Payment methods

I take it you've registered your business with the IRS and took care of all the legalities of running a business for money. Otherwise, pretty much any payment method other than cash is traceable and can land you in a pretty pickle as it's illegal (but then again, so is accepting cash without a proper receipt). But, if you're registered properly, you can use any method you want.

I don't do albums (specifically) but I usually get paid through Bank transfers.

Paypal is where it's at IMO. Clients can link it to most forms of payment, and it's safe.

Paypal work with many of us; but one really needs a to have a way to accept plain old credit cards too.

There is a subset of folks who hate paypal. Some are scared of using it; thus unless you have a way to accept credit cards you loose these customers.

Thanks guys! Very helpful.
One more thing: do I register as self-employed or business? It'll be just me, but I'm gonna register a DBA and create a brand for my services.

One more thing: do I register as self-employed or business? It'll be just me, but I'm gonna register a DBA and create a brand for my services.

My comments relate to federal tax (IRS) -- first, decide what business form you want to have (self-employed, partnership, LLC, Corp.). You may wish to seek expert advice. Assuming you decide on self-employed (i.e., sole proprietor) call the IRS or go online and apply for an EIN number (tax ID). As a sole proprietor, you do not need an EIN (unless you have employees), but it can make life easier by not having to provide your social security number for business transactions. Also, there is no cost to obtain an EIN. If you apply online, be sure you are at irs.gov and not irs.com. If there is a fee, you are on the wrong site.
Good luck.

Re "but it can make life easier by not having to provide your social security number for business transactions."

****Starting in 2012****;

if one pays out more than 600 dollars during the year to a person or company; you have have to send them a 1099. This a a total of 600 for all ones dealings. ie the summation.

Thus you will be giving out your Social Security number if you are a sole proprietor.

Thus if you buy 610 dollars through out 2012 to Acme Photo for film; paper; inkjet *you* send them a 1099. This means if Acme Photo is right across the street; you still have to keep a running total of all your payouts to Acme for the year; and send them a 1099 IRS form. This 1099 form has either your SS number or Employer ID number and whom you paid that 610 dollars too. It is filled with the IRS so they can crack down on unreported funds; it is the raw data to increase tax collection.

Thus if a simple business if one had 35 invoices from Acme for purchases; at the end of 2012 one has to add them up and send Acme a 1099 with the grand total of 610 dollars; and also send that 1099 info to the IRS; all tied to your SS number or businesses Federal ID number. This was added as part of the Health Care package; what folks were excited about passing. The added burden of paperwork was brought up; but quashed. Here in my business; it will be more a lot more work. It basically means one has to keep a running total through out 2012 all ones vendors; to see it the total breaches 600 dollars.

If I buy a 300 and a 350 dollar lens from Bubbas Cameras on Ebay; you have to add up all 2012's purchases to them; and send them a 1099 with *your* social security number. You have to do this no matter if paid by cash; check; visa, paypay; or pennies. It really means that one is having to ask for every person or company you pay out funds to; for their SS number or Tax ID number.

For example; one giant copy machine here has its 4 pack of toner costing 275 dollars from my Ebay vendor. If I buy one in Jan 2012; I will have to get their SS number since I typically buy about 3 to 4 wads per year. If I only bought two from him by Oct 2012 and their total is 275x2=550; they are still under the 600 limit. But if I buy one on Dec 31,2012; the running total breaches 600 bucks. As a practical matter many of us are with recuring purchases just having to get folks SS numbers at the start of 2012; and keep a program/spread sheet/log book by SS or Federal ID number. Since my business buys more than 600 bucks per year from Walmart`; I will have to add up all those tiny receipts and keep a running total.

As a practical matter many small business are still pondering how to keep track of all this info to generate those 1099 forms. For me I think it will be more like 1984; anybody we pay money to will be in this matrix by SS or Federal ID number; with the days payouts added to those SS numbers so the end of the 2012 year is not a nightmare of paperwork; or asking folks for their SS number because a purchase made on Christmas eve just pushed the total over 600 bucks.

***Carol;

This also means that if in 2012 that a clients Album cover(s) you designed for Acme Records; Acme will be keeping a log on the sum of the money paid to you for all of 2012. Thus if Acme paid you 3 times for 300, 500, and 1200 dollars; you will get a 1099 form from Acme Records in Jan 2013 for 2000 dollars; whether you like it or not. The IRS then will look at your Income taxes for the 2012 year; to see if that 2000 dollars gets reported.

Photo.net is really about photography.

Thus you need to talk to a tax adviser in the US state where your business is going to be.

Somebody here on photo.net can pop in and say do NOT worry about 2012's quagmire with 1099 forms; BUT the IRS still is going to do what they want to. The person who here on photo.net gave you bad advice will not be there for you when you get audited by the IRS.

Thus Talking to a tax adviser in your state where you live is recommended.

A good one will prevent tax issues.

Each state has different rules; that is their area they know.

Thanks so much for your the extensive responses. This greatly benefits newbies to the business like me. :)

Kelly, not sure if your response was directed at me, or if you were just rambling. For the record, there is nothing incorrect in the response I posted. Your extensive response (informative, by the way) deals with 2012. Keep in mind, congress passed a law. Now, the IRS must produce rules and regulations that follow the law. However, during this process, things change. So, until 2012, nothing has changed.
Also, not sure why you quoted from my response. Are you saying that even if I have an EIN for my sole proprietorship, I would still have to provide my SSN? Doubtful. There is no benefit to the IRS for such a requirement.

And, this is exactly why I stated that one should get advice from a professional, not some stranger on the internet.
BTW, what is your source for the above? I would like to research for myself. You have me curious as to the extent of the reporting requirements. Thanks.
-Doug (former IRS Agent)

There really should be more information available here on PN about the fundamentals of establishing a business in the US. The OP appears to unaware of the requirements for identifying her business to Federal, State and local governments for the purpose of establishing herself for proper licensing and tax reporting.

Whereas anyone can establish a Paypal account with an email address and a bank account, credit card processing companies will require you to present valid license and tax documents to establish an account. Only businesses can accept credit cards.

The concern for IRS 1099 reporting rules leads to the acquisition of a professional business bookkeeping system. The point is to do proper record keeping throughout 2012 to prepare yourself for meeting the reporting requirement in January 2013. Businesses that use CPA services will have this task done for them. Well-established software systems are available for business owners who prefer to maintain their own books. You can be sure that the software developer will keep such a system will up to date with current law and business practice. You need dependable business systems to manage information about your activities and finances anyway.