 Shino D. Elliott |
Advertising if your not a business Hello, I live in Canada and I was just wondering if anyone knew the laws about advertising on, say, my own website and listing prices if one was not actually a business. I would like to get a website so people could see what I do and I could do sessions for them but I don't think I am ready to start a business and make it official. I was thinking of just doing it on a smaller level for now because I still have a 3 yr old and I don't want to put her in daycare. Thank you for any advise, Shino Elliott
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Monnie Ryan |
I can't speak for Canada, but here in the states, you certainly can "advertise" prices etc. on your Web site if you want to. But the second you accept money for providing even a single product or service -- you ARE a business (albeit a sole proprietor). As such, you must declare your income no matter how little, pay any required taxes and otherwise follow any laws governing your type of business. It doesn't matter if you work two hours a week or 60 -- once you offer your services for sale and someone buys, you are "official."
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Shino D. Elliott |
I'm sure it is the same in Canada. Thanks. I guess I have to take the plunge. A little scary.
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- Gregory LaGrange Contact Gregory LaGrange Gregory LaGrange's Gallery |
Tax fraud with illegitimate lemonade stands used to be a big problem in the states.
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Shino D. Elliott |
So, all the people who are doing photography or anything else as "just a hobby" are breaking the law? There seems there should be a grey area that you can do it in a casual manner and get a little compensation but when you reach a certain, say, monetary level, you need to become a sole proprietor or some such. And one could only be caught if turned in, right? Because, honestly, it seems there should be a little space. Shino
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- Gregory LaGrange Contact Gregory LaGrange Gregory LaGrange's Gallery |
To be somewhat serious, and I'll say somewhat because I can't seriously say you should depend on my or any others advice about the law in a forum like this, but, I were somebody who were to do something for somebody, such fix their car for them. Something like they'll buy the parts, could you put in the alternator for them. You're good at working on cars, but you're not a mechanic. You load trucks for UPS. Word gets around, people say "you got a car problem, Shino will help you fix it."About once a month you make $50 here, $40 there, depending on the job. End of the year, you get your W-2 form, do your taxes, wait for the refund from your UPS job. Are you supposed to report the money you made helping people with their cars as income on your tax form? Yes you are.
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- Gregory LaGrange Contact Gregory LaGrange Gregory LaGrange's Gallery |
typo fix:"if you were somebody who were to do something for somebody, such as fix their car for them"
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Shino D. Elliott |
So you could declare it as an individual not as a business?
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Lynn R. Powers |
There is a grey area. It is refered to as a hobby business. When you get a business license you must report all outgoing money as well as all incoming monies. You must also prove that you are actually working and/or improving your skills. When your expenses are greater than your income they expect you to show a reasonable profit within 3 years. You may never deduct more than you earn reguardless of the amount. If after three years without showing a profit you loose your business license and are considered a hobbyist. In which case you only have to pay taxes on what your profit was from that photo. An example is you sell an 8X10 print that is mounted on a 11X14 board and have a single matte around it. The print cost $5 and the mounting board and matte cost $15 and you sold it for $50. You are supposed to pay taxes on the $30. There are no other deductions allowed. And they don't care how far you traveled and paid for rooms and rented a helicopter for an hour to get the image.
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Shino D. Elliott |
Hello Lynn and everyone, What about before you become a business because if you just jump in without establishing yourself somewhat and getting confidence it will be difficult to get the business going. Can that be a "hobby business"? I mean it is best to get a few shoots under your belt. And since you are competent, it would be nice to be get a little to help build your equipment. Thanks for all the responses, Shino
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Lynn R. Powers |
Shino, The last paragraph applies if you make over $12 in a year selling prints. Fortunately they aren't going to get too upset if you make less than a thousand. But DON'T rely on past examples. Things are changing fast. A lot of it will depend upon which tax bracket you are included. If your tax bracket is 15% than you owe $15 for every $100 you make. It used to be you could be able to get away with $3000 a year. But I feel that those days are gone forever. Remember as a hobbiest that you have no deductions. It is still OK to advertise on your website but you cannot deduct the cost of the website. Your Tax Agent will be more of assistance about this. It is one reason I pay to have my taxes done. You do not want the IRS to find that you have eliminated paying taxes unless you are asking for a government job and pay them immediately all back taxes due. (Yes, that is sarcasm.) Otherwise there are penalties and interest added. By declaring you have nothing to worry about and this past year I made almost enough to purchase a new iMac. I should have it by the end of this year. But I am in the lowest tax bracket so my return wasn't as much as usual. I always overpay on my Retired Pension so I have can have some extra money each year.
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Shino D. Elliott |
Thank you so much. It is all clear to me now. I definitely see the benefit of starting a business and it seems if you can't get it off the ground, no harm done, especially since the cost of almost everything can be deducted. Shino
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