Best Business Practices for Photographers [100]
Also, the Excel spreadsheet examples I provided are very simplified versions of the actual spreadsheets I use. The size of this book makes it hard to show the actual spreadsheet, which includes all of my most common accounting categories, some of which show zero items. Doing this saves me from having to re-enter and essentially re-create the spreadsheet every time. If you decide to go the Excel route (which I think is the best route), I recommend you create a spreadsheet template for your business with the most common accounting codes you use and leave three or four empty ones at the bottom for unusual charges that occur on occasion. Doing this will save you a lot of time, and you will get used to knowing that a particular category is in a certain place every month on the spreadsheet.
Finally, I then print out and attach the Statement Breakdown and any Payment Breakdowns for payments that appear on the statement, together with the credit card payment statement itself, and I file them away chronologically.
When to Call an Accountant (Sooner Rather Than Later)
If you are operating a business, you need an accountant. It's that simple. I could just end this section with that statement alone, but I won't. You are a professional photographer, you know all about lighting and f-stops, and you find yourself frustrated when you lose an assignment because a client says, "Oh, I have a friend who is shooting it as a favor," or "We're just going to send someone from the office with a camera." For rites-of-passage photographers, the killer line is, "There's an uncle who has a camera and can take photos, so we're saving money by just having him shoot some photos." Aaaarrrrgggghhhh! You know the results will almost certainly be unsatisfactory, if not downright terrible. Unfortunately, they won't know that until it's too late.
If you know this, then you'll want to apply the same mentality to your tax preparation. You can either spend a whole lot of time teaching yourself about all the forms, allowable deductions, limits on deductions, changes in tax law, and the like. Or, you can hire a professional to do it. I recommend that route. Further, your accountant can tell you how much to put away for retirement each year based upon your taxable income and advise you when you have a question about taxes. An accountant is an indispensable resource.
Every accountant has a different pricing structure, and your mileage may vary; however, for significantly less than $1,000 a year, my taxes get completed, including my Schedule C, student loan expenses, mortgages, childcare and medical deductions, income from investments, and several other factors. In other words, my taxes could never be done on a 1040EZ form—what I file approaches 1/3-inch thick each year. Further, my accountant advises me as to how much of that expense is personal (which I pay with my personal credit card) and how much is related to the preparation of the business aspect of my return (which I then charge to my business card).
Now, a word on "tax preparation services." They're good for some folks, but I'd strongly discourage their use for a business. You are building a relationship. You don't want a different tax preparer each year; you want the same person. I have been with mine for almost 20 years, and he keeps track of amortized expenses from year to year, knows me and my business, and asks intelligent questions about how I can save more and earn more. He also advises me of smart (and honest) ways to minimize my tax liability. I can get a copy of my return from four years ago if necessary, and when I have a question, I can call. Depending upon your relationship, that call may well carry a charge for the accountant's time, but it won't be much, and