I've had quite a few people come to me and ask me about starting a legal photography business in Florida, so I thought I would write a blog for everyone. If you are a hobbyist, then you do not need to register or license yourself; however, if you charge anyone any amount of money, even a penny, you need to make yourself legal.
Why is it so important for you business to be legal? Well, several reasons. First and foremost, running a legitimate operation is a means of validation in the eye of the consumer. It is also a means of protection. A quick google search of current lawsuits against photographers and I am sure you will see the need for protection. So let's go a little further into that.
You need to register a DBA. DBA = Doing Business As. There are a few states that do not require you to register a DBA. Alabama, for example. Florida is NOT one of those states. It is absolutely required. So how exactly does a DBA protect you?
1) Enforcing Contracts...
If you don't obtain a DBA, you can't enforce any contract that you sign under your unregistered business name. For example, if you order office furniture and computers from a supplier who takes your money and doesn't deliver the goods, you can't sue to get your money back, at least not until the time you register your DBA. And at that point, you risk receiving a hefty fine from the court for not registering before beginning operation of your business.
We all know how important contracts are. If a client sues you, your contract is your bullet proof vest. If you do not have a registered DBA, you might as well be shirtless with a big red target on your chest. You will have no protection from a lawsuit and regardless of the situation, you will lose. Why? Because the court will consider first and foremost the fact that you are not running a legitimate enterprise and look no further.
2) Shut Down of Business
You read it right. The state can step in and shut you down on the spot, no questions asked. That is about the nicest thing they can do. You can be charged hefty fines. Failure to pay can result in jail time. The pesky thing about business is that business = tax. Tax = state revenue and is associated with the local economy. Unfortunately Uncle Sam has to have a piece of the pie and trying to make him go hungry will not work out favorably for you. Tax evasion, whether it is for $1 or $1,000,000 is both a state and federal offense.
3) Criminal Charges
As I said in the beginning, Florida is one of the states that requires a DBA. Failure to register can result in misdemeanor charges and up to a $1,000 fine. This is a criminal charge on your permanent record. This is something that is definitely not good for business!
4) Bank Accounts
One of the number 1 rules of doing business is keeping business and personal separate. This applies in all aspects including bank accounts. One of the first things you should do when starting your business is open a business bank account. An account that is business related only. In order to open a business bank account, a DBA is required. The bank you choose will require you to present your certificate as proof.
Can you mix your personal and business accounts to try to get around this? Sure. But you are just asking for trouble if you do. It will get messy and it will get complicated. Unless you are a stock holder in Excederin, I wouldn't recommend it.
So before we move on too much further, let's talk some more about tax laws. If you do not take all of the legal steps to collect sales tax, you legally cannot collect it. If you are providing a product, you are legally required to collect sales tax. So what happens if you collect sales tax but are unregistered? Well that friends, is a felony and is punishable by fines and jail time.
Let's look at another situation. You take the time to register your business. You collect sales tax. But when the time comes, you don't pay your taxes. You spent the money elsewhere and claimed $0 taxable income. That is an even worse felony. The state calls this "Theft of State Funds" and is punishable by fines and 5 years in the state penitentiary.
While I am sure that none of you would do this, I am putting that information out there just to show that when it comes down to business and legality, there are no loopholes.
So now that you know just a few of the reasons why it is so important for your business to be legal, let's move on to how to make your business legal. A side note, as you go through these steps and complete different licensing and registering requirement, be sure that you print and save PDF's. YOU WILL NEED THEM!
1) Choose Your Business Structure
The business structure you choose will have legal and tax implications. You will also need to know this information before you begin registering and licensing your business. There are 6 different structures, but the most common are LLC and sole proprietorship.
For information on the different structures and help in which one to use, click here: https://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/choose-your-business-stru
2) Register With The IRS
Before you do anything else, you need to apply for an Employer Identification Number (EIN). You will need this number throughout the rest of the process. There is no charge for this. Yay, free!
To get more information about EIN's and to apply for yours, click here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
3) Register For Your Fictitious Name Certificate
Remember that pesky DBA I told you about before? Well this is where you take care of that. In Florida it is called a Fictitious Name Certificate. The filing fee to register a fictitious name is $50.00. You have the option to purchase a certificate of status for additional $10.00, or a certified copy for an additional $30.00.
For more information and to register, click here: https://efile.sunbiz.org/ficregintro.html
4) Register With Your County & City
Once you have completed all the other steps, you need to register with the county & city. Make sure that you have copies of all the paperwork from steps 2 &3. You will need to submit them with the application for your business license.
For Sarasota County, click here: https://www.sarasotataxcollector.com/docs/business/BTRegistration.pdf
Additional help getting started in Sarasota County, click here: https://www.scgov.net/EconomicDevelopment/Documents/Doing%20Business%20With%20Sarasota%20County%202014.pdf
For Charlotte County, click here: http://www.cctaxcol.com/documents/BTApp.pdf
Additional help getting started in Charlotte County, click here: http://charlottebusinessresources.com/starting-a-business/licensing-permitting/
For Lee County, click here: http://www.leetc.com/docs/default-source/lbt-internal-links/lbt-application-and-instructions.pdf?sfvrsn=8f
Additional help getting started in Lee County, click here: http://www.leetc.com/docs/default-source/lbt-internal-links/lbt-checklist.pdf?sfvrsn=10
These links are for the COUNTY forms, NOT the CITY forms. You can google search for your particular city, or you can pick them up from your local tax man when you file for your county license.
You do have to pay for BOTH licenses. The charges will depend on your location. If you need help filing out the forms, just go in and talk to the tax man and they will walk you through it.
Have you done all that? Congratulations! You now have a legitimate business!
But wait, there's more...
What? What do you mean more?
Having a legitimate business will protect you in many, many ways. But there is also one more thing you need. Just like you need car insurance, you need business insurance. You may as well be playing the lottery with your livelihood, clients and self confidence when not carrying the proper insurance policies. There are quite a few very reputable companies that specialize in insurance for photographers.
For photography business owners equipment and liability insurance are the most critical insurance policies to secure protection. Even though you may be set up as a limited liability company (LLC) or a corporation, there is no limit to the need for business insurance. In fact, state laws may require that your business transactions be covered by a certain form of insurance.
When shooting in a variety of venues, proof of insurance may be required. Besides potential legal requirements, having insurance minimizes the risks that are associated with potential liabilities, losses and unfortunate events. I highly, highly recommend keeping a copy of your insurance certificate in your camera bag.
First and foremost, you need equipment insurance. Just like with your car, you will have deductibles (unless you get a premium plan that you REALLY pay for), but let's say you are traveling and $2,000 worth of gear is stolen. Or you accidentally drop and break your $2,000 camera body. Or one of the million other things that we risk going wrong every day from the second we wake up. Well that $250 deductible is going to look pretty nice in comparison to what you would have had to pay if you weren't covered!
Aside from equipment insurance, you need general liability insurance. This insurance is especially critical for photographers working in sensitive specializations (wedding, newborn, extreme sports, etc.) This insurance works as an umbrella to provide protection against legal actions arising from injuries, accidents and other claims.
Remember that quick google search I told you about in the very beginning? Lawsuits in the photography world are real and these days, they are getting nasty. Despite tort reform, photographers are facing lawsuits each and every day. I really cannot stress enough how important it is to get yourself covered. There's nothing wrong with dancing in the rain every once in a while, but you don't want to walk naked into the eye of a category 5 hurricane.
There are several very reputable companies that offer insurance specifically for photographers.
Hill & Usher (aka Package Choice)
American Photographic Artists Insurance
I also highly recommend Professional Photographers of America. It is not an insurance company. It is a membership for professional photographers. That being said, your membership dues give you an AUTOMATIC coverage of $15,000 for equipment insurance. It also covers you with an Indemnification Trust.
What is an Indemnification Trust? It is a program offered exclusively through PPA . It’s not insurance – it’s a trust fund established to help protect photographers from allegations of negligence. So if you ever need that lawyer that we are trying to hard to avoid, PPA has your back.
If you want to join PPA or find out more about them, click here: https://www.ppa.com
If you choose to go through PPA, you have the option to pay a low (honestly it is really cheap) fee to get basically 'full coverage' insurance.
For more information on extended insurance through PPA, click here: http://ppa.locktonaffinity.com
And that is the end of the lesson. Keep in mind that you should do ALL of this before EVER CHARGING A PENNY to a single client.
Once you have legitimized yourself, the work really begins. Good luck!