Does selling prints/books make you a small business?

Laserguy

Mu-43 Regular
Joined
Apr 10, 2010
Messages
51
Location
Greenbelt, MD, USA (just outside Washington DC)
While it's not a concern for me yet (and may never be, although I'm working on it), I'm wondering whether selling prints of my pictures or copies of a photobook for profit means that I would need to register myself as a small business. Unless things go ridiculously better than I might hope, income from such sales will make up a tiny portion (<5%) of my income.

Obviously, this is going to vary by jurisdiction (and vary tremendously by country), so I'll say that I'm most interested in the situation in the USA in general and the state of Maryland in particular. I also expect that there will be some difference between the letter of the law and how people actually tend to do things. I also know full well that you (or most of you, anyway) are not lawyers, and that I won't take anything said as the gospel truth without further investigating things myself.

So, have those of you who sell prints or books registered yourself as businesses? Do you collect sales tax and pay self-employment taxes, or do you just append photography sales income to your total income on your income taxes?

PM me if you're concerned about discussing any of this in a public forum.
 

richiebee

Mu-43 Regular
Joined
Jul 26, 2010
Messages
34
Location
St. John's, NL, Canada
I'm in Canada... laws are obviously different, but this is the way I deal with it. I have worked as a professional musician for about four years, and set myself up as a sole proprietor. I only did a really small number of gigs a year... they were very well paid, but didn't really add up to a whole lot of money because there was so few of them. But I paid my taxes on that income like I was supposed to do. It allowed me to use related expenses against my taxes. So, I expanded the sole proprietorship to include composition and other related music things. I was able to claim my computer and all my software against my taxes, and it really helps. The fact that I don't make a profit is irrelevant. Both to me and to Revenue Canada. To me its a hobby, one from which I make roughly enough money to fund my studio and get endless enjoyment. For them its a business. They get taxes on my income, and give me relief on my equipment purchases. I don't even bother with many of the things that I could get more relief on (like room use, utilities etc) because I'm really not concerned about getting as much money out of them as possible. Breaking even is good...

I've actually stopped gigging as a musician now, but I still maintain the business for composition and engineering work. The business model has changed slightly, but its all still related.

As a sole proprietor, my business taxes are included on my personal tax return. They're separate, but on the same return.

R.
 

photoSmart42

Mu-43 Top Veteran
Joined
Feb 12, 2010
Messages
628
Location
San Diego, CA
Selling anything makes you a small business, and theoretically you'd have to register it with your city, and report your income on your federal and state income tax returns using the Schedule C form for self-employed. On the flip side, you can also claim the partial use of your home and other expenses toward your Schedule C, which may turn out to be larger than the profit you actually make, meaning you'd be reporting a business loss.
 

Narnian

Nobody in particular ...
Joined
Aug 6, 2010
Messages
1,465
Location
Richmond, VA
Real Name
Richard Elliott
Generally on a Schedule C business it is good to make a profit at least every 2 years out of 5 to reduce the chance of an audit.

One way of doing this is to bunch up your expenses in a year - stock up at the end of the year on materials, equipment, etc and minimize those costs in the next year.

Ideally you should prorate your costs if the camera is used for personal and professional reasons if you are not a full-time pro. If you use your camera 40% business, 60% personal it is good to only write-off 40%. It is much easier to defend in an audit.

Also you may have local license requirements and taxes as well.
 

Narnian

Nobody in particular ...
Joined
Aug 6, 2010
Messages
1,465
Location
Richmond, VA
Real Name
Richard Elliott
Good catch and correction - it used to be 2 of 5 but I have not done a Schedule C for quite a while. Thanks for fixing my error. And, as you pointed out, good documentation is critical.

My father has been doing taxes for 60 years now and he has been audited 3 time - every time he came out with MORE money. The stopped auditing him for some reason. Basically he is conservative on his deductions. In the audit he pushed some deductions he did not take that were "gray" and usually got one or two added.

I also recommend NOT writing off an office or even part of one - the IRS targets that for audits.
 
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