We started out in photography as a hobby. Then we started making some money. We both have regular 8-5 jobs. Now we've are looking forward to '08. When do you get a business license, report to the IRS, insurance? (we now have our equipment on our home owners insurance) In other words, become a legitimate business?

if you going to start working with people, then i suggest now. you have liabilities now and you need to cya. also, people will start paying you in checks and its really best to open a business account and get an accountant. a lot of your equipment (if not all) will be write-offs, which you can benefit from. you should also think about getting insurance. your homeowners insurance will not cover your equipment if you are at a professional level.

Thanks Tami, I know about the insurance. I've been getting a list of equipment for my local insurance agents to quote. I know that you are in London, but are there insurance companies that specialize for photographers?

State Farm has something called an inland marine policy that will cover professional photo equipment if you are only part time. I was open and upfront that I work an 8-5 and do weddings on weekends only. They called HQ to make sure that qualified and they said yes. I have roughly $20K in coverage, no deductible, insured against all peril...including my own stupidity and its under $400/yr.

Thanks Jessica, that's who I've got my homeowners and life ins. with. I'll call them on Mon.

The liability insurance is a must. It doesn't matter if you are a part-time photographer or not, if someone were to get injured while you were shooting, you could be liable. Also, if you are collecting a certain amount of income from your hobby you need to be reporting for income tax and collecting state sales tax.

You may want to look into joining the PPA. In addition to having insurance programs available, they also offer malpractice coverage that helps pay for legal fees if you have a major issue with a client, or other expenses due to something like mechanical difficulties. http://www.ppa.com/i4a/pages/index.cfm?pageid=665

Cindy's right. I didn't even touch on the liability issue. I was just thinking property. Farmer's insurance has a nice policy for commercial liability and property, but the state farm policy has no deductible so I listed all my equipment on it instead.

Key phrase: making money. The right time is NOW. I recommend LLC.

+1 on the making money

I went the sole proprietor route for now, but plan to go LLC if I ever move from a portrait to wedding focus.

Yesterday.

You should be collecting sales tax and reporting your income from the very first day you take money for services.

I'd suggest finding an accountant NOW who can help you figure out your back taxes for 2007 and get you set up right for 2008. You do not want to get audited for 2007 and wind up owing thousands of $$$ in penalties.

Kia

Thanks everyone for your comments. Cindy, we are a member of PPA. But I didn't know about their malpractice insurance. I already have a CPA for my 8-5 job that I'm a co-owner of. He'll love to make another dollar off of us.

Mike

Completely agree. Before you started taking any money for your services you should have gotten necessary permits, signed up with your state tax board, etc. Get it done now before you end up in trouble.