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Legal, Insurance, Tax

Let's talk about boring, to me, but necessary. Sometimes you gotta wade through some of this crap to enable yourself to do the things that you really love. Boring. That's also like a good mantra for parenting. Literally wading through the crap because you love them so much. How many people here are parents? Yeah, yeah, yeah. Isn't it so hard? On the break, I had to share this with a couple of people. On the break I step off for two records and I got a text. They take my phone away. (laughing) I got a text from my daughter, and all it was was all caps saying, "You need to get me out of gym!" (audience laughing) I was like, "Well, I'm going back on the air, "and I can't really do that right now." Yeah. Love you, Sophie. Alright, so, boring but necessary. Legal, insurance, tax. I talked about agreements. Contracts. Those are so important. I am not a legal person. I am not a let's legalize everything. Let's litigate everything. But I want to know that what you're saying is what I'm saying,...

we wrote it down on paper, we both agreed, and we both signed on it. I would have agreements for so many parts of your business just for clarification, to be able to not have friction or altercation or any sort of anything that is negative that you don't need to have. I would put agreements in place for multiple things. It just is the smart way to do it. So we obviously have a lease. We have an agreement about the place we're gonna rent. When we negotiated this lease on our current place, my goodness, it was a negotiation. It was a couple weeks of starting with their standard boiler plate document, us saying this is fine, this is not okay, how do we do this? How do we negotiate that in? In the end it ended up being probably 30% modified to what we wanted, but if we'd just signed right away, we'd have been a little resentful and a little frustrated, you know? Realizing these agreements are malleable, and you can shape them just as much as your clients can shape them, but having those in place. Model releases. Those are a big, big deal. I know a lot of people would say, "I don't really need a model release. "I'm not gonna do anything with this." Maybe not right now, but later you may very much wanna do something. When I first started doing portraits, I did a lot of fun shots that I loved, and then I started slowly getting model releases, just 'cause I'd heard that's what you should do. I didn't need them for anything, but I heard you should have them. And then I started doing stock photography for a while and I was able to go back and sell a lot of these images that people had already released and have some really good fortune with that. Like, really cool experiences, which was really neat because I had those in place. Now, in the last, gosh, I'm on my fourth year as a Nikon ambassador, which I love, and the amount of times that everything has to be run through legal is, it's a lot. It's a lot. And every single image that we sent to them for use on their publicity, social media, advertising, marketing, website, education center. Everything we send over for anybody under has to be released and notarized. So, like, it got to the point where my studio director became a notary public. Like a few years ago. Went through the whole class. Got the little stamp, all the things, because it didn't make any sense financially and time wise to keep going to a bank or somebody else, and so we have all the things. We do workshops, so we have our workshops. People come in and everybody signs a release and notary public. And it's funny because, if you read these releases, and you read these notarized Nikon releases, they're basically saying I will let you do anything with these images you ever wanna do all the time. Love you, bye. (audience laughing) I mean, that's how they read. And I would hesitate, and I think we have 99% of people sign them. We will only use them for good. We really, really do care about the integrity of everywhere these images go, so there's no concern there, but they're really thorough releases that you can move these images in a lot of different ways. Kinda interesting. But it's really helpful to have those releases signed. Very, very helpful. What else? Legally, how are you setting yourself up as an organization? If you are currently not in any sort of bucket, or you're a sole proprietor, I would strongly encourage you to look at the LLC route. The Limited Liability Company. It's just a designation of how your business is structured, but it basically separates you personally from your business, so if anything happens in your business, they can't come after you and your house and all the things you hold dear over here, because some odd thing happened in your business. That really makes a difference. So I would have you talk to your lawyer in your state. It all varies per state and law and country, but I would look at that over being a sole proprietor pretty much as soon as you can, would be my suggestion. And after a certain level, we're now a C Corp. No, an S Corp. Excuse me. Our business, because of how we have to handle payroll and certain payroll tax options, and classifying ourselves this way saved us money on payroll tax that way, and taking certain money here, and others in bonuses made a difference. But when you're starting out, at the very least, protect yourself that way. Insurance. Big fan of business insurance. If you're working from home, just check if your home insurance covers your equipment. It should, based up to a certain amount, but you're gonna make sure that coverage is actually accounted for. If you're growing a lot of expensive gear and you're not updating your policy, it may not be. If you travel internationally. Several of you love travel. If you travel internationally with your gear, is your gear covered while you travel? I can tell you of a couple experiences. This is painful. I've had a couple of experiences where I've lost gear overseas. I don't know why, but I have, and one time was I left a lens in a church in England one time. And then I called my business insurance provider and he's like, "So, in England." Yeah, and he's like, "Yeah, you don't have an international writer. "That's not covered in any way for any of our clauses." And so that was just a loss. I signed up for PPA. You guys know PPA? Professional Photographers of America? So I signed up. Our studio has always been a part of their organization, and because, the main reason was their insurance that comes with it; it's really good. And so I signed up for their insurance, and the next time I lost a lens, which was traveling back from Africa. I was like a late flight. I landed in Milan at 5:00 AM. Got off the plane, and it wasn't until I was sitting down, really groggy, that I realized that I'd just thrown my lens on top of my bag, which was really dumb, and my bag fell over and I'm pretty sure the lens just rolled somewhere down the plane. My 16-24/2.8 lens. Not a light one to lose. I wanna believe that over somebody lifted it while I was sleeping, so I'm going to believe that. But when I got back, and by the way, that I just did there wasn't a joke. Actually, that's the idea of kinda controlling your mindset. I wanna believe that, so I'm going to believe that. But I contacted my provider, 'cause I'm like, "Okay, I should be okay now "because I lost that internationally." And there was some convoluted reason why it still wasn't covered, which was so annoying. So we called PPA Insurance. Actually, my student director managed all this. Because she went after it like as a detective, right? Whereas I'd have been like, "Oh my God, I've gotta call this insurance company." And they came back and they said, "We just need proof from your regular insurance company. "We need this signed and this signed "that they aren't covering it." And it was a few months of going back and forth, but then they paid for the lens, which was amazing. I literally, like, I was like, that's so cool that you say you're gonna do it and you actually did it. So if you don't have business insurance, or you don't have it covered, realize that you can basically protect tens of thousands of dollars by simply paying for some form of insurance. And if you don't have that covered, look at organizations like that that, that do it for you at a much lower cost. Like, a much lower cost. Tax. Ugh, tax. Tax. Tax is a beast. Especially when you start having a lot of offerings and different options, and your multiple businesses. Tax becomes crazy. Like I said, I have a bookkeeper and I have an accountant, and when people start talking about tax codes and breakdowns, I feel my brain melt out of my ear and drip to the floor. I'm like, I'm trying so hard to focus, but like, ah, 10-40, X4000. I just, this is just not where my talent lies. So luckily I work with people who do have a great talent for it and we just kind of set the direction at the beginning of the year how things have to be done and they get done, but I talked earlier about how I'd gotten so much money back that just because somebody stepped in, an accountant said, "Okay, you can get $44,000 back if you just do this." Okay, let's do that. We did that over here. But at the things like, have you guys looked at capital expenditures and how you have to document everything in your business and line item by line item? I hate that part of it. If you don't love doing that, hire somebody to do that. There are people who love that. Both of my parents for just the joy of it spent years as IRS agents slash tax preparers. For the joy of it. I'm like, who are you, and are you sure we're related? I don't understand at all. And they're good at it. They're really good at it. But I just don't understand the passion for that, 'cause it doesn't work for me. Tax perspective. How are you charging for products and services, and how are they different? Have you thought about that with your estate? I tell a very long, painful story of a tax audit I have, and I'm just gonna condense it here. The condensed version is when I moved to North Carolina from San Francisco, I said, "Hey, when I was in San Francisco, we charged for products "but not for services. Is it different here?" And they said, "Nope." I walked into the space. I walked into the actual county tax department, and she said, "No. Charge for products, not for services." And I said, "Thank you." And then I walked out. The mistake I made, and what I hope you guys will avoid in the future for yourselves, because the end result was super painful and expensive. The mistake I made was not taking any documentation of that conversation with me. Because if I'd have one small document that, with her name alone, I would have saved myself six months and in the end $10,000. So what happened was I walked away. I said great, and I built my whole business around what they had actually told me. Like, I did the right thing, you know? And I built it all up that way, and by the time, when we moved into that commercial space, that first commercial space, it triggered an audit. And they came in, I'm like, I'm gold. I'm doing everything right. I opened up my Excel spreadsheets, 'cause I didn't have studio software then. She went through everything, and long story short, after six months of being in my studio so often, Robin; her name was Robin. At the end of it, they gave me a bill of 20-something thousand dollars that I had to pay in late fees and interest rate because they read the two lines in the tax code in North Carolina as saying that anything you do as a photographer leads to a sale, so 100% of everything should be taxed. Every wedding I'd done, every album I'd done, every commercial shoot I'd done, every portrait session I'd done was supposedly all to be taxed. And I'd only taxed products, and products were a smaller portion of what I was doing for those first three years, as we talked about, so when she gave me this whopping bill, I was like, "What?" And apparently, 'cause I then talked to a tax attorney, more expense, who said they have the rights to read the tax code how they wish. If there's any variance whatsoever, they get to make a judgment call. They just get to. And so, we went through this back and forth, and she said, "Guess what?" And this is no joke. She said, "If you pay by Friday," this was towards the end of the year. "If you pay it by Friday, "I'll just knock it all down to $10,000 even." I'm like, "What? What is happening here?" And I had no recourse unless I wanted to pay a tax attorney and fight it out for months and months. And, as I was advised, I'd probably lose anyway. So I wrote a check for $10,000. By the way, not good business to do that, because they're killing the little golden gooses who are running around laying eggs for them, 'cause you can't stay in business after you lose $20,000 plus dollars. I was fortunate enough to have a setup where I could, but most wouldn't. And then I started hearing over the next few months, pop, pop, pop, all the photographers in our market were being targeted for audits. It's like they discovered there was money as an entrepreneur or photographer and let's go hit that. So whatever your state is, I would talk to your county tax person, find out exactly what it is, and get a document, because when I said, "That's what she said," that's what she said. When I said, "That's what she said," she goes, "Do you have any documentation?" I'm like, "Well, no, but I know what she looks like." Doesn't matter. If you have a signed document, this is over. If not, we're gonna keep proceeding. Huge piece of valuable advice. That's terribly boring, but so, so valuable. Note that somewhere.