When Does Your Photography Become a Legal Business?

On a recent episode of a popular photography podcast, the listener asked a question about turning his photography into a legal business. He said right now he was just earning money but wanted to convert to a legal business. It’s an interesting question, and one I am sure many entrepreneurial photographers ask.

I wanted to provide my own answer to this question, based on years of freelance and business experience. Please bear in mind this answer comes from my own personal experiences in this matter. I am not a lawyer. This answer is also based on the laws of Canada, but I would expect their similar in the US and other similar countries.

There is a short answer; and a longer explanation.

Relating back to the listener’s question, he has no need to convert his business into a legal business. He’s already operating one. That’s the short answer.

Here’s the explanation as I understand it. The moment a person accepts a payment for services rendered (like photography), that money is considered by the Canada Revenue Agency as self-employment income. It must be declared on an annual personal income tax report, and you will be expected to pay all taxes due on that money earned. You are operating a legal business under your personal name. Under Canadian law, you must also collect and remit sales taxes once your gross annual revenue exceeds $30,000 in a calendar year.

If you’re a photographer and you accept money for services, you’re in business. If you receive more than $30,000 per year in revenue, you’d better be charging sales tax on your services and remitting the collected funds to the government.

So, if the listener was operating in Canada, his question is moot.

Now, let’s assume for a moment the listener was asking a slightly different question. Perhaps he is considering registering a business name for his photography and equates that with converting to a legal business. The question then becomes at what point do I register a name for my business?

The answer to this question is whenever you are ready. It’s a simple process if you only intend to operate as a sole proprietorship. This is sometimes also referred to as a trade name.

The important thing to keep in mind is when you convert from earning money in your own name to learning money under a sole proprietorship (or trade name), the status of your business doesn’t change. You’re still a self-employed individual. You’ll be required to claim all business income(or loss) on your personal income tax and you’ll be responsible to remit any taxes due at the end of the year.

Let’s look at a simplified example:

A nice guy by the name of Steve has a camera. A friend (we’ll call him Fred) takes a liking to the photographs Steve creates and asks him to pop over on Saturday to take some pictures at his kid’s birthday party. Fred offer’s Steve $100 for his time. Steve accepts.

Steve is now a business owner and has landed his first client. He’ll have to claim the $100 on his personal income tax report as self-employment income.

Notice there was no official business registration process. Steve went from ‘guy-with-a-camera’ to ‘photography business owner’ in the amount of time it took for the money to change hands.

Our story continues as other parents who met Steve at the party called to request his services at their kid’s events. Steve is building a reputation as a solid and reliable birthday party photographer. He increases his rates and adds more booking to his calendar. Steve begins to think about taking his photography business more seriously and maybe even setting up a website.

He decides to register ‘Steve’s Party Photography’ as a business name with his provincial government. Steve now has the ability to start conducting business as the sole proprietor of Steve’s Party Photography.

The important thing to keep in mind is all the profit (or loss) from ‘Steve’s Party Photography’ will need to be claimed on Steve’s personal income tax report. If you’re collecting money in return for photography services, you’re already operating a legal business. Choosing to operate under a trade name is a completely optional step, but one that most entrepreneurial photographers choose to take.

What is the Exposure Triangle and How Does It Work?

When it comes to photography, light is everything. After all, a photograph is nothing more than light captured on a medium (film or digital sensor). Controlling the amount of light that reaches your camera’s sensor is key to getting the right photograph. There are three camera settings related to exposure, the aperture, shutter speed, and ISO.

Together, they form the Exposure Triangle.

When the settings are right, the correct amount of light reaches the sensor and the photograph is considered properly exposed. If too little light reaches the sensor, the resulting image will appear too dark. This is referred to as underexposed. Overexposure occurs when too much light reaches the sensor and the image appears too light.

Modern cameras usually have an automatic mode where the camera evaluates the scene and makes the proper adjustments to the camera settings for the best exposure.

This shot was taken with my Nikon D5100 in automatic mode. The camera chose an aperture of F/5.6, a shutter speed of 1/125th of a second and ISO200 for this shot. As you can see, it’s a well-exposed photograph.

Now let’s examine what happens to the same photo as we switch to manual mode and begin adjusting the same three camera settings.

Exposure Triangle: Aperture

Aperture controls the amount of light passing through the lens. The smaller the number, the wider the aperture. The wider the aperture, the more light the lens allows to reach the sensor. Aperture is measured in F-stops. Each full-stop reduction in aperture (F-number gets larger) means a 50% reduction in light. A full-stop increase in aperture (F-number gets smaller) means double the amount of light comes through. An F/4 aperture allows in double the light of an F/8. An F/16 allows 50% less light through than F/11.

I switched my D5100 to manual mode and dialed in the same settings chosen by the camera in automatic mode. I then took a sequence of photos, narrowing the lens aperture by one full-stop between shots. We went from an aperture of F/5.6 on the first frame to F/8 in the second. You can see the resulting image is darker. The aperture was one stop smaller so 50% less light reached the sensor.

Narrowing down again from F/8 to F11 resulted in even less light with another 50% drop. These resulting 50% drops in light are referred to as stops of light. So from F/5.6 to F/11, we’ve lost a total of two stops of light. Drop to F/16 and now we’ve lost three stops of light.

Quick Tip: Narrowing aperture by one stop reduces light by half. Increasing aperture by one stop doubles the light.

READ MORE: Aperture and Depth of Field

Exposure Triangle: Shutter Speed

Shutter speed is a measurement in seconds of the amount of time the camera shutter opens, exposing the sensor to the light passing through the lens. A shorter duration allows less light. This is known as a faster shutter speed. A slower shutter speed will keep the sensor exposed longer, generating a brighter image. A 1/125th-second shutter will allow more light to reach the sensor than a 1/250th second. A 1/1000th shutter will allow less light than a 1/500th.

I repeated the same process as above, but this time I left the aperture and ISO settings alone and only adjusted the shutter speeds. The 1/250th shutter speed gave us a darker image than the 1/125th, which makes sense. The shutter was open for half as long, meaning half as much light reached the sensor. Just like narrowing the aperture one stop results in a 50% reduction in light, doubling the shutter speed also results in 50% less light. Increasing from 1/500th of a second to 1/1000th of a second likewise causes a 50% reduction in light on the sensor (one stop of light).

If we look at this photo from right to left, we see slowing down the shutter from 1/250th of a second to 1/125th results in twice as much light getting through because the shutter is open twice as long. The resulting image will be brighter.

Quick Tip: Increasing shutter speed one stop reduces light by half. Decreasing shutter speed by one stop doubles the light.

READ MORE: Shutter Speed and Controlling Motion

Exposure Triangle: ISO

The third point on the exposure triangle is ISO. This is a measurement of the ‘sensitivity’ of the camera to light. If you remember buying film for a camera, you’ll remember you had to buy film that has an ISO rating that matched you shooting environment. You used an ISO200 film for outdoor shooting and ISO800 film for indoor photos.

Once again the shutter speed and aperture are dialed in to match the automatic shot. I increased the ISO one full stop between exposures and you can see the results. Each full stop increase in ISO makes the image brighter. Moving from ISO400 to ISO800 results in an image that twice as bright. Moving down from ISO400 to ISO200 means the image is 50% darker.

While ISO is an algorithm the camera uses to alter the brightness of the photo, I found it helpful to think about ISO as changing how ‘sensitive’ the camera is to light. A lower ISO means the camera is less ‘sensitive’ and a higher ISO means the camera is more ‘sensitive’.

While the actual sensitivity of the camera doesn’t change, this thinking still helped me to understand what was happening to my images as I adjust the ISO.

Quick Tip: Increasing ISO makes the camera twice as ‘sensitive’ to light. Lowering ISO makes the camera half as ‘sensitive’.

READ MORE: ISO and Noise

Dialing In the Proper Exposure

We’ve explored the effects of aperture, shutter speed and ISO on the exposure of our photographs. Moving a setting up or down one full stop has a resulting increase or decrease on the amount of light that reaches our sensor, or the sensitivity of the sensor to that light in the case of ISO.

What’s most important to note is we can compensate for the stop of light lost or gained by adjusting another setting in the opposite direction.

Let’s say we need to narrow down our aperture one stop to increase our depth of field. We’ll lose 50% of our light. We can compensate for that drop by slowing the shutter speed by one stop or by increasing the ISO by a one stop. Either one of those changes will allow us to recapture the lost light.

Without text, the image looks nearly identical to the reference image, but it is the same style compilation as the other examples. Four separate frames, each taken with different camera settings. I started with the reference settings of F/5.6, 1/125th, and ISO200; then made a drastic 3-stop change to one of the settings. The change was compensated for by an equal, but opposite, change in another setting. The result is the same proper exposure.

In the second frame, I narrowed the aperture by 3 stops, which as we know from the above example would result in a substantially darker image. However, I compensated for the loss of light by slowing the shutter speed by 3 stops. This allowed me to regain the lost light by keeping the shutter open longer and properly exposing the image.

The third frame shows the result of a 3-stop increase in shutter speed, from 1/125th to 1/1000th, and a 3-stop bump to ISO 1600 to compensate. The faster shutter reduced the light available to the sensor, but the ISO bump increased the sensitivity of the sensor to the available light.

The last frame I stop down to F/16 and increase to ISO 1600. All three frames are equally exposed, despite the drastically different settings.

Quick Tip: Boosting ISO too high will result in noise in your photos. ISO should be the last adjustment you make and only if aperture and shutter change isn’t enough.

Putting it All Together

Know that we understand how to manually dial in the exposure settings, the obvious question is why bother? If our camera can automatically detect the best settings for the situation, why learn the exposure triangle at all?

I would say because the camera might make a mistake and that may be true. But as a beginning photographer, your camera will nail the proper exposure more often than you will. It’s also a good idea to understand what your camera is doing to get the best exposure when it’s in automatic mode.

However, there’s a lot more to the aperture, shutter speed, and ISO than proper exposure. This is the real reason why you need to understand the exposure triangle. You’ll soon want to step out from the automatic mode and start creating more artistic photographs and you’re camera won’t be able to choose the proper settings. Aperture and shutter speed control different artistic elements of your photograph and your camera’s automatic setting has zero artistic ability.

Aperture controls the depth of field and determines which parts of your photograph are in focus. Shutter speed affects how motion is displayed in your photos. Adjusting both can lead to interesting artistic effects such as blurring the background of a portrait, or creating star trails at night.

Quick Tip: ISO is only for low light compensation unless you consider digital noise to be an artistic element.

For more details on each of these exposure triangle settings and their effects on your photographs, check out these articles:

How Would Your Business Spend a $3,700 Gear Budget

An opportunity recently presented itself to expand my photography business into another market, At the moment, my photography serves as a value-add to my freelance writing projects, and while it does a great job of increasing the value of my deliverables, I’ve always had a desire to expand my photography services beyond their current situation.

The new opportunity involves one of my other business ventures and would require event photography. Mostly business networking events, conferences, training and other related professional functions. We had briefly considered hiring a photographer to work with us on this project, but I can’t pass up an opportunity. Two birds with one stone, if you catch my meaning.

This type of photography would be a considerable departure from my current projects as far as shooting environment is concerned. Right now, my work is almost entirely outdoors in natural light, but corporate event photography will move me inside, to poorly lit meeting rooms, dim networking venues and various forms of artificial light. For this project to be a success, a gear upgrade will be required.

I currently shoot with a Canon 7D (yes, the first one) and have a small selection of lenses I use for different purposes. A Sigma 10-20mm F/3.5 for interior shots of boats and RVs. A Canon 70-300mm F/4-5.6 for long shots of running boats and a 50mm F/1.8 for the occasional grip and smile shot. While this gear suits me well for my current projects, none of these lenses, except the 50mm, is well-suited to the indoor shooting I’ll be doing.

The upgrade will need to consist of a minimum of a 24-70mm and a 70-200mm lens. Both are standard fare for any event shooter. F/2.8 would be ideal, but I’m a business owner first, and a photographer second, so F/4 may be a more suitable investment. The Canon F/4 lenses are about 40-45% cheaper than their F/2.8 counterparts. Deciding which to choose, like many business decisions, comes down to a math equation.

Assuming my business has a $3,700 budget for the needed upgrades, let’s grab some prices from the B&H website:

  • Canon EF 24-70mm f/2.8L II USM Lens: $1,600
  • Canon EF 24-70mm f/4L IS USM Lens: $900
  • Canon EF 70-200mm f/2.8L IS III USM Lens: $2,100
  • Canon EF 70-200mm f/4L IS II USM Lens: $1,300

As you can see, on the 24-70mm, opting for the F/4 version saves $700. On the 70-200mm, I hang on to $800 by foregoing the F/2.8. Choosing the F/4 over the F/2.8 will save $1,500. Seems like a no-brainer for a cash-strapped small business owner, but there’s another problem…

Both lenses are designed for a full-frame sensor. They will fit on my Canon 7D, but because it has an APS-C sensor, the focal lengths of these lenses will be increased by a factor 1.6. The 24-70mm would become a 38-112mm and the larger lens would work out at 112-320mm. Not ideal focal lengths for event photography, but passable, except for a second issue…

By losing the one stop of maximum aperture, I need to make that up at another point in the exposure triangle. I could adjust the shutter speed, but given the poor lighting conditions I may encounter, I’ll be keeping the shutter speed at the absolute slowest setting possible to avoid motion blur. Stopping it down won’t be an option very often.

The other adjustment I can get to retrieve my lost stop of aperture is to bump the ISO by an equivalent stop. For example, if I can get a proper exposure at ISO1600 with the F/2.8, I’ll need to stop up to ISO3200 to get the same exposure with the F/4 glass. I know this will produce more noise in my images, but this will likely be the only viable solution in most situations if I opt for the F/4 lenses.

So, to summarize the problem, is it worth an extra $1,500 to reduce noise in my images by one full stop?

Absolutely not! $1,500 for a single small benefit is an unwise investment for a business owner. I’m here to make a profit on my corporate event photography, not tie up valuable cash flow inexpensive assets I don’t need. I’m not shooting weddings or other intimate events that involve a lifetime of happy memories.

However, perhaps there’s a more elegant solution here. If there was a way to invest the extra $1,500 so I regain my stop of light along with some other benefits, then it would be worth considering.

What if I invested the $1,500 into a full-frame camera body to replace the aging 7D?

Stepping up to a full-frame sensor would mean cleaner images at the necessarily higher ISO setting. A newer body would also bring many other benefits that would offset the $1,500 premium.

Let’s stick with Canon for a moment for an apple to apple comparison. What if I pulled together another $100 and dropped $1,600 on a brand-new Canon 6D Mark II, or even a slightly used model if I can’t find extra $100?

What extra benefits would that net me?

I love my 7D. It has fast autofocus and takes great photos, but it does have a few shortcomings.

The biggest one I ran into was with video. I don’t shoot video often, but even with my limited need, I found the 7D inadequate for the task. It’ will do 1080p at 30fps, but it lacks any ability to autofocus during recording. If the subject is moving, like a boat (or a person at an event), I’m not going to have much luck getting usable video.

The 6D Mark II fixes this extremely well. Not only will it do 1080p at 60fps, but it’s also equipped with Canon’s Dual-Pixel AF and a Vari-Angle touchscreen. That’s a massive upgrade over the 7D.

The other disadvantage of the 7D is CompactFlash memory. That stuff is expensive and obsolete. My laptop has an SD card reader, not a CF slot. I don’t want to mess around with a card reader, or even worse, a USB cable to the 7D. The 6D Mark II would solve this issue as well.

The new body would also give us goodies like Wi-Fi, Bluetooth, NFC and an upgraded 26.2-megapixel sensor adding even more value to my investment. But the biggest benefit to the new body is I would then have a capable backup in the 7D should the 6D fail during an event.

Here’s the $3,700 bottom line:

Option 1: A pair of F/2.8 lenses with a capable, but ten-year-old APS-C body?

Option 2: A pair of F/4 lenses and a brand-new full-frame body for an extra $100?

Your money and your business may lead you to a different decision, but for my business and my money, it’s F/4 lenses and a new full-frame body.

I am sure that more than one of you are disagreeing with my entire thought process and screaming that F/2.8 is the only option for a pro event shooter. You may be right. That’s why there’s a comment section down below. Agree or disagree? Sound off and let me know what choice you would make and why?

Perhaps you can change my mind!