There are many reasons why you may want to become a photographer. It might be that you really want to be your own boss, that you love working with people and you want to help them, you want a more fulfilling career and you want to choose your own hours. Whatever the reason, we have put together a guide to talk you through the steps on how to become a photographer.
6 top tips to help you become a photographer:
- Consider your business structure
- Register your business
- Get a business bank account
- Get appropriate insurance
- Understand record keeping requirements
- Understand accounting and tax requirements
In this blog, we walk through each of these steps in detail to give you the confidence and knowledge required to become a photographer. Let us get into the details,
Consider your business structure to become a Photographer
You have decided you want to become a photographer but don’t know where to start. There are multiple options when deciding what structure is for you, the most common structures include:
- Self-employed/Sole Trader (note these terms can be used interchangeably)
- Limited Company
- Limited Liability Partnerships
- Other such as; Joint ventures, charities, and community interest companies
To become a photographer there are two structures that we will focus on; Self-employed and Limited Companies. For further detail on other business types see our related questions at the bottom of this blog.
So what is the difference between being a sole trader and a limited company?
To put it simply, being a self-employed/sole trader means you are trading as an individual, while being a limited company means you are trading as a company, albeit a company of one.
A self-employed individual, often known as a sole trader, does not work for a specific employer who pays them a consistent salary or wage. Self-employed individuals earn an income by offering their services or products directly to customers or businesses. They are required to win clients themselves and take responsibility for the success or failure of their photography work. As a photographer, this would mean you would have to go out and find clients yourself.
Benefits of a photographer being self-employed
- Simple freelance business structure without the administrative burden of a Limited Company
- Free and easy registration of your business with HMRC
- A flexible freelance business structure that can later transition to a Limited Company
Considerations of a photographer being self-employed
- You are personally responsible for any losses the freelance business makes
- You are taxed at income tax rates which can be less tax-efficient than operating as a Limited Company
- Potential Clients may see sole traders as less attractive than Limited Companies
What is required of you as a self-employed individual
- Register with HMRC at gov.uk
- Record keeping of all income and expenses (see below for detail)
- Submit a tax return each year
Many of the indicators of a self-employed individual also apply to owners of a limited company, however, instead of being self-employed you are considered both an owner (shareholder) and employee (director) of a limited company.
A Limited Company is a general form of incorporation that limits the amount of personal liability undertaken by the company’s shareholders and directors. This means that as a director and shareholder of a Limited Company, the business and you are seen as separate legal entities, which provides a layer of protection to your personal assets as a photographer.
Benefits of a photographer operating as a Limited Company
- Retain more of profits by utilising tax efficiencies
- Limited personal liability, means that if a company is in debt, the personal assets and finances of the shareholders will be protected by law
- Limited companies have a certain level of prestige in terms of brand image that sole traders do not
Considerations for a photographer operating as a Limited Company
- More complicated and expensive to set up than a sole trader
- Limited company accounts and taxes are more complex than a sole trader
- More expensive to run a limited company
What is required if you register as a Limited Company
- Incorporate your company with Companies House and register for company tax with HMRC
- Record keeping of income and expenses in line with regulation
- Submit Financial Accounts and Corporation tax returns each year
Further information on both structures can be found in our blog on setting up as Self-employed versus Limited Company.
So which should I choose?
Ultimately the choice as to whether you chose to be a sole trader or a limited company is completely up to you. If you are looking for a simple way to set up as a photographer then a sole trader is probably the best place to start. As a photographer, you may appear more desirable if you are to start up as a limited company as it gives you slightly more prestige.
Whatever you decide, the best thing to do before you register is to sit down with an accountant to get their professional opinion. All accountants offer a free consultation call, so you would be silly not to use this. Check out how to contact us here.
Register yourself as a photographer
Once you have decided on an operating structure you will register your Photography business. The process is different for sole traders and limited companies.
Self-employed/Sole trader registration
Registering as a sole trader is pretty straightforward. All you are required to do is log on to the HMRC website and register as a sole trader for free.
Once you are registered you will be required to keep on top of your record-keeping and deadlines for filing your tax return. See how you do this here.
Limited company registration
To start up as a limited company there are a few more steps that need to be taken.
- Decide on a company name
- Decide who will be the director(s) of the company
- Decide who will be the shareholder(s) of the company
- Prepare documents on how to run the company
- Incorporate your company with Companies House (costing £12)
- Register for Corporation Tax with HMRC
Do not worry if some of these mean nothing to you we have answered all your questions here.
We would recommend using a specialist accountant to guide you with registration as a Limited Company to ensure you meet all of the legislation requirements.
Apply for a bank account for your photography business
The number one thing you should always do when you set up as a photographer, whether you are self-employed or a limited company, is set up a bank account specific to your work.
Setting up a bank account means that you can keep all of your photography income and expenditure separate from your personal finances. This makes is much easier when you come to your tax and accounts at year-end. Furthermore, as a Limited Company, you are legally required to have a company bank account as the company is a separate legal entity in its own right.
What is required to set up a bank account?
It is easy to set up a bank account. You will provide the bank with the following information:
- A letterhead with your logo
- Business name and address
- Photo ids such as a driver’s license or passport and proof of address
- May require a letter from your accountant
What banks could I look at?
You can apply for a bank account from most banks. You can choose a bank such as HSBC or an online bank such as Starling. If you are ever unsure, check with your accountant.
Apply for appropriate insurance
As a Photographer, there is a key type of insurance you will be interested in, Business Equipment Insurance. It is not a legal requirement but if you do not have insurance you may leave yourself and your photography business in a vulnerable position. You may also want to consider public liability insurance or if you hire assistants or other photographers to help you on a shoot, you might want to look at taking out Employer liability insurance.
What is Business Equipment Insurance
Business Equipment insurance is in the name, this insurance will cover you for your photography equipment, which can be very expensive. Having this insurance is an essential tool for the photography trade and it is worth investing in. If you find the right cover, it will cover for accidental equipment breakage, damage or loss of equipment and your business won’t have to take a financial hit.
How much is insurance for a photographer?
The cost of photographer insurance may differ depending on how much your equipment is worth but you are looking to spend somewhere upward of £30 a month.
Understand your record-keeping requirements
The requirements for record-keeping for sole traders and limited companies are different.
As a sole trader, you must keep records of your photography income and expenses for your tax return. If you have any other employment you must also keep a record of this.
Types of proof include:
- all receipts for goods and stock
- bank statements
- sales invoices, till rolls and bank slips
How to keep track of records?
As a sole trader, it is possible to keep track of records in a spreadsheet. We would recommend looking at your records regularly e.g once a month and entering all income and expenditure into a spreadsheet. This means when you come to complete your tax return at the end of the year you have all your details in one place. As a sole trader, you could use an accounting software system, see the limited company section for further details regarding accounting software.
As a limited company, you are required to keep more records than as a sole trader. You must keep records about the company itself and your financial and accounting records for 6 years after the end of your financial year.
Records about the company
- Details of directors, shareholders, and company secretaries
- The results of any shareholder votes and resolutions
- Any details for the company to repay loans at a specific date in the future and who they must be paid back to
- Details for the company to make payments if something goes wrong and it’s the company’s fault
- Transactions when someone buys shares in the company
- Loans or mortgages secured against the company’s assets
- all money received and spent by the company, including grants and payments from support schemes e.g. coronavirus support scheme
- details of assets owned by the company
- debts the company owes or is owed
- stock the company owns at the end of the financial year
- all goods/services bought and sold and who you bought and sold them to and from
How to keep track of records?
As a limited company, we would not recommend keeping track of your records using a spreadsheet. We would instead recommend you use accounting software. The benefits of using accounting software is that it provides 24/7 access to all your financial data from anywhere in the world, electronic filing for all of your invoices and receipts to minimise the need for paper, and integration with multiple applications such as Hubdoc, Shopify, and PayPal.
This means that when you invoice for a shoot and the client pays you via your bank account, the records will be tracked in the accounting system for you! The other great thing is that your accountant has real time access to the software to help you with any queries you have.
Examples of accounting software are Xero, Quickbooks, and Freeagent. As partners of Xero we would highly recommend this as a great tool but as always have a chat to your accountant to decide which software suits you.
Understand your accounting and tax requirements
As we alluded to when deciding on which structure you chose there are different requirements for sole traders and limited companies when it comes to accounting and tax.
As a sole trader, you are required to complete a self-assessment tax return at the end of each tax year. You will be required to complete the tax return including detail from the 6th April in one year to the 5th April the following year and you have until the 31st January the following year. For example:
You register as a photographer on the 6th April 2020, you will complete a tax return for the year ending the 5th April 2021 and you will have until the 31st January 2022 to complete the return.
You must include all self-employed and employed income on your self-assessment tax return.
As a sole trader, you can complete the return yourself on the HMRC website or you can engage an accountant to complete it for you.
In keeping with the trend of limited companies being more complex, there are more accounting and tax requirements for a company.
As a limited company you must carry out the following:
- Corporation tax return to the financial year-end
- Company accounts to the financial year-end
- Confirmation statement
- Dividend vouchers
For your corporation tax and company accounts, you have until 9 months after your financial year-end to complete them.
For limited companies, the financial year is set according to when the company was incorporated. In the UK, companies are given an accounting reference date (ARD) which refers to the last day in the month the company was incorporated.
For example, if a company incorporated on the 20th of May, their ARD would be the 31st of May. Their financial year would therefore run from June 1st – May 31st.
What happens if you miss your deadlines?
If your deadlines are not met, as either a sole trader or a limited company you will incur fines.
To ensure you comply with financial regulatory standards we would recommend using an accountant to complete these for your company.
Summary – How to become a photographer?
You may be feeling completely overwhelmed by the information detailed here, which is completely normal. So to break it down the next things to do are:
- Decide if you will operate as a sole trader or as a limited company
- Register as self-employed or incorporate your company
- Open a bank account
- Apply for professional indemnity insurance (and other if they apply)
- Decide how you will maintain your records; spreadsheet or accounting software
- Put the accounting deadlines in your calendar so you ensure you meet all requirements
A great idea before deciding on any of the above would be to speak to an accountant. They will make sure you understand exactly how to become a photographer and ensure tax efficiencies.
Can I claim travel costs to shoot locations?
If you are required to travel to a shoot, this is an expense that is ‘wholly and exclusively’ required for you to carry out your trade. As a result, it is allowable from a tax perspective so you will be able to claim the expense.
What is Employer liability insurance?
If you regularly hire assistants, lighting crew, or employ other photographers as part of your business then it is worth investing in this insurance. Any company that employs one or more members of staff, by law, has to have employers’ liability insurance. The only exception is if the people you are hiring are independent contracts themselves. This type of cover will cover you if any of the staff you have hired, sue you because of an injury obtained whilst working for you or if a piece of their equipment has been damaged. Whatever the claim, this type of cover will help cover any legal cover.