You may have the equipment and the clients, but before you accept a single penny you need to set up your business legally.
Here are seven tasks you’ll need to complete in order to make your business legal:
- Choose your business name and check for trademarks. I always suggest using your own name, whether it’s your first and last name, or first and middle name. You are your business and brand.
- File for your LLC. As a business, you need to keep your finances separate and this is the first step. If a client ever decided to sue you, he/she could go after your personal assets in addition to your business assets if you don’t have an LLC set up. An LLC can be tricky to set up if you don’t know what you’re doing. I suggest finding someone to help you out. It will be well worth the cost for saving time and frustration.
- Obtain your EIN. This is also known as your tax ID number. You’ll need this in order to open a business checking out. Please know this is FREE and you do not need to pay to obtain your EIN.
- Open your business bank account. Avoid business credit cards and go for a checking account. Did you know that even Dave Ramsey does not use credit cards for his business? It’s totally possible to run a biz without building credit card debt. There are a lot of options out there. I like US Bank’s Silver Business Checking Package. There are no fees and a low minimum balance required.
- Become licensed with your state. Sales tax…some states list photography as a service business and others consider it retail. Research the qualifications in your state, county, and city. I suggest finding a CPA to help with this step.
- Use real contracts. My contract is from The Contract Shop. They provide lawyer-drafted contract templates for creative business owners. This may seem like a big investment in the beginning; but it could end up helping you save thousands down the road if a legal issue comes up. Having a contract will protect both you and your client and outlines to terms of the services you provide.
- Secure equipment and liability insurance. Avoid bundling with your home or auto insurance, you need separate business insurance. I’m a fan of Hill & Usher’s Package Choice for photographers. Why do you need business insurance? I share a few stories in this post.
Yes, it takes a bit of time, energy, and money to set up your business legally. But trust me when I say it’s better to be safe than sorry.
Bonus tip no. 1: Don’t use Venmo, Zelle, Cash app, or even Paypal to accept payment for services. It’s too easy for your clients to dispute the charges and many of those services are for personal use only. The only credit card processors I recommend are Square and Stripe.
Bonus tip no. 2: Don’t spend a ton of money on equipment at the start of your business. All too often I see young photographers spend thousands upon thousands on cameras and lenses and have no money left over for anything else. You can absolutely run a photography business without using the most expensive gear. I did it for two years! Check out the gear I recommend for beginning photographers here. Start with the basics and slowly upgrade your equipment when you’ve saved up the cash from your paying clients.