THE ESSENTIAL LEGAL WORKFLOW

THE ESSENTIAL LEGAL WORKFLOW
BROUGHT TO YOU BY
Licensed Music courtesy of:
What You can Expect to Learn






How to create a business entity
Employees and subcontractors – (the
good, the bad and the ugly)
How to draft an airtight contract your client
will love – and sign!
Everything you ever wanted to know about
Copyright (and more)
What happens when you don’t get a model
release
How to protect your personal assets
Tweet Me and win Fantastic Paper



#applestudios
#wppi12
Tweet one thing
you’ve learned that
will change the way
you approach your
business
e.g. “I learned from
Craig Heidemann that
photographers have
to collect sales tax
#applestudios
#wppi12”
Want to win $1,649 worth of stuff?
Enough about you….
A Question:
Get your head in the game
SITUATIONAL AWARENESS

Wiki says:
 Situation awareness (SA) involves being
aware of what is happening around you to
understand how information, events, and
your own actions will impact your goals and
objectives, both now and in the near future.
Getting legal
Who am I and where am I going?
SETTING IT UP RIGHT
BUSINESS ORGANIZATIONS

LLC (Limited Liability Company)
 Simple and effective

Corporation
 Headache
S Corporation (is a corporation)
 Partnership
 Sole Proprietorship

 Danger
Giving Birth to Your Business
Setting it up Right









Pick Your Entity Type
Do a trademark search on your name
Get your local business license
Get your zoning verified
Get a Federal Tax ID # (no SS#’s please)
Get a State Tax ID #
Get a Sales Tax #
Register to pay property tax
Buy your domain name (and variations)
I am a business – not a hobby
STAYING LEGAL


Calendar tax deadlines and meet them
Run it like a business
 Business assets are not personal
 Business accounts are not personal

Get a CPA & a lawyer ASAP
 We all need a little professional help
 Love thy accountant


If you don’t have a receipt, don’t deduct it
Know the Hobby Loss Rules
Hobby Loss Rules
STAYING LEGAL


The IRS does not care if it doesn’t feel like a
hobby to you!!
There’s complicated tests. Know them.
 Active participation – 500 hrs
 Profit 2/3 years
 Basis and at risk rules


General rule: “Hobby losses deductible only
to the extent of hobby gains”
HOBBY = BAD FOR DEDUCTIONS
Hobby or Business?

In order to make this determination, taxpayers should
consider the following factors:
 Does the time and effort put into the activity indicate an intention







to make a profit?
Does the taxpayer depend on income from the activity?
If there are losses, are they due to circumstances beyond the
taxpayer’s control or did they occur in the start-up phase of the
business?
Has the taxpayer changed methods of operation to improve
profitability?
Does the taxpayer or his/her advisors have the knowledge
needed to carry on the activity as a successful business?
Has the taxpayer made a profit in similar activities in the past?
Does the activity make a profit in some years?
Can the taxpayer expect to make a profit in the future from the
appreciation of assets used in the activity?
What does the IRS Say?

The IRS presumes that an activity is
carried on for profit if it makes a profit
during at least three of the last five tax
years, including the current.
A quick word about….
Basic Concepts
Income
 Deductions

 Expenses
 Depreciation
Taxable Income
 Withholding Tax
 Self Employment Tax

Can I deduct it?

ARE YOU A HOBBY OR ARE YOU A
BUSINESS?

In general, taxpayers may deduct ordinary and
necessary expenses for conducting a trade or
business. An ordinary expense is an expense
that is common and accepted in the taxpayer’s
trade or business. A necessary expense is one
that is appropriate for the business. Generally,
an activity qualifies as a business if it is carried
on with the reasonable expectation of earning
a profit.
Common Deductions

















Lab charges
travel,
new equipment,
office and phone,
rent,
software,
Web site, and other promotional items
Book, magazines, reference material
Business insurance
Local Business License Fees
Business meals and entertainment
Credit card processing fees
Cabs, subways, buses
Equipment
Film developing/processing
Film supplies
Gas and electric


















Internet/web site (business portion only)
Legal and professional fees
Memberships (professional organizations)
Messengers, private mail carriers, postage
Mortgage interest/taxes
Office supplies
Promotion
Props
Seminars and workshops
Software
Staff fees
Studio rent
Studio supplies
Stylists/makeup
Tax preparation
Telephone
Travel
Website hosting fees
The Joy of:
Self Employment Tax
STAYING LEGAL

You are self-employed if any of the
following apply to you:
 You carry on a trade or business as a sole
proprietor or an independent contractor.
 You are a member of a partnership that carries
on a trade or business.
 You are otherwise in business for yourself.

You get to pay a 15.3% tax in 2012 on the
first $110,100 of your income
Self Employment Tax
STAYING LEGAL
It’s a pay as you go tax
 IRS does not care if you used your self
employment tax to pay your album
company
 IRS does not care if you used your
withholding to pay your album company
 State does not care if you used your sales
tax receipts to pay your album company
(or the bank)

Tax Time
STAYING LEGAL





Tax d/l varies by entity and fiscal year
1099 (to everyone over $600 by d/l)
W-4 and W-2 (by d/l)
State filing requirements
Excise Tax requirements
I Want To Sell You My Work
A Quick Summary If You’re Just Waking Up
7 Common Mistakes









1. Not collecting state sales tax
2. Misclassifying employees as independent
contractors
3. Not saving receipts – no evidence, no deduction
4. Not paying self-employment tax
5. Improper use of home office deduction
6. Writing off full cost of meals and entertainment
7. Being disorganized
8. Using the EZ tax form (doesn't let you maximize
deductions)
9. Hobby Loss rules
Getting legal
Let’s take a quiz:
Do you know the answer?











When is my income tax return due?
When is my self-employment installment due?
When is my fed withholding due?
When do I have to mail out W-2’s?
When do I have file my W-3?
When do I have to send out 1099’s?
When do I have to file my 1096?
When do I have to pay my federal unemployment?
When do I have to pay my state unemployment?
When do I have to pay my state use tax?
When is my business personal property tax due?
You can’t afford not to
The good news is…you don’t’ have to know
A Legal Moment by:
$150 in Wall Art or
$150 Lay Flat Album
Protecting yourself and managing client expectations
If it involves more money than you can afford to light on fire……
Your Contractual Relationship with the Clients
Sell with Right Brain while
Thinking with Left Brain
Expectations

A photographers
contract mirrors the
specifics of:
 Your bargain
 Your workflow
Consequences
Contract
 Your style
 Your Personality

One Size Fits Most
Quality
Deadlines
Lay the groundwork
Real World: WPPI 2010
The Contract
DESCRIPTION

Include everything you promised to do
 Engagement/Bridal/Reception/Hours
Include the total amount they’ll owe you
How many shooters
 Include dates when payments are due
 Recite receipt of the deposit
 Spell out the descriptive details of the book


 Number of pages
 Type of paper
Include any promises you made to get the job (they’ll
remember even if you don’t)
 Err on the side of too much detail

Get Contract Signed Quickly
Once signed, won’t change mind
 Once signed, won’t shop around
 Signed contract comes with deposit
 Put the deposit in your business account
 Calendar deadlines (like wedding date)
 Notify your second shooter of the date

A true story of contract and intrigue……..
“Now, is it my understanding that the Massey prenup has never
been penetrated?”
“That is correct. Not to blow my own horn, but they devote an
entire semester to it at Harvard Law.”
Custom Forms for Custom Work
The Lawsuits Will Come
UNLESS YOU’RE PROTECTED BY AN AIRTIGHT BOUDOIR CONTRACT



Lawsuit Filed Over Publication Of
Boudoir Photo -- Orlando Sun Sentinal
Husband and wife sue and say a boudoir
photo was meant to be a private gift - from a
bride to her groom.
Eight years after the shoot, the Boca Raton
couple filed a lawsuit in Palm Beach County
Circuit Court, saying the semi-nude photo of
the client was printed by the photo studio in
a boudoir photography "how-to" book
Custom Forms for Custom Work
Your Honor, may I have permission to treat Ms. Vito as a hostile
witness?
You think I'm hostile now, wait 'til you see me tonight.
Do you two know each other?
Yeah, she's my fiancée.
Well, that would certainly explain the hostility.
Sponsored by
1 Year Free Membership
Employees vs. Independent Contractors
IRS Twenty Factor Test
Work only for you
 Can’t lose money
 Use your equipment
 You have right to control
time, scope and manner
of work
 Do work typical of
employees
 Perform personally

Employees
Independent Contractors

Work for lots of folks
 Can lose money
 Use their own equipment
 Not subject to your
control

Typically independent

Can substitute
http://www.mdc.edu/hr/Operations/AFS/IRSFactorTest.pdf
Independent Contractor
• Copyright owned by IC – NOT YOU!!
Employee
• Copyright owned by Employer
Work for hire
• Copyright owned by commissioner (MUST
BE IN WRITING)
WHEN USING INDEPENDENT
CONTRCTORS (1099 employees)
Must have copyright assignment
Advantages and Disadvantages
Protecting your livelihood
Confidentiality and Non-competition Agreements
Protect confidential information
 Prevent competition

 Geographically
 Vocationally
 Temporally
Enforceability Varies
 Must be reasonable in Scope and Time

Employees
Withhold Taxes
 Work Comp (when req’d varies by state)
 Fair Labor Standards Act – Min
Wage/Overtime
 W-3/W-2 Deadlines
 GENERALLY WORTH IT

Independent Contractors
Don’t Withhold Taxes
 No Work Comp
 Your insurance doesn’t cover them
 1099 deadlines and penalties
 They can compete against you

Employee vs. Independent Contractor
Legal Moment Sponsored by
2 $50 Kubota Bucks Gift Certificates
Model and Property Releases
Model Release
Right of Publicity
 Right of Privacy
 Exceptions:

 Editorial
 News
 Parody
 Personal use

Make money/get release
Property Release
Is the tangible item copyrighted?
Statue?
 Is the tangible item trademarked?
 Were you legally there when you
pressed the shutter?
 Government works/property

 http://home.nps.gov/applications/digest/per
mits.cfm?urlarea=permits
Who wants all the forms I’ve
shown up to now on disk?
Legal Moment Sponsored by
Legal Workflow Consultation
“Business and Legal Forms for Wedding and Portrait
Photographers” CD including 25 forms and documents
www.apple-studios.com
I’ll give you everything but the
What is a Copyright?
Reproduce
 Display
 Derivative works
 Distribute/license
 Sell/transfer
 Pass to your heirs

How long does it last?
Myths and Legends
○ “You do not need to register your copyright in order to sue
○
○
○
○
○
○
○
○
○
for infringement”
“You can use that music if it’s just for your slide show
montage”
“If I don’t charge for it, it’s not a violation”
“I won’t copy it, I can just recreate it myself”
“It’s not like it’s a crime or anything”
“The copyright registered by your book/magazine
publisher who used your images will protect your rights.”
“The statue/artwork/painting/photograph is on government
property, everyone knows you can photograph it with
impunity”
“They’ll never know”
Photo agencies are scouring the web
“A handshake is as good and binding as having a
copyright license agreement in place”
Who owns it?
Who caused the “work” to become
“fixed”?
 Exception:

 Work for hire
Who can reproduce/use?

Exceptions:
 Fair Use
○ Parody
○ Editorial/Newsworthy
○ Education/Documentary
○ Search engines?
Managing your rights
Copyright created when work “fixed”
 Registration gives protection
 Your work is more valuable registered
AND infringed

 Up to $150,000 per violation
Benefits of Registration

What are the benefits?
○ Public record
○ Proof of validity of copyright if registered
within 5 years of publication
○ Statutory damages and attorney’s fees (if
registered within 3 months of publication)
○ “ICE” protection against importation of
infringing copies

Good For Author’s Live Plus 70 Years
When to register
PUBLISHED WORKS
 NON-PUBLISHED WORKS

Registration is Easy and Cheap
(you can’t afford not to)




$35 Online
$50 On Paper
Can Register Annually if unpublished
Every three months if published
 How do we register?
○
○
○
○
○
Online registration (eCO)
Fill in form (Form CO)
Paper form (Form VA)
Fees
Deposit sample of “best edition” (thumbnails on
DVD)
○ Library of Congress – here we come!
Example Form
What You Can Do to Best Protect
Your Images
 put your copyright notice on each page of
your website and put your copyright notice
on or at least adjacent to each photo as well
as in the metadata of your files.
 register your photos with the U.S. Copyright
Office so that you will be eligible for statutory
damages.
 put all of your licenses in writing, even if by
email, and make the license contingent on
payment of your invoice in full.
HELP! I’ve Been infringed

What to do:
 Make copies
 Make sure it’s an infringement
 Research the Infringer
Infringement Options
Do nothing
 Request a photo credit
 Prepare a DCMA “take down notice”
 Self-Help cease and desist or demand
letter

My recommendation for best outcome:
If you’ve done your homework……..
What am I transferring away?
Licensing vs. Transfer
 Licensing: Release vs. Transfer
○ Under 1976 Copyright act, transfer of
exclusive rights is not valid unless in writing
signed by the owner. Non-exclusive transfers
does not have to be in writing.
 56 year termination provision and notice
requirements
○ Transfer can occur under will/trust
○ PLUS – Picture Licensing Universal System –
use for modifying your agreement
Licensing Maintains Control
 To who – Bride? Mom? Everyone?
 How long/duration
 What rights?
 Fee based on use
 Attribution
 Changes to Work
 # of Copies
Coldplay will Kill You


It may have started with the wedding of Tony Romo, the
Dallas Cowboys' quarterback, to Candice Crawford in
May. People magazine said the five-minute video they
had made "hit the Internet looking more like a blockbuster
movie trailer than nuptial footage" -- and soon it went viral
on YouTube, complete with Coldplay's "Fix You" as theme
music.
Now it's gone -- and so, apparently, are many wedding
videos celebrating less-famous couples. The
videographer who shot the Romo-Crawford video was
threatened with a lawsuit for using music to which he had
not bought the rights. He's settled, and agreed not to talk
about it, and a chill has settled across the nice, warm
world of weddings.
Legal Moment Sponsored by
Three $60 Music License
Certificates
Like momma said……….
A few examples
Dallas Cowboys paid Walter Smith
(Impact Images) $275,000 for exceeding
scope of license of photo of Emmitt
Smith kneeling on the star in the middle
of Texas Stadium
 Then they barred him from their property
(6/05)

What’s a “work”?
$60,000 for a photo ain’t bad

Marylee Leiolaha Colucci and Island
Treasures Art Gallery paid photographer
Kim Reece $60,000 after creating a
stained glass copy of a photo (11/07)
Quick Mention:
Wal-Mart
 PPA – Secret Shoppers
 Special Forms
 Wal-Mart used to be one of the larger
infringers
 Tin Eye www.tineye.com
 ASCAP/BMI
 “ICE”

Who HATES their website
and why? Say it loud and
proud!
Protecting your business and personal assets with
Anyone from Petaluma, California missing a Canon lens?
What can you lose in a lawsuit…
EVERYTHING!!!!!
 Distracting/no peace of mind
 Judgment lasts forever until paid
 Ruin goodwill
 Can Get Personal assets
 Garnishment
 Execution
 Credit Score

What’s it cover? A lot…….















Buildings/Structures
Theft Reward
Claim Data Expense
Commercial Articles [photo
equipment]
Electronic Data Processing
Equipment, Data & Media in Transit
Electronic Vandalism
Employee Dishonesty
Expediting Expenses
Fine Arts
Fire Dept. Charges
Forgery/Alteration
Green Building Alternatives
Green Business Personal Property
Newly Acquired Business Personal
Property
Existing Business Personal
Property
















Accounts Receivable
Debris Removal
Personal Effects
Personal Property of Others
Advertising Injury/Defamation
Trade Dress Copyright
Infringement
Signs
Computer Fraud
Unauthorized Business card Use
Valuable Papers
Production Equipment Breakdown
Trailers
Temporary Relocation of Property
Loss of Business Income and extra
Expense
Interruption of Computer
Operations
General Liability/Personal Injury
What it does not cover …
 Errors
and Omissions
 Malpractice
 Professional Liability
 That’s why we need:
 PPA Indemnification Trust
 $50 for coverage in addition to
membership
Coverage you can’t live without
Commercial articles vs. inland marine
 Property & Casualty
 Errors and Omissions

 PPA Indemnification Trust
Medical Payments
 General Liability
 International Endorsements
 $800 per year

 If you can’t afford it, reevaluate your business
model
www.apple-studios.com/wppiu2012.pdf
Special thanks to: