For those of you who do not know my dad is one amazing accountant (among other things). I collaborated with him on this blog post on accounting tips for photographers. We will be doing many more quick tip blog posts in the future so if there is something you would love to know more about please let me know in the comment section of this blog post.

Three Things you can do in your busy season to help with getting your records in shape at the end of the year when it’s tax time.  

1. Most photographers like yourself are self-employed and therefore required to pay their own social security taxes in addition to regular income taxes. The social security tax for self-employed people is 15.3%.  Since you are not having your taxes withheld like you do when you’re an employee, you need to make quarterly estimated tax payments to the IRS and your state (if your state has an income tax). 

The method I recommend for making sure you have enough money to pay your estimated taxes is to work with your tax preparer to figure out a set percentage of your gross sales that you can transfer to a separate savings account every time you make a deposit. This percentage typically ranges from 20%-40% depending on your unique circumstances and if you are married or single.

 

2. Make sure to take the extra hour or so a week to input your invoices and expenses into a program like QuickBooks, Dubsado or Honey books. Not doing this puts you way behind on your bookkeeping when the end of the year comes. It also does not give you any accurate information on which to make decisions such as, do I have enough money to buy another piece of equipment or start a new marketing campaign.

I know a spreadsheet can be helpful for doing some supporting documentation but using a software program or app that is specifically designed to track your income and expenses is highly recommended.

3. Do not look at all the money in your account during your busy season and start spending it on things that are not essential to growing your business. This is a common mistake that many business owners make. Always remember that the off season is coming, and you want to make sure you position yourself to be able to ride out that period where your income is reduced.

Hope these quick tips help you prepare for Tax season! Next blog post we will dive into what is a tax ride off and when it is smart to count up more ride off’s and when you should hold off on too many of them.