I want to start a one-man photography business in Colorado. How do I make it legal?
Posted on Jan 28, 2012 with Comments 2
James S asked:
Do I need a tax license? Can I just name the business after my self, if so can I use my initials? Should I incorporate or go LLC? I need to ramp up as fast as I can but keep it all legal and above board.
Pam Hatchel
Do I need a tax license? Can I just name the business after my self, if so can I use my initials? Should I incorporate or go LLC? I need to ramp up as fast as I can but keep it all legal and above board.
Pam Hatchel
Filed Under: Small Business
Previously, LLC wasn’t available to sole proprietorships, but it now is. However, I doubt you need to go LLC. In certain industries it is a good idea to go LLC because it protects your personal assets in case your business is sued or the business falls into bankruptcy. I doubt you have much chance of being sued in a photography business (although you’ll probably still want a liability insurance policy). All income from an LLC is taxed at the regular income tax rate and you must pay FICA tax on it. If you were incorporated, you would pay a lower tax rate on the business income and then regular income tax on just what you draw from the business (in otherwords, what you pay yourself as an employee.)
You will need a business license and tax id number. That’s a quick trip to the county court house. You can use whatever name you want for the business (as long as it’s not trademarked.)
you will need two tax numbers, a federal tax number, and a state tax number. the name can be whatever you want as long as it isn’t already being used. financial record keeping is paramount. have an accountant set up your books. incorporating is expensive, but gives many tax advantages but you should discusss them with your accountant. he amy recommend you operate as a sole proprietorship, a simple company, a limited corporation (sub-chapter s) or to incorporate. llc’s are usually used by those who are required to have a lisence to practice a special trade such as lawyers and doctors.
plumbers and elecrtricians are required to have a liscence, but they rarely use an llc, going as corporations or sole-proprietorships.
starting a business is often difficult due to the need to have working capitol. i suggest you start it as a hobby. it has some tax advantages, plus you are not rewuired to actually be a business unless you make a profit. your accountant can tell you more on the subject.