Deciding Where to Set Up Shop as a Working Photographer
The ideal location for your photography business depends on the type of services you’re going to provide, how much equipment and cash you have to start with, and what your goals are. Basically, your two choices are being homebased or setting up in a commercial location.
Home sweet studio
One of the key benefits of a homebased business is that it significantly reduces the amount of startup and initial operating capital you’ll need. But there’s more to consider than simply the upfront cash. You need to be conveniently located so clients can find you and so you can get to them -- or other places you need to go -- without too much travel time.
Also consider your home from a capacity perspective. Do you have a separate room available for your business, or will you have to do paperwork on a corner of the dining room table? Do you have adequate storage for equipment and supplies? Many homebased photographers say that having enough (climate-controlled) storage space is one of their biggest challenges.
The ideal situation for the homebased photographer is to set aside a room (or rooms) exclusively for business use. To take the home office deduction on your taxes, the IRS requires that you have at least one room that’s dedicated solely to your business. If you’re only using part of a room or if your office doubles as a den or guest room, a home office deduction may not survive an IRS audit. Discuss this with your accountant before proceeding.
You can also deduct directly related expenses, which are those that benefit only the business part of your home, and a portion of indirect expenses, which are the costs involved in keeping up and running your entire home. For example, your office furniture, computer(s) and photography equipment are fully deductible as directly related expenses.
In the area of indirect expenses, you may deduct a portion of your household utilities and services (electric, gas, water, sewage, trash collection, etc.) based on the percentage of use for business purposes. This also includes your internet service, especially if you regularly communicate with customers via email, operate a company website or use cloud-based services to manage, backup and archive your digital photo library.
Other examples of indirect expenses include real estate taxes, deductible mortgage interest, casualty losses, rent, insurance, repairs, security systems and depreciation. You can also deduct other expenses -- camera equipment, related photography gear, inventory, storage, supplies, automobile, marketing, etc. -- that are legitimate costs associated with doing business. All that said, keep in mind that the Tax Cuts and Jobs Act (TCJA) that went into effect in 2018 may change how some of these deductions can impact your business’s bottom line. For the latest on how the new tax code affects small-business owners, visit www.irs.gov/tax-reform.
Choosing a commercial location
If you don’t have adequate space at home, or if you’re unable to set up your business because of zoning or other restrictions, you’ll need to buy or lease office and/or studio space. Before investing in a commercial facility, be sure the surrounding market is favorable for the studio you envision and the location is consistent with your style and image. Consider these questions:
- Will your clients be comfortable coming there?
- Is the facility accessible to people with disabilities?
- If you’re on a busy street, how easy is it for cars to get in and out of the parking lot?
- If you’re in a multitenant building, are there specific days and hours of service and access?
- Are the heating and cooling systems left on or turned off at night and on weekends?
- If you don’t have your own entrance, are there periods when the exterior doors are locked, and if so, will you have keys?
If this is your first venture into leasing property, you may initially find yourself a bit overwhelmed. Just follow a few simple guidelines as you negotiate a lease. First, you need to understand what the lease documents say. If you’re having trouble deciphering the lingo, talk to a Realtor or hire an attorney. Second, you need to know exactly what you want out of this transaction before going to the table. A long, drawn-out negotiation process could kill a deal. Third, you need to be reasonable with your demands. You might be surprised at what you can get if you ask nicely. The initial lease is just a starting point. Following are the lease items that are subject to negotiation:
- Start of rent and lease amount (include anticipated increases)
- Length of lease
- Termination clause
- Configuration of the physical space
- Tenant improvements
- Tenant’s rights and exposures
- Common area maintenance costs
- Construction allowance (use if you need to do a substantial amount of work to prepare the space for occupancy)
- Subleases and assignments (important if you are going to share space or need to get out of the lease early)
Before you sign a lease, make sure you’ve considered everything. How many rent increases have there been during the past three years? How old is the roof? Find out if there are any anticipated repairs coming up in the near future. The more you know, the less risk you will have.
Another option to consider is sharing a studio with one or two other photographers. The biggest advantage is reducing your rent to help you project the image of a professional operation at a more affordable cost. You’ll need to work out a written agreement to make sure everyone has a clear understanding of what’s expected from each party. You should address the following:
- What days and times will each photographer have use of the studio?
- Will you share an assistant or have your own employees?
- Will you share some of the equipment?
- How will maintenance and cleaning responsibilities be divvied up? (A better alternative may be to outsource those duties.)
- What type of termination clause will you have in the event one of you splits before the end of the lease?