Part 107 - Now business license (LLC) for one person?

[curtfire77]

So is it worth getting a business license (LLC) for one person to just dabble in real estate photography to start out? Or just have the extra side income

 

[BigAl07]

If you're going to operate AS a business you should set up AS a business. Plus many states require it. It's cheap and easy to do but seek professional advice in the setting it up and not a friend or online forum.

Keep in mind that running a business is a whole lot more than having a drone and your Part 107. It's a LOT of work to build and grow a business and with business you're either growing or dying.....

 

[manutter51]

I've set up my drone business as a single-member LLC. The taxes aren't much different either way, but it's handy to be able to set up a business checking account and credit/debit card so that I can have all my drone-related income and expenses in one place.

 

[ifr]

There are some advantages to setting up a business. Here are just a few (in no particular order):
1. You look more professional as you advertise your business name.
2. You can have some legal protection if you set it up properly and if you do all that the law requires to maintain that protection.
3. You can write off expenses. This includes trips you make to do your photography.
4. There is some personal satisfaction to owning your own business.

The list of challenges would be several times longer, including tax reporting, marketing yourself, etc. But, as a serial entrepreneur, I can tell you that it has worked for me. YMMV (your mileage may vary).

 

[MavicMustang]

So is it worth getting a business license (LLC) for one person to just dabble in real estate photography to start out? Or just have the extra side income

I hear you Curtfire77! I'll be interested in the answers to this question.

 

[Rich QR]

So is it worth getting a business license (LLC) for one person to just dabble in real estate photography to start out? Or just have the extra side income

A key reason to set up a LLC is found in the meaning of the term. "LLC" stands for "Limited Liability Company". If you as an individual are flying your drone around someone's house, and you crash or something else bad happens, then you as an individual are responsible for the damages. You may have an umbrella liability policy, or some liability coverage from homeowner's insurance, but read the policy carefully: that kind of policy often won't cover you if you are doing something for hire. But if you are doing work as part of a LLC, the business is liable for the damage. Your own personal assets are not exposed.

Of course you should speak with an attorney before setting anything up. The liability protection of an LLC is not absolute. Laws of different jurisdictions will vary. There are different ways to set up a business, with different advantages and disadvantages.

 

[MARK (LI)]

Does anyone know if Drone services are subject to sales tax?

 

[BigAl07]

Does anyone know if Drone services are subject to sales tax?

Depends on your State.... in NC they are now... they weren't for a long time but someone lobbied and changed that 2 years ago.

 

[vindibona1]

The reason for being/opening any corporate entity is to limit YOUR PERSONAL liability financially. IMO a lot depend on volume of the operation and the potential risk each job might impose. In any case you need liability protection via insurance. The good news is that you can buy commercial insurance by the hour, day, month or year regardless if your a C corp, S corp, LLC or sole proprietorship. What also may make a difference is in the cost of accounting and taxes in the different corporate categories.

At one time my photography business was a C corp. I did lots of jobs with all sorts of exposure, and enough volume and knew that the circumstances that I was in left me exposed on any number of fronts. As my business changed with less risk I "downgraded" to an S-corp which minimized accounting and associated costs. In latter years I haven't had the same kind of risk, take out commercial insurance as needed and thus "downgraded" once again to sole proprietorship. I still have a business checking account, but I really don't need it and don't know why I don't close that out and just keep track in Quickbooks. My liability is limited for many reasons, and the "as-needed" commercial insurance covers me when I need covering, but I don't suffer excess accounting/reporting costs not ongoing insurance costs while I'm not working.

Bottom line: It depends on what you're doing and how much personal liability you might have.

 

[curtfire77]

All interesting takes… I’ve had an LLC before because I owned my own 18 wheeler. So the money aspect and taxes were far more than having a drone for side jobs as I don’t even know how much I will get into

 

[ifr]

I'll start with saying I'm not an attorney. You may want to consult one. If you are going to do any kind of business with your drone, it is, in my opinion, a good thing to have a legally recognized structure - even if it is only a sole proprietorship. I have had an S-Corp since 1996. A C-Corp is double taxed - as an entity itself and the owners are also taxed on the profits or dividends they take. If an LLC had been available then I would have chosen that, as the tax paperwork is a bit simpler.

Add to that the possibility of writing off some expenses incurred while you fly, you have some personal benefits at tax time as well. All that said, you don't have to do it. These are just reasons I have found to be advantageous to me.

 

[vindibona1]

I'll start with saying I'm not an attorney. You may want to consult one. If you are going to do any kind of business with your drone, it is, in my opinion, a good thing to have a legally recognized structure - even if it is only a sole proprietorship. I have had an S-Corp since 1996. A C-Corp is double taxed - as an entity itself and the owners are also taxed on the profits or dividends they take. If an LLC had been available then I would have chosen that, as the tax paperwork is a bit simpler.

Add to that the possibility of writing off some expenses incurred while you fly, you have some personal benefits at tax time as well. All that said, you don't have to do it. These are just reasons I have found to be advantageous to me.

I agree with pretty much everything above, except that I think that an accountant might have better advice than an attorney. CPA's know well how business liabilities work and the associated costs of accounting. Lawyers (IMO) are better with contract issues.

LLC's are often a good option if you are independent and will have no full time or part time employees. Over 30 years with business models changing with the times I have never once been advised to be an LLC, but in some situations it might be ideal. JMO

As far as C-Corps go, yes, not only can you be double taxed, but might have to pay double accounting fees because of all the separate paperwork required. Not to get too far off the reservation, I cringe every time I hear someone preaching that corporations (or rich folks) must "pay their "FAIR SHARE". They fail to realize that corporations, if they show limited income after paying expenses, salaries and dividends that those distributed salaries and dividends are taxed separately on their own including social security and Medicare premiums and just outright capital gains tax. Any profit laying in the corp's account gets taxed separately. And you'll note that nobody calling for folks to pay their "fair share" have a maximum percentage of earnings in mind, some perfectly fine taking 100% of earnings, should an entity make "too much".

 

[ifr]

I actually don't disagree. An accountant is better equipped to talk about various structures and their implications I have used CPAs in this way for years. Well said.

 

[Dbez1]

Does anyone know if Drone services are subject to sales tax?

They are in PA.

 

[ifr]

You'll need to consult your state tax code. Some services in Utah were not taxable in Utah, but regulations shift all the time. I often just called the tax division and asked them - usually very helpful.