Essential Bookkeeping Tips for Your Photography Business

Spend more time capturing the right image and less time balancing your books. We provide different levels of support for customers who use different features and services from Wave. Kim Shackleton is a former accountant, bridging the GAAP between numbers and words. She takes the photography accounting complexity of the financial world and breaks it down into digestible pieces to guide people down a path toward financial freedom. Janet Berry-Johnson, CPA, is a freelance writer with over a decade of experience working on both the tax and audit sides of an accounting firm.

By keeping track of expenses in addition to income, you can calculate the actual business earnings as well as identify tax deductible opportunities. Organizing your expenses is easy with online accounting applications as well as apps such as Shoeboxed, where you can turn receipts into digital data for safe keeping. Examples of expenses include equipment and software costs, marketing, travel, mileage, business meals, and vehicle maintenance (if using it for business), and utilities such as internet and phone. It is important to note that if any of those are reimbursed by the client, you can’t use it as a deduction.

Detailed financial records also make it much easier to apply for financing and establish accounts with vendors.

Just know it is an option that should be discussed with your tax preparer. In summary, for most of us that receive non-refundable retainers, include the income in the year it is collected, for tax purposes. And if the retainer and balance are collected in the same year, don’t worry about it too much.

• Wave Accounting is a good option if you don’t need much more than an accounting software that creates and sends your invoices, and keeps track of payments.
• From there, you would transfer the money to 4 (or more) other accounts at different appropriated percentages.
• Also, be sure to make all of your expense payments from a separate business bank account.
• My son is good at math, likes repetitive tasks, and would be good at coding transactions in Xero.
• Additionally, it’s always easier to start with strong accounting practices rather than fix broken, disorganized, and fragmented financial management.
• Think about your computer, monitor, cell phone, keyboard, mouse, SD cards, cables, SD card readers, tablets, etc.
• Basically, you would structure your business accounts so that all of your income and paid invoices land in an Income Account.

Some might prefer tracking their expenses and accounting activity with spreadsheets. If you’re looking for an expense spreadsheet template, check out the free download below. Now you know why you need accounting, how an accounting software provider can paint the picture of your finances, and some of the common terms you’ll come across. Credits are great for increasing income and decreasing expenses, but not so great when they increase liabilities and decrease assets. Like debits, there are pros and cons to credits, depending on where you move your money. You incur expenses when purchasing products or services from another vendor, like buying new camera equipment.

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You’re reducing the cash account because money is going out of your business. In my first full year of business as a photographer, I had a loss from my photography business. All of those factors contribute to showing that I was operating as a business seeking to make a profit. However, I did several portfolio building sessions and weddings for no fee, had travel expenses, bought equipment, and my overall expenses were more than my income. Cash basis means that you recognize income and expenses when received or spent.

It’ll help you see when you’ve achieved a goal and act as a reminder to set new goals. Basically, the more organized you are, the more money you will save, because it won’t take your accountant or bookkeeper as long to sort through everything. Most accounting firms will prepare an engagement letter, which is a contract that will spell out YOUR responsibilities, THEIR responsibilities, https://www.bookstime.com/ the work to be done, and what it will cost. I recently had the opportunity to sit down with Karen Schultz of CKS Accounting Services, LLP. Being that I’m a photographer (and not particularly money-savvy), I had a bazillion questions to ask her. Pick one that has gorgeous templates to choose from, and offers features like a built-in blog and online store, plus client proofing.

Recording Your Financial Transactions

Sales Tax collections are required in some states on session fees and mandatory in all states for products sold. This tax should be added to your prices for your clients to pay. Even if you have no clients for a taxable period, you must file a sales tax return and input zero or you can be charged a fee. Depending on the area your business resides, local sales taxes may need to be collected in addition.

Each transaction that you record is considered either a credit or a debit. Reporting also helps you when you’re looking for any kind of business loan. You can easily share your photography business’s financial standings with investors or creditors.

A few words of caution, this may or may not be a good option for you. First, your child should actually be working for you if you are going to pay him as an employee, and this work should be documented and kept in your records. Second, payroll adds a layer of complexity to your business that may or may not be worth it to you. If you already have payroll, it’s probably not hard to add your child.