The legal side of running a business is what makes it a legit business. Today I’ll be sharing my take on a Sole Proprietor vs. LLC for photographers! I also have a free guide called “9 Steps to Making Your Photography Business Official.” Yes, 1 of the steps is setting up either your Sole Proprietor or LLC, but there are 8 other vital steps! Make sure your business is ready to run before you get going. So, I want to break down the differences for a Sole Proprietor vs. LLC for photographers. Let’s jump into these legal tips for photographers…
This is usually less expensive, easier and can be done online! You use your DBA or business name and it’s attached to your social security number. As a sole proprietor this is considered pass through income. That means it’s found on your regular tax return as additional income. Simple to keep track of and you don’t have to file extra returns.
This typically costs a bit more to set up with paperwork. You are assigned an EIN rather than using your social security number. So an LLC separates your business from your personal assets. An LLC can be beneficial because it keeps your business entity assets separate from your personal assets. So, in the unlikely event that you get sued they would be unable to come after your personal assets. They are suing the entity not you personally.
I suggest those that are just starting out to do a sole proprietor. This is typically ideal for those that don’t own a home or have significant personal assets. As an LLC you can choose to be taxed as pass through income (like a sole proprietor) or as an S-Corp. Which basically means it’s taxed as a corporation. I wouldn’t worry about this until you’re making over $30k-$40k. At that point you can choose to pay yourself a certain amount but have the corporation keep the rest. Either choice will have to pay taxes, but as a sole proprietor you pay tax on the full amount. As an LLC if you keep money in the corporation that portion is not taxed like self employment!
I highly suggest talking to a CPA or tax professional for further questions and answers. But feel free to reach out and get clarity on theses legal tips for photographers if need be. I hope this gives you better idea of which avenue is a better fit: Sole Proprietor vs. LLC for photographers!
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