Chuck:
1. Everything Schnozz say, especially the separate checking account.
Deposit all of your business receipts intact to the account, and pay the
business's bill from that account. If you need to withdraw cash from
the business, write yourself a "draw" check and deposit into your
personal checking account. If you have to put cash into the business
account to pay the bills, carefully note that it is a "capital
contribution", and not a receipt from a customer.
2. Get a business credit card, or designate a card "for business use
only". Same idea as the checking account.
3. Consider purchasing QuickBooks, and using it to do the studio's
accounting. You will need a way to invoice for your services anyway,
and this will make it easy. There are tons of people out there that can
provide QB assistance.
4. Investigate if you need to register your "assumed business name" in
your county. For instance, if you called the studio "AAA Photography",
you should probably be filing a certificate of assumed business name.
5. Make sure you are in compliance with sales and use tax laws in your
state. Items purchased by mail-order or Internet frequently do not have
your state's sale tax withheld by the vendor. You would be subject to
use tax on equipment or material used by the studio. Use tax is levied
at the same rate as your state's sales tax. You will need a sales and
use tax identifying number, so you can file the reports, and pay the
tax.
6. The IRS looks hard at small businesses that have a small amount of
income, and large deductions, especially if the business looks like it
might be "fun".
7. Carefully document all travel, entertainment, and business use of a
vehicle. You can get expense logs from Staples or Office Depot to
satisfy the substantiation requirements. If you are ever audited, the
IRS will look first, longest, and hardest at these areas.
8. Buy a two-drawer filing cabinet to organize your paperwork.
9. Resist the urge to pay assistants as "contract labor". You will
need to file the proper payroll tax reports, and cover the employees
under worker's compensation insurance.
10. Isn't it great to be in business for yourself?
Bill Stanke
AG Schnozz wrote:
>
> > Although it is true that you can write off
> > equipment
> > expense, be sure that you don't have a business that looses
> > money at the
> > end of the year. The IRS gets suspicious if you don't turn a
> > profit
> > after a few years - especially if it is border-line "hobby".
>
> One thing that helps me is that I have a different camera
> "system" that I use for home/family pictures. I can easily
> point to the OM system and identify it as my "professional"
> camera system. The IS-3, even though I occasionally use it for
> pro use (and visversa), is uniquely identifiable as the home
> camera. Same with film: I use elcheepo Fuji 100 stuff (4 roll
> packs) from Wal-Mart for family use and pro films for
> professional use.
>
> By seperating as much as you can, it really, really helps at
> times of audit. Make sure you have a seperate checkbook for the
> business too. Life is SO MUCH easier when your systems are
> seperate from the home.
>
> I make sure that I cost charge-back paper, film and supplies to
> the home for anything not used by the business. The IRS really
> likes to see some supplies be recognized as used for home use.
>
> As far as the pro market is concerned... Do what you want to do
> and try to find a niche market for your work. It is a highly
> competitive world out there, but there seems to always be
> emerging markets in some wierd specialized area. I found one
> last year.
>
> Have fun with it, you can always do the arts and crafts shows
> like millions of other retiries.
>
> AG
>
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