LET’S SAY A CLIENT HIRES
you to shoot an assignment.
When it comes time to pay,
the client writes you a check
and addresses it to you—your
personal name. You cash it.
In taking these simple
steps, you’ve accidentally
established your business as a
sole proprietorship: For all legal
intents and purposes, you are
the business. This is trouble.
It means that if your business is
sued for any reason—copyright
infringement, invasion of privacy,
or even simple breach of contract—
then you are on the hook. Any
asset you own could be taken,
including your house, your
equipment and your personal
Now, the law thinks this is
bad. The law wants you to start
businesses and follow your
aspirations, and fewer people
will turn entrepreneur if they’re
afraid of losing all their money.
And so we have limited-liability
corporations, or LLCs.
If you like, you can think of an
LLC as being like an imaginary
friend, who is also your boss.
You dream up an invisible,
intangible person, give them a
name—let’s call ours Bob, LLC—
and give them a purpose. In this
case, that purpose is running
a business, and you give “Bob”
all the money you would spend
on that purpose. When you are
running your business—making
a product, keeping your books,
working for Bob. He owns the
company, in a sense, which
is good because it means he’s
protecting you, just like a real
Bob has two jobs. The first is
to hold the business’s money and
other assets, and so all the money
and equipment you use in your
business will be held in Bob’s
name. But the second job is more
important: Bob takes the blame.
If you do anything wrong while
you are operating your business,
Bob gets sued, not you; and if Bob
loses, Bob pays the judgment.
Like a good boss, he protects his
employees by taking the bullet,
and keeping your assets safe.
If you do something wrong while
running the business, only the
business’s assets can be taken.
This is really the whole
point of any corporation.
Corporations aren’t just an easy
way to organize people into
working together; they’re also
a way to protect those people’s
personal assets. An LLC is much
like a regular corporation such
as GM or Google, but smaller
and simpler, and often owned
by just one person. In order to
form a corporation, the owners
have to go through some pretty
elaborate paperwork as well as
obey complicated rules and pay
special taxes, and for this reason,
corporations are usually much
larger affairs than a simple LLC—
an imaginary boss to hundreds
or thousands of people, rather
than just a few. That is why a
photographer is generally better
off creating an LLC rather than
So, which is best for you and
your photography business?
The answer depends entirely
on you and how you want to run
Most photographers will
fall somewhere in the middle
between a sole proprietorship
and a corporation. You’re
not trying to start the next
Google, but neither do you
want a haphazard business
whose assets are mingled and
indistinguishable from your own.
You want a liability shield, but
you also want the freedom to
move your money around as
you see fit, and you don’t want
all the hassle, paperwork and
formal procedures required by a
corporation. If this is the case,
an LLC may be best for you.
To start, an LLC is done by
filing the proper paperwork,
called the Articles of
Organization, with the state in
which your business is located.
Each state will have its own
process for filing the proper
paperwork, and you can learn
more about your state’s process
by going to your Secretary of
Remember that LLCs have
special taxation rules. Once you
form an LLC to protect your
business, don’t be shy about
talking to a certified public
accountant to make sure that Bob
is paying his taxes. Bob certainly
won’t pay them without your
help, because, being a legal
fiction, he doesn’t have hands.
ShouLd You operate
Your BuSineSS aS an LLc?
Attorney Aaron M. Arce Stark on how LLCs work,
and how they could protect your personal assets
if your business gets sued.
Aaron M. Arce Stark is a lawyer for the artist and entrepreneur.
His law firm is Arce Stark Law LLC, arcestarklaw.com. This article is
for informational purposes only. It is not intended and should not be
construed as legal advice. Contact a lawyer about legal issues.
“YOU WANT A LIABILITY SHIELD, BUT YOU
ALSO WANT THE FREEDOM TO MOVE YOUR
MONEY AROUND AS YOU SEE FIT, AND YOU
DON’T WANT ALL THE HASSLE, PAPERWORK
AND FORMAL PROCEDURES REQUIRED BY
A CORPORATION. IF THIS IS THE CASE,
AN LLC MAY BE BEST FOR YOU.”
— aaron M. arce Stark