Should I Start an LLC for My Photography Business?

By starting an LLC for your professional photography business, you can:

• Protect your savings, car, and house with limited liability protection
• Have more tax benefits and options
• Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Professional photography businesses will benefit from liability protection because of the risks associated with inviting clients into their studios and visiting the various venues they’re hired to photograph. 

Example 1: While in your photography studio, an employee bumps into a client and spills boiling hot coffee on them. Due to the severity of the burns, this client filed a personal injury lawsuit against your business. Limited liability would protect your personal assets from being used by the court to satisfy any awards of damages granted to the plaintiff.

Example 2: A photographer working for your business lied to a customer about having qualifications he did not possess. After seeing the poor quality of this photographer’s work, and believing your business to be complicit in his deceit, the client sued your business for fraud. In the ensuing litigation, the court can only use your business’s assets to award the plaintiff damages.

Example 3: Your photography business arranged with a client to conduct a photo shoot before a specific date. However, due to timetabling issues, your business was unable to fit them in beforehand and missed the agreed-upon date. As a consequence, this client suffered significant financial loss which motivated him to sue your business for breach of contract. In this instance, the court is prevented by limited liability from seizing your personal assets to satisfy this claim.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC’s limited liability protection, you must maintain your LLC’s corporate veil.

LLC Tax Benefits and Options for a Professional Photography Business

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business’s net income passes through to the owner’s individual tax return. 

The business’s net income is then subject to income taxes (based on the owner’s tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform. 

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you’d need to be saving about $2,000 a year on taxes.

We estimate that if a professional photography business owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Professional photography businesses rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.