Photography: The Difference Between a Hobby and a Profession
(and how to become a professional)
What is a professional photographer?
I would define a“professional photographer” as someone who derives income as a photographer. You don’t have to be a full-time photographer to be a professional, but you do have to net money and be set up as a business. You may be a fabulous photographer, but if you’re not earning income doing photography, you have a hobby, not a profession. Of course there’s nothing wrong with being a hobbyist. I want to be clear that the words “hobby” and “profession” have nothing to do with your skill level or the quality of your work. They have everything to do with your finances and legal business status.
If you’re a hobbyist and you are happy with the way things are, that’s great! But if you strive to be a professional and you need help making your hobby a profession, read on!
Before I begin, I want you to have realistic expectations. You cannot become a professional overnight. It took me two years before my business was able to contribute a significant amount of money to my family’s income. Running a successful business is hard work, but it is extremely rewarding. I learned a lot on my journey to becoming a professional and, if you follow my advice, it probably won’t take you as long as it took me.
Once you decide to become a professional photographer…
The first three steps are going to look intimidating. They also tend to be dreadfully dull to artists like us. Rest assured, they are much easier than they look and are very important for running a professional business (hence why they are the first three steps). They involve setting your business up in the eyes of your state and/or country. I’m going to explain the steps I took but I recommend meeting with a local accountant or tax attorney to decide what is best for your business.
1. Register your business with your state
2. Register your business with your state’s tax commission
3. Apply for an EIN with the IRS
1. First I established my business with my state. There are two primary ways to do this: a sole proprietorship or a single-member LLC. Personally, I prefer the protection and credibility you get with a single-member LLC. You can register for your LLC very easily through your secretary of state’s office. In my state, the application fee is $100.
2. Next, I registered my business with my state’s tax commission. When you do this, you’ll receive an account number and, in most states, you will be able to file and pay sales tax electronically. This process is not very difficult and, in my state, the application fee is $20.
3. Finally, you may want to apply for an EIN (employer identification number) with the IRS (or something comparable if outside the US).. Some banks require your registered business to have an EIN in order to open a business checking account. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number on the IRS website. You’ll likely use this number when you pay your quarterly income tax.
Bleh. I’m not going to try to convince you that dealing with government agencies is fun. I couldn’t make it sound fun even if I tried. However, it is necessary to pay both sales tax and income tax if you want to ethically and legally run a business. If you chose to work for another photography business, not start your own, as long as you are a salaried employee, you likely fall under their company. If you are doing contract assignments, you likely still need steps 1-3.
The last 3 steps are not nearly as painful. They’re not quite as fun as taking pictures, but they’re much better than filling out paperwork and writing checks. They’re also essential for running a profitable business. They are:
4. Create a business plan
5. Price yourself based on that plan
6. Keep accurate books
4. If you want to be successful, you must make a plan and set reasonable goals. To fail to plan is to plan on failing. The most basic business plan includes a mission statement, target market, goals and a strategy. Everyone’s business plan will look a little different. If you’re detail oriented, you can set monthly or even weekly goals along with your goals for the year.
Make sure and include reasonable financial goals. Remember, in order to reach your goal of being a professional photographer, you must be make a living from your photography. Set a goal for both revenue and net profit. Base your minimum net profit goal on your living expenses or the minimum amount you would like to contribute to your family income. Having these numbers in mind will help keep you on track. Remember to include estimates for taxes and all of your anticipated expenses.
Revisit your business plan every month.
5. Now you must price yourself based on your goals. Once you set your goals and begin to run the numbers, you may realize (as I did) that your pricing is way too low. Set aside some time to carefully restructure your pricing based on your goals. When I crunched the numbers and discovered how much I needed to charge in order to meet my minimum goals, I panicked. I was worried that no one would pay those prices. But I knew that if I wanted to do this for a living then I was going to have to actually make a living. That’s when I decided that I must be confident in the quality of my work and confident in my prices. I changed them that day and I never looked back. I’m not going to lie – it was scary. I lost most of my clients and had to rebuild my clientele. But over the next several months, as I slowly rebuilt my clientele, I began to realize that my new clients respected me, my work, and my prices – something I was not used to! I was beginning to tap into my target market!
I know this is a scary step – believe me. But I encourage you to do it as soon as possible. Increasing your prices gradually will only draw out the process. It will be more painful that way. It’s best to just rip off the band-aid. Do it once and get it over with. Take it from someone who has been there before.
If you don’t hit your goals in your first year, don’t panic. It may take a few years to build your clientele and your credibility. Don’t give up. If necessary, continue to work another full or part-time job while your photography business grows.
6. And lastly, it is vitally important to keep accurate books. You need to know exactly how much money is coming into your business and how much is going out. In order to do this, you must keep your business finances completely separate from your personal finances by opening a business checking account. Personally, I use QuickBooks Online to manage my business finances. If you’re not ready for financial planning software yet, create and keep track of your finances on a spreadsheet. Meticulously keep track of every dollar that comes in and every dollar that goes out. I guarantee that this will help you be much more thoughtful with your purchases, which will keep you on track for reaching your goals.
About the Author: Ann Bennett is the owner of Ann Bennett Photography in Tulsa, OK. She specializes in high school senior pictures and lifestyle family photography. For more information, visit her website www.annbennettphoto.com or Facebook page www.facebook.com/annbennettphotography.