Workflow for setting up a small business (photography)
With many requests for film developing, scanning, printing and portrait services, I decided to set up an LLC in 2021 to create a separation between my personal and business activity. These are activities I do in my spare time.
I’ll go through the steps I took to set up the business in Texas for information/entertainment purposes only. This information is not advice of any sort; for that you’ll need to consult with lawyers and accountants who are familiar with your situation.
Preparation
If you are going into business, then you already have a service or product you think will be desirable. For a photographer, that means you’ve already figured out your niche over the past few years and have a defendable portfolio of representative images.
If you have a good portfolio, that means you already have the equipment you need to make the images. So there’s no need to buy any more gear. Please note that many YouTube videos and blogs with “10 steps to start a photography business!!!!” will talk about buying gear. Don’t. I recommend using what you have because gear will eat your profits in the early years. With a low budget, you’ll discover used gear and making what you have last. With higher income, you’ll buy specialized equipment that will last because you’ll have a focused niche.
Using your experience with hobby/second shooter/free sessions, you also have established workflows such as session prep, execution, post-production and delivery. You have already been refining your contracts such as model releases when needed.
Your portfolio is likely already public on social media, and perhaps on a website that’s existed for a while to gather SEO momentum. Its pretty easy to find an unused business name in your state, but much harder to find a web domain with the same name that is available. And you’ll need both. Buy a .com domain before registering with the state so you don’t have to change names after the fact.
Part of the enjoyment of starting a business is the fantasy of where you will be in five or ten years from now. Write down these long term goals and store it in a folder on your computer called “business planning”. This is important because you work backwards from those dreams to make practical decisions now on how to get there.
The next document you need to create is a simple expenses spreadsheet. Write down every expense you predict for your first year in business from the cost of your website and accounting software, to business cards and pens. This list needs to be exhaustive. Also make a theoretical sales spreadsheet for the next year, and maybe the next few years. How many sales do you need to equal your expenses (break even)? How much to cover replacement gear? How much before you can pay yourself from the business? How will the business grow? This activity will make you think about what expenses you really need versus the nice to haves.
The grand finale in your preparation is to write your Business Plan to figure out if those dreams are reasonable. There are plenty of templates and more information on the web. In general you’ll have sections on: Business Overview, Management and Operations Plan, Products and Services, Competition and Marketing, and Strategic and Financial Plan.
Determine your business entity - this will require some thought and a lot of Googling for phrases like “LLC vs sole proprietor”. Even within an LLC there are different ways to elect to be taxed (e.g. disregarded entity or as a C- or S-corp). Make sure you are picking the right one. Setting up the business can be done DIY, but it might be safer to have a professional prep and submit the documents for you.
Regardless of what type of entity you’ll be starting (even if you are a single-member entity), write an Operating Agreement. Plenty of info and templates can be found searching online.
Get familiar with www.irs.gov. Lots of useful info there.
Learn about Sales Tax requirements for your state (see here for Texas), for your products and services. Also figure out if you’ll need to pay sales tax in other states (Google “Sales Tax Nexus”). More information on photography-specific sales tax info from the Texas Comptroller can be found in form 94-176.
2. Business Formation
Register your business with the Secretary of State (SoS). I did this in Texas, online with form 205 (their website is designed poorly, but you don’t need to interact with it that often).
Once the SoS paperwork comes through, register for your company’s free EIN (business version of the social security number) on the IRS website.
Once you have an EIN, you can set up a business bank account at a convenient bank. This is critical to keep all your business and personal expenses separate. Mixing personal and business accounts makes bookkeeping difficult and could have negative legal consequences.
Register with the state comptroller for Sales Tax (see here for Texas). You’ll need to look up a NAICS code which best describes which industry your business belongs to.
Note in your calendar when quarterly estimated taxes are due, and what dates Sales Taxes need to be payed.
3. First steps for a smooth business start
I think the order of these activities is not critical, but will help keep things simple.
Set up a new email account, preferably You@YourWebDomain.com. This is usually best practice for looking professional to clients, but it has a practical advantage in that you can create new online account log-ins for your business, separate from your personal ones, e.g. a separate Amazon or PayPal account.
Update your contracts, releases and marketing material to use your business name and new email address. Create new contracts for any services you offer. Update your website with a Terms of Use and a Privacy Policy. Guidance and templates can be found on the web, or through your lawyer.
Use your new email to set up separate accounts for payment processing. Examples include PayPal or QuickBooks Payments for online invoicing and point-of-sale payments. Square is a point-of-sale payment service, and Stripe integrates with SquareSpace for sales through SquareSpace websites. See my blog post comparing payment processing fees for a more in-depth look at this.
You can use a spreadsheet for your bookkeeping, but accounting software like QuickBooks makes data entry easier, and can generate reports that will guide business decisions and will be easier to share with an accountant at year-end. If you set this up before taking your first payment, then you can start slow and learn how to handle different payment types as they occur.
Next steps are to figure out the most efficient way to handle the needs of the business. Insurance will be a consideration. If your income allows, you might want to use nice-to-have software tools for client/project management, scheduling, online commerce etc.
Setting up a small business has lots of moving parts, but you can learn about them piece by piece. And don’t shy away from getting professional help - it might be more cost effective in the long run.
