My understanding that it is mostly from a certain profit level. For example, ff you earn $25,000 after expenses with your photography business, I don't think you can justify to the IRS that you only pay yourself $15,000 in salary and then not pay self-employment taxes on $10,000. The other piece of the puzzle is that your additional tax filings (i.e., if you have pay someone to complete hose extra tax forms) and setting up a payroll may cost more than your tax savings.