Whether your photography is a small side hustle, or you’ve gone full-time and it’s your primary focus, it’s a good idea to begin treating it as a legitimate business. That can include the exciting parts, like advertising and showcasing your beautiful pictures for prospective clients to see. Or it might mean seeking out a space to rent so you can do professional photo shoots. The biggest difference here is in the timing of when the sales and purchases are recorded for your accounts.
It’s important to know your assets and liabilities to calculate future economic benefit or create a plan to eliminate any debt. The cash method for accounting is pretty straightforward and can be a good option if your photography business is still small. With the cash method, you’ll record transactions based on when money actually changes hands. When you start bookkeeping for your photography business, you’ll have to choose whether to use the cash method or the accrual method. The method you choose determines how and when you record different financial transactions.
Bookkeeping for photographers done right!
In this comprehensive guide to accounting for photographers, you’ll get the information you need to set up your business for accounting success. Have other bookkeeping services you need for your photography business? Every month, you can rest assured that your accounts have been reconciled.
So, the accrual method is trying to pair the expense of renting the venue with the income you made by renting the venue in the same time period. If you have staff within your photography accounting for photographers business, sharing reports is a nice way to keep them up to date on how the business is doing. It’s good for them to know their employer is successful enough to keep them employed.
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Try not to think of accounting as a boring, numbers-based practice that only causes frustration. If you’re a photographer hoping to expand your professional opportunities, good accounting is the vehicle by which you’ll read your end goals. Additionally, it’s always easier to start with strong accounting practices rather than fix broken, disorganized, and fragmented financial management. The simplest way to organize your business finances is to run everything through a business bank account. You won’t have to worry about sorting things out, and it makes tracking and reporting so much simpler with everything in one place.
We laid out a big picture of the money coming in and out for the year. Then we analyzed all of her expenses and cut areas that were sucking profit. No matter how small you think your business is in the early days, one of the best moves that you can make is to establish a separate business banking account. This might include both checking and savings accounts, but all business bank accounts should function separately from your personal accounts. Chances are, if you’re new to the world of accounting, you need tried-and-true tips to follow. This might also apply to veteran photographers, since business is usually busier, with multiple financial points to track at any given time.
Assets and Liabilities
If for nothing else, bookkeeping your photography business is imperative to correctly file and manage your taxes. Even if you can’t afford to hire a full-time employee to manage your photography business finances, incorporating expert advice at the right times can make all the difference. You might want to handle your own bookkeeping but invest in a professional accountant at tax time, and set aside money in savings if you want to hire a financial consultant or bookkeeper.
- Many photographers hire a professional bookkeeper to help along the way, but some opt to do it themselves.
- With all the administrative work you do to keep your photography business running, it’s easy to understand how bookkeeping can fall by the wayside.
- As a photographer, you need to check local laws on each service you provide to see if you should legally be charging and paying sales tax.
- As a photographer, you know that accounting and bookkeeping are important aspects of your business.
- When comparing this number to your expenses, you should get a clear picture of whether you’re making a profit and how large that profit is.
Cash accounting sees revenue and expenses when money changes hands while accrual accounting only recognizes the revenue when it is earned and when the expenses are billed and not paid. When you’re not behind a camera, chances are you’re in front of a laptop touching up the photos from the shoot. If you work from home, you can deduct a percentage of your home expenses — utilities, Internet, maintenance, property taxes, mortgage interest, rent, etc. Roughly 10% of total home expenses is a reasonable estimate, but it may be larger if you use your home as a studio as well. While you don’t have to go through every bill to get an estimate, it’s a good idea to keep the household expenses organized, in case you need to support your claim. For tax purposes, equipment purchases such as cameras, lenses, lights, etc., are considered fixed assets, which depreciate over time.
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You’ll receive simple reports so you can know exactly how your business is doing. Meanwhile, if you have questions about your books, I’m here to answer your questions. As a photographer, you know the importance of bringing your subject into focus.
If you want to go with the single-entry method, an Excel spreadsheet is all you need. Use it to record every transaction involving your business, and then keep your supporting documents on file (more on this later). Equity is what you have left in the business after you take assets and subtract your liabilities.
If your photography business doesn’t have many transactions, outsourcing to a CPA firm or independent bookkeeper is probably a better and cheaper option. A bookkeeper’s job includes gathering financial data for your company and recording it properly. Some of that financial data includes when you purchase new equipment, pay to rent space for photo shoots, or receive money from clients for your services. To minimize your risk of an audit, keep your tax returns as simple as possible. Accounting software is always helpful in these situations as well as keeping very organized and concise records regarding your photography business and expenses.