when do you make it a business?

[MRCPix]

ok so in the last few months I have been getting many parents wanting me to shoot there kids sports. So my question is when do you have to create a business in order to pay taxes and not get into trouble?
I have made a little money last quarter of last year and didn't think it would contiue, but it seems that I am wanted to do a lot more shooting for these parents.
I realize this is probably a bad question, but humor me.
and if I should do this now what is the process?

thank you
Mike

[CobyPhoto]

Legally? The state of Texas considers you IN business if you take money for your work/service performed. Logically, you are probably not in any trouble unless you increase and continue to take payment.

My opinion, if you want to take money for it, you should go ahead and get the tax number and report your sales tax. Having been through a tax audit, I never want to do it again. Don't want the hassels?...don't take payment, not much simpler than that.

CJ

[DanStar]

So I am in the same boat but I have taken the money. So, once I get the tax number and report my sales tax and revenue can I also start deducting equipment and other expenses as well? If I use the same camera for commercial and personal work should I only deduct a %age of the equipment value or is it better to get another camera and just use it 100% for commercial work?

Last, any threads, books or pamphlets that cover this sort of thing in detail?

Thanks for sharing your hard earned knowledge!

[carrbowl]

This seems to always be an issue...right now I am so waffling, I'm surprised I haven't fallen out of the boat and drowned...but the answer was on the billboard for me today...so I am going to officially start. I wonder if that would make a good stickey??? Things you must have to start a business, things that would be considered helpful, and things that would make it easier or icing on the cake so to speak..

For instance...business cards, tax id, maybe a camera would be considered necessary..

good idea: website, letterhead, portfolio, website

things that would be nice-laptop, a logo,


Just thinking.....

[CobyPhoto]

Wow, where to begin.

Dan,

Reporting Sales tax and deducting equipment as expense are two totally different things and one does not have to do with the other. I suggest that you search Sale Tax and look at the threads resulting from the search. This has been disccused before and in depth.

Based on many years in business for myself and being associated with many photographers doing this for a living, the main reason 85% or MORE of new photograhers is not the photography in their business, but lack of business knowledge and how to operate a business.

CJ

[d2creative]

I decided to go "legit" when I decided I wanted to set up a separate bank account just for my business and use a name other than my personal name. In order to do this I needed a tax i.d., so....

[MRCPix]

so do you get a tax I.D. no matter what the amount of income it is you get from photogaphy? If so then I should look into this because I have been contacted in the last few days by coaches that want me to shoot their teams.

[Shane]

Take a look at the Tax Code thread (sticky in the business section) that I started last year.

http://www.texasphotoforum.com/forum...ad.php?t=13628

"The Texas Sales Tax Code does not define ‘in business”, however, each sale of a taxable item or service in Texas is subject to tax. Therefore, for sales tax purposes, you are considered to be “in business” when you begin to offer for sale taxable items or services."

[MRCPix]

thanks Shane really good info

[d2creative]

Originally Posted by MRCPix

so do you get a tax I.D. no matter what the amount of income it is you get from photogaphy? If so then I should look into this because I have been contacted in the last few days by coaches that want me to shoot their teams.

Yes, you need a tax i.d. in order to charge tax and then report it each quarter (unless you make under the required amount, which you can then report annually instead of quarterly).

I don't charge tax for my freelance design services since that is considered consulting so I don't need a tax i.d.
I just file my earnings annually on a Schedule C attached to my personal taxes. Well, my accountant does it for me now.

[MRCPix]

so what is the required amount?

[SCone]

A wealthy friend of mine always says, "Turn your hobbies into business ventures, that way you'll always get paid to play".

[Shane]

Originally Posted by MRCPix

so what is the required amount?

$.01 . . . the moment you charge in Texas, you are considered "in business".

[island bound]

§ 151.304. OCCASIONAL SALES. (a) An occasional sale
of a taxable item and the storage, use, or consumption of a taxable
item the sale or transfer of which to a consumer is made by an
occasional sale are exempted from the taxes imposed by this
chapter.
(b) In this section, "occasional sale" means:
(1) one or two sales of taxable items, other than an
amusement service, at retail during a 12-month period by a person
who does not habitually engage, or hold himself out as engaging, in
the business of selling taxable items at retail;


So it is not a $ value of sales, it is how many sales you make and whether you say you are in business or not.

[CobyPhoto]

Originally Posted by island bound

So it is not a $ value of sales, it is how many sales you make and whether you say you are in business or not.

The required amount referred to here was not sales, but the threshold that is used to determine WHEN you must pay your sales tax...Monthly, quarterly or annually.

IF you sale anything, regardless the amount, you are required to collect sales tax. Period.

CJ