Digital Photography: Business or Hobby?

If you're like many with digital cameras, you occasionally take some great pics that you could edit with professional software and sell. You could also resize and package them onto T-shirts, coffee mugs, vases, glass ornaments, window decals, bumper stickers, posters or giant posters, coloring books, photologs, photostory books etc.

You could actually make a business of photography if you put out the effort required to do it. Some people kind of stumble into the business side of digital photography when they have initial success selling their stock images of furniture or happy faces or flower-arranged vases or sports images to magazines, textbook publishers etc. $100-250+ a day is possible if you're reasonably well-organized and you keep your photos properly indexed like an encyclopedia in alphabetical file folders in a filing cabinet AND ALSO on CD-ROMS or DVDs, you copyright your photos, and if you contact the growing number of photo-buyers online and off, domestic and internationally-based to build your business. It's always best to build up your stock of photos in your file cabinet before approaching resellers.

Yes, it is possible to make a business out of your hobby. You do however at some point need to decide if your income will be considered business income or personal income derived from your hobby. You might be saying to yourself "Who Cares?"

The IRS cares a lot about anyone making unreported income. The IRS and other government bureaucracies want to determine if you're a hobbyist or a business. Never mind the legal issues involved here. Most anyone who has viewed Aaron Russo's 'Freedom to Fascism' knows the IRS operates unconstitutionally and that there is no current or explicit law that grants the US Government the power to tax a US citizen's personal income.

You need to ignore all the facts and simply understand that the IRS auditors and agents have their own families to support and are 'just doing their jobs' - same as you and me. Whatever they do, remember, it's never personal. Forgive and forget. After all, it's only your money. They want you to be fair and honest in reporting your income to them. After all, we do have a voluntary system of reporting.

You do not want them to determine that you're only a hobby and not a real business. If you've been deducting expenses, you would want to be considered a legitimate business. To avoid IRS scrutiny, you should keep yearly sets of receipts of expenses you incur for lenses, camera bodies, tripods, memory cards, file folders, photo paper, photo editing software, postage, gasoline, RT mileage driven, repairs.

The IRS will want to see a pattern of purchasing behavior that shows you are serious about your business. Advertising expenses would almost always be included in your receipts - that shows your work is for sale.

Keep all your personal expenses like groceries, power, water and tel bills separate from your business expenses like those mentioned above. If you file as a sole proprietor like most photographers, you need to complete a Schedule 'C' to your 1040 form detailing all your expenses. The Schedule C let's the IRS know that you have a business and expenses related to it.

Smart photographers who are serious about their business and who are organized will organize their business as an LLC (Limited Liability corporation or an 'S' Corporation. Doing this almost always convinces the IRS that you are serious about doing business with your camera and are not just another photo hobbyist claiming expenses on your tax return.

Decide what you want to do with your camera equipment and software. Any questions or comments about this topic/blog are welcome. What are you doing to generate sales for your photo business? How do you organize your photos? Got a favorite pic? Post it here or post a link to it here for others to see.

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