you. More information here.
How else can I protect myself?
Here, at TheLawTog, we talk about the legal trifecta. Business formation (such as being an LLC), having a lawyer-drafted contract in place and a good liability insurance policy.
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