A Cautionary Tale: Why All Photographers Who Charge Money Need to Get Legit Now

A Cautionary Tale: Why All Photographers Who Charge Money Need to Get Legit Now

A recent anonymous social media post is being spread like wildfire all over many photography groups and pages. In it, a woman claims she has had all of her accounts frozen, has a lien on her home, is being held liable for over $45,000 in delinquent taxes, and might possibly be banned from doing business in her county, because for five years, she has failed to report income she has made from photography.

Ignorance of the Law Is Not a Legitimate Excuse

The anonymous poster says she didn’t think it really mattered, that it was just a hobby, and she didn’t think she made enough income to be paying taxes after buying props and equipment, and honestly, I can relate to that way of thinking. I think many of us have been there in the beginning. When I first started taking portraits of people, they were my friends, and I photographed them for free. Later, when I began to charge money, I really didn't know what my legal responsibility was. I certainly didn’t want to pay taxes on the very small amount I was charging. It was very easy for me to want to just stick my head in the sand and avoid the subject of taxation, but I was uneasy.

Photography Business and Tax Accounting

Photo by rawpixel.com from Pexels

After a few Google searches and a letter from my county seeking a rendition of my business property values, I went from uneasy to a terrified, angry mess. So I sought the advice of a tax professional who helped me set up a legitimate business as a sole proprietorship, and my whole way of thinking of my business began to change. As a result, I had to work harder, my work got better, my prices got higher, and my business began to prosper. Now, when I pay tax on my photography income, it hurts a little less, because it’s proof that I made a good profit.

The Pros of Setting Up a Legitimate Business as a Professional Photographer

I really was so angry about having to pay taxes. And I was truly terrified that I would do it all wrong. That’s why I sought the help of a professional. Once you decide to just bite the bullet and go legit, it’s like a weight is lifted. You're a professional now, running a professional business. When you pay taxes, you don’t have that monkey on your back, you don’t have to worry that you’ll get caught, or that someone will turn you in.

And if you think that kind of thing doesn’t happen, think again. I have heard tales of competing photographers turning in other local photogs whom they suspected weren’t paying taxes. A representative at the county tax office where I used to live point blank told me that they troll Facebook looking for people who advertise as a business, and send out tax rendition forms accordingly. There are even accusations of the IRS watching Facebook to see if people are spending tremendously more than they are reporting as income. Don’t take for granted that nobody is watching. Someone is bound to see you sooner or later.

Photography Business and Taxes

Photo by Steve Buissinne, used under Creative Commons

Being in business is not only about paying out taxes. There are also tax breaks you may get for running a business. You likely will get to reduce your taxable income when you make purchases like camera equipment, props, backdrops, software, computers, and other necessities that you need to be up and running. A good tax professional will make sure that you are taking advantage of all of the tax breaks you qualify for. You may be eligible to write off mileage, memberships, cell phone usage, and many other things that your tax pro can advise you on.

The Possible Disasters That Await if You Fail to Go Legit

Besides being on the hook with the various taxing entities in your area, failure to run your business the right way could also land you in hot water if you are running an uninsured business. You need to be insured for not only your own equipment losses, but also for liabilities when it comes to the physical health of your clients, and the liability you take on when you agree to produce the work that you contracted to do for them. Do you have a studio? What if one of your clients takes a bad spill over one of your light cords, and breaks her ankle? Do you shoot only outdoors? What if one of your clients steps in a hole or is bitten by a rattlesnake? What if you lose a memory card full of wedding photos, or your computer crashes and you have no backup? These are all real-life examples of things that photographers have been sued for. The good news is, being insured against these things is not super costly, and many of these insurance programs are included with memberships in some professional associations.

The Cost of Running a Legitimate Portrait Photography Business

Of course, all of these costs do add up. This is why any photographer worth their salt will charge a premium for what they do, and why it’s so easy to spot the tax evading photographer who is charging $100 for 150 images on a disc. There is no possible way to sustain a legitimate business on that kind of income. Other photographers know it, the IRS knows it, and deep down, that photographer knows it, too. If that photographer is you, it’s time to up your game, up your professional standard, and up your prices so that you can afford to pay what it takes to protect yourself and your clients.

Believe me, when I first started out having to do all of this business just to be in business, I was totally against it. I just wanted to take beautiful photos and be compensated for my time. But what it boils down to is this: if you are going to advertise as a business, quote prices to potential clients, charge said prices, and accept payment for work done, that means you are making a taxable income, on taxable products, with taxable equipment, and each taxing entity that is entitled to their cut will be coming after you if they see you advertising online, on social media, or hear about you from somewhere else. Be safe, not sorry. Go legit.

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27 Comments

45000 in taxes? So she made around 200k with her photography and didn't think it was a big deal? Sounds like a made up story to me.

Agree. Where's the post? What country is the photographer from?

If it's true that number probably includes interest and penalties.

Indeed an anonymous source from nowhere land. Not discounting the liability of tax evasion but this is sensationalism.

dred lew's picture

As Kurt mentioned, interest & penalties can get high very easily. I once was in that situation, having started a new business at the end of the year, this "smart" account told me I wouldn't have to file taxes since there hadn't been any income and it was only a few days in the previous year. Well, after my actual first year in business, I filed taxes and the IRS then knew when the business actually got incorporated, so they charged me interest per DAY I hadn't filed taxes, so over a year. Got a $2500 bill from the state and a $5000 bill from the government for a business that had up until that day only expenses, no income. They billed me for not filing. Fortunately, with help of another accountant, I was able to abate the charges because it was my first "offense".

Ian Smith's picture

Whether or not the anonymous social media post is fact or fiction makes no difference to me. The discussion from this article is relevant and I see nothing in which I disagree.
In fact, following this advice not only protects you in the many ways already mentioned, it also helps raise the global value of our industry. Is anyone else sick of hearing from clients "Why does that cost so much? I have a friend who has a friend who said they can shoot it for (name crappy $ amount here)." Before you explode on my with comments, please understand that I also know there are a multitude of reasons photographers/videographers hear this. And a big reason had to do with the economy for the area I used to live. People, in general simply couldn't afford what high quality work requires in terms of commercial production.
Back to my point... If we are all operating our business honestly, ALL of our prices are driven higher. Our industry has been cut-throat with the explosion of camera tech, and today everyone with a camera calls themselves a "photographer". I'm not entirely arguing that even the average Joe can BE a photographer, but that has also been a major factor in the economic decline of the "value of photography".

....OK. Comments... Go! : )

Jen Photographs's picture

Eh, Jenny (the author) could've easily left out the fiction and initiated a discussion about the importance of being legit. The fact that she cooked up this story (as far as I can tell, anyhow) makes her motives suspect. With the rise of "fake news," it's on us to question the writers.

Ryan Mense's picture

I'd love to know what sinister motives you think this article could possibly have. "Damn you, Jenny! You got me to be more serious about taxes! How could you!?"

It was included because it's a post that others may have read, so she used it to springboard something more meaningful from it. The validity and the details from the anonymous post don't matter.

Jen Photographs's picture

When people don't cite or reference the original source, it turns into a game of telephone. Information gets distorted. Or bad information gets lumped in with the good. Let's not turn photography into an arena like holistic medicine has become.

If you want to play fast and loose on the Fstopper platform, that's your prerogative. But when you start blogging without verifying or sourcing properly, you risk alienating people who come here looking for valuable, accurate information.

Ryan Mense's picture

I don't know if you just didn't read the article, but the original source doesn't matter or the information it contained.

No, it matters. If it doesn't, why the article starts with this information?

You just trying to add legitimacy to a generic tax advice article by making up a scary story. It doesn't look professional at all. But you probably don't care about your audience anyway, it's all about click bait and advertising.

Ryan Mense's picture

Because it was used to connect something people might have heard with her own advice. It really doesn't matter.

user-167100's picture

File a Schedule 'C' with your taxes. You don't need a 'legitimate' business. Just follow the tax laws. Schedule 'C' allows for expenses and income. That's all the IRS wants to see.

Jen Photographs's picture

I'd like to see a screenshot or links to these photography groups. Quick googling turned up nothing -- except for this "article" on Fstopper. Look, I get that this is a blog platform, and you're not held to the same standards as real journalists, but at least put in some effort and support your article.

Crystal Johnson's picture

For anyone interested in reading what this post is about, here it is.

"One of our members emailed me this from an anonymous email to me and asked me to share it. She asks that as many people share it as possible so the same thing doesn't happen to anyone else. I don't have any additional info except for whats below:

I have something I need to admit before it swallows me alive. I have no one to talk to about this and for legal reasons, I can't post about this except for anonymously. Thank you to the admins for posting this for me.

I started charging in 2013. I wasn't charging that much my first year so I didn't think it was a big deal. If I am honest, I shouldn't had even been charging because I shot in auto for most of that year. My second year I started charging more because I was starting to burn out at $150 wasn't worth being away from my two kids. And TBH my husband was getting tired of having to stay home with them while I was out on shoots since I wasn't making much after props. But I was still only charging $250 so I didn't think it mattered. I wasn't making that much and I don't think I'd ever get caught. I kept telling myself it was just a hobby. That I was making extra money to do fun things with my kids and make grocery money... and since I'm not making that much, I can't AFFORD to pay taxes on it. And TBH I used it as an excuse to not go back to my night shift nursing job.

But one morning a few weeks ago, I noticed my pay pal account was being weird but thought it was just down. Then on the way to my mini sessions, I stopped to pick up balloons and my debit card on me and my husband's joint checking account was declined. I was late and frazzled so I just used a cash and figured I'd tell my husband when I got home. When I got home my youngest was throwing up and had a fever and my husband was annoyed I had been gone all evening and I forgot to mention it because we really hardly spoke that night. The next day we received a letter from the IRS. My husband freaked out and we had a huge fight (and we never fight) and immediately called a tax attorney. All of our accounts are frozen. Including the three thousand dollars I had squirreled away in paypal. A lien has been placed on our home and they may garnish my husband's wages. We don't know how much we will owe yet. But our tax attorney estimates that it will be over $45,000 for state, federal, and sales tax. More money than I've probably even made in the last 5 years...... Money we do not have. More if we have to set up a payment plan. We have also been served to appear at a hearing at our local courthouse for not paying taxes to our county and our attorney says to expect a similar summons from our city and they may bar me from operating any business withing county limits for up to 10 years. My husband says our credit score is going to be wicked low now. He's so mad he can't even look at me and I don't blame him. He works 8-5 every day and then watches the kids while I go on shoots and edit. And he's been so supportive. And honestly I haven't even been able to pay a real bill because I've spent everything on props and actions back drops and mini session set ups... And whatever has been left I've spent on clothes and stuff for my girls that my husband didn't even know about because he's too busy working to notice what I spend on things.

I'm not supposed to "conduct any business" until this is settled which is supposed to take up to a year but we have have zero money to refund any of my clients' deposits and I have 40 clients booked for the next few months including some Newborns.

We also have to pay the tax attorney and I'm afraid to even ask what that will cost. I've been scrounging for receipts for deductions but I haven't kept many over the last few years... Especially from when I first started.

I'm not asking for advice but I just had to share because I am too embarrassed to tell anyone I know. My in laws know because they are loaning us money to cover our bills and my mother in law is having a field day with it. Do NOT feel sorry for me. This is 100% my fault. I cut every single legal corner because I was selfish and thought I could get away with it. Another photographer in town offered to help me with my pricing and get my business license last year and I ignored her. I thought she was just jealous because her clients were coming to me in droves because I was cheaper. I did a happy dance when she went out of business a few months ago because that meant more clients for me.
None of this is worth the extra cash I was making or the Facebook likes and Instagram followers I was getting. It's not even worth getting to stay home with my girls.
Lesson learned. It's not just a (F***ing) hobby when you charge. Not when the IRS has screen shots of my website and Facebook page and a ledger of my PayPal invoices. They even have screen shots of my ads in local mom and garage sale groups and a list of photography groups I'm in.
I wish I had registered as an LLC or a sole proprietor when I had the chance. I could have gotten legal at anytime but I never did. I was always spending what I made on toys and clothes and stupid props and was scared to have to pay taxes since I wasn't making that much.

Our attorney said I never would have even had to pay that much anyways if I had been legal to begin with and that more and more small businesses are getting caught partly because PayPal has to turn you in after a certain amount and because the IRS is catching on to small social media run businesses. All they have to do is search social media.

GET LEGAL NOW PLEASE"

user-167100's picture

The IRS doesn't all of a sudden freeze your accounts. They notify you by mail. If you don't reply, the clock starts ticking.

None of this happens like magic.

Crystal Johnson's picture

Exactly! In my reply below this comment I mentioned that. She would have gotten a 'bill' from them multiple times before they started tacking on fees and then eventually seizing her accounts/lien on home.

This story just keeps getting better!! I love FSToppers!

Yup, I call BS.

Does read like a Lifetime movie script, doesn't it. Perhaps it's legit, perhaps not. The more important point is, when you start taking money from people in return for providing a service, it's now a business. Uncle Sam and the mini-me's at the state, county and local level want their share of your profits. All of us know that, some of us will cut corners.

I'm an amateur and have yet to take money for doing photography. But I do know the rules if that ever changes.

Jenny Edwards's picture

Thank you, Crystal, for sharing. I hadn't had a chance to get on and read all of my fan mail yet ;)

Crystal Johnson's picture

She willfully neglected to pay her taxes, and assumed she could cheat the system. Seems fishy though for how quick everything went down hill. That's really not how the whole process works, and she would have received many notices over the years before the lien and freeze happened. There are rules and regulations they IRS has to abide by. She would have gotten a 'bill' in the mail from the IRS of what she owes and the percent of how much they would be charging per month if she continued to be late. It's like 5-30% or something like that of how much the total she owes. So the 45k she's mentioning she owes is years worth or her husband too didn't pay. A lien is a last resort tactic as is the freeze , and she will have to go to a collection due hearing. It really sounds like she thought she could get away with not paying taxes, and uses all these BS excuses.This is why new photographers, or even veteran ones, need to take a few business management classes at their local college before they start to charge people/refresh their knowledge.

If you're making money in this industry you need to pay your taxes, period. You need to be a legitimate photographer, get your licenses/permits/dba/registration etc... squared away ASAP. You need to maintain a system of all invoices, taxes that need to be paid, how much your overhead is and everything else associated with working. If not,you're playing risky game of cat and mouse, and being caught by the IRS cat one day.

stir photos's picture

this write-up has a very 6 o'clock news vibe to it, minus the pretty meteorologist of course...

Vincent Alongi's picture

If you're attacking this article as fiction-based, I think you're missing the point. It's a pretty solid message, one everyone should take to heart in starting out.

JetCity Ninja's picture

to all those arguing that her cautionary tale is not real, relax. it's just a tale. you won't actually get caught charging for your hobby.

The truth of the matter is that the IRS doesn't really care about most hobby photographers that work under the table. Keep in mind IRS auditors have families to feed too. Unless a photographer is raking in the dough, it's simply not worth the effort to audit for days/weeks only to collect $100 dollars of interest penalty fees.

"anonymous social media post" - sounds legit.