what type of business?

[sjordan]

I am sure its been asked here before, but what type of business are you guys running for your photography. When I say this, I am talking about LLC, S-corp etc.

[jonnydonut]

LLC.

that's what the attourny recommended. I don't know much about that stuff, that's why I have other people take care of it, and just pay my taxes.

[bondarnes]

I am actually a sole proprietorship, but if I were starting now I would probably do an LLC or an LLPC. The rules for those are a little easier than a sub-S Corp.

[brad]

I'm a Class C corp... but that's because I already had it set up from my computer consulting days.

[C!LLY]

sole proprietor it's the easiest for me to handle right now.

[sjordan]

All of this is very confusing to me ;)

My business will be very simple. It will be me and my partner, I will be doing most of the shooting (weekends) and my partner will do any weddings I cannot make and also be my 2nd shooter.

I was reading up on LLC's and the thing that confuses me is the members deal. I read that to run a LLC you need one member...can that member be yourself?

[sjordan]

One more question.

From what I read, a Sole Prop is easy to maintain and easy come tax day. What about a LLC, is this going to be a huge headache?

[jonnydonut]

my llc, because it's just me, is easy to file via sched-C form.

If you're working with a partner, you can't do sole prop., from what I understand.

[sjordan]

jonnydonut, ahh thanks!

[brad]

You and a spouse can do a sole prop together... The IRS treats it as one or the other's income.... if you're not married, then you need a different structure.

[Jeff Lane]

If it's you and a "partner" (as that term is often loosely used by folks without a law degree), you're pretty much presumed to be operating in a "partnership" as a legal entity. A partnership can be formed without any formalization (i.e. written agreement) at all, but if that's how you're operating, you SHOULD consult with a CPA or other tax professional to be sure you're accounting for all your income, expenses, and tax consequences properly.

A primary reason to organize as something other than a sole proprietorship or partnership is to take advantage of liability limitations that are available under the law. As a sole proprietor or partner in a general partnership, if you (or your partner) get sued and the plaintiff gets a judgment that is not covered by your insurance (you do have the right kind of insurance, don't you?) that plaintiff can get access to all your non-homesteadable assets to satisfy that judgment. For example, the plaintiff can file a garnishment against your household bank account and get access to that money, even though most of the money in it is from your husband's paycheck, or the big inheritance you got from your rich Uncle Moneybags, or all that money you have made in the stock market over the last twelve months (as if!!!). If you are organized under a structure that gives you liability protection, however, the plaintiff can only collect against assets actually owned by that company -- your (and your spouse's) personal assets are safe. (There are a few rare exceptions, but this is already a long enough post.)

The structures that give you this protection generally are: (a) a corporation (which can be either a C-corp or an S-corp -- it's a tax question); (b) a "Limited Liability Company" or LLC; and (c) the now generally little-used limited liability partnership. (There are other forms, especially for non-profits and members of certain professions like medicine, accounting and law, but you don't need to know about all that). The reasons to pick one over the other usually have to do with such issues as ease of alienability of shares (whether you want the structure to be fluid so that you are always adding new people into the company or using stock as an incentive, or you want the company to be stable), decision making structure (whether you want to have a board with outside directors, or you want the "members" of the company to make all the decisions), and the ever-present tax consequences (whether you want to be taxed on both the corporate level then on the individual level, or you want to "check the box" to have earnings presumed to be distributed to shareholders and taxed only on that level).

The decision how to initially form your business can have significant consequences, and it might be worthwhile to do some research or get some help while you're still getting started. Your grandmother was right -- an ounce of prevention is worth a pound of cure.

Good luck,
Jeff

[Wes]

Some good info in here. I plan on setting myself up as an LLC real soon. My biggest question is.... I know that I have to pay to set this up, but is there a yearly cost to renew the business license each year?

[jonnydonut]

Originally Posted by Wes

Some good info in here. I plan on setting myself up as an LLC real soon. My biggest question is.... I know that I have to pay to set this up, but is there a yearly cost to renew the business license each year?

It cost me $300 if I remember correctly, then I had some weird fee from the attorney's office for like $15 a year or so later, but since then nothing.