9 Tips for business accounting for photographers
Let’s face it, artistic photography and number crunching just don’t mix. I’d rather distract myself with Pinterest than think about something complex that involves my left brain, which I’m fairly sure does not exist. Since my math skills never progressed past the first grade, I had to speak to a mathematician to learn over the years what I needed to know. In the photography world, the appropriate terminology for an accountant or ‘tax guy’ is, “Mathematician.” I’ve learned a few tricks of the trade that can make my mathematician’s job more simple. Apparently mathematicians do not like boxes of receipts on their desks.
Hire a Mathematician (i.e. ‘tax guy’)
Turbo tax just doesn’t cut it. Doing it by hand? You’ve got to be kidding, right? Paying the small fee to have a tax guy do your annual taxes is something that will give you peace of mind and ensure you count all of your expenses correctly and pay the correct amount. Yes, I said pay. Even with all the expenses in the world, you will likely have to pay taxes. When you hire someone to help you with all this, you should typically get a guarantee from the company saying they will help if you ever get audited or need your taxes corrected in the future. Plus, did I mention that you can count the fee to get your taxes done as an expense?
Track Your Mileage
I have to tell you a short story. When I first started my business, I was traveling all over the state of Colorado to meet clients and do photo shoots. Despite doing work for a low fee and occasionally free at the beginning, I wanted to ensure I had as many expenses as I could. Mileage was the single best thing I could have tracked for a business expense and still is. Simply tracking my mileage and giving it to my tax guy paid for all the taxes I owed to the government at the end of the year. Last year I went over 8,000 miles, and the US government reimbursed mileage at .51 cents per mile for 2011. That was over $4,000 toward paying my taxes this past year! Mileage is the easiest thing for you to track as a business expense and can be a huge bonus at the end of the year!
Open a Checking Account
During your first year it can be difficult to open a business checking account, but simply opening a separate business account can be the easiest way to track your profits and expenses. If you use this to only put in money that you made and only spend out of this account for your business, then your account has tracked all of your expenses for you, and you can print out a detailed year report and give it to your ‘mathematician’ instead of a box of receipts.
Use an Online Accounting Service
There are tons of great services online that can help you track your expenses and profits. All you have to do is file your receipt (just in case) and record the expense or profit in your account online. At the end of the year, you can print out a report that will show exactly how much you spent and where you spent it as well as your profits.
Track it Old School
For me the easiest way to do things is to carry around a notebook I got at an office supply store for accounting and record everything in it as I get profit or have an expense. This does take a little bit more time at the end of the year to sort out everything for taxes, but having it with me at all times means I can record all my receipts, expenses, and profits without missing something.
Spend One Day A Month on Accounting
Small businesses like photography aren’t going to require daily care with accounting. However, if that’s easier for you, then do it! I dedicate one day a month to taking my receipt pile filing and recording it. Knowing I don’t have to worry about those things until that one day a month keeps me on track and keeps me from getting anxiety about it. Letting it build up over the year and trying to figure it all out at once before tax time is not fun and might mean that you miss something.
Track those Expenses
Anything you spend relating to your business should be tracked as an expense. At the end of the year when doing your taxes, you (or your mathematician) can decide if it truly counts as an expense according to the law. When I meet clients at Starbucks, I offer to buy them a coffee; this is an expense. There are tons of things that can count as an expense. Did you know that in some cases if you buy individual private health insurance as a small business owner you can count this as an expense? Of course, defer to your mathematician or the government to know for sure how to do this. I’m no expert. Start thinking outside of the box of what you can count as an expense for business. Equipment is the obvious choice, but many photographers forget the great options they have for expenses outside of their fancy cameras and lenses.
Track those Profits
Track your profits and set aside a certain percentage for end of the year taxes. Although you may not need it, it’ll be nice to have that cushion when the time comes!
Learn about Sales Taxes
Take the time to learn what you can about how sales taxes work for your government in your area. Most regions offer regular free seminars for new small business owners on how to do sales taxes. Sales taxes will need to be recorded in your accounting, but because they’re different for every area it’s important to ensure you have the correct information!
(Related Post: Overview of Taxes)
These are of course simple tips from a right-brained girl so the best tip of them all is to ask questions to an accountant. An accountant will be able to tell you exactly what you need to know for your area and their information is absolutely priceless!
You can find me at http://carrieswailsphotography.com using my right brain to make photographs or at http://photographyawesomesauce.com using my left brain to help photographers with their businesses. I’m also on Facebook at Carrie Swails Photography (https://www.facebook.com/pages/Carrie-Swails-Photography/134948879877343) and at Photography Awesomesauce (https://www.facebook.com/pages/Photography-Awesomesauce/214295348675017). Of course I’m also on Twitter @CarrieSPhoto and @picawesomesauce