Best Business Practices for Photographers [92]
A book of receipts for a large shoot could take you a number of hours to produce, and at the end of that, there should be no question that each and every amount billed was completely a valid expense.
Figure 11.1 shows is an example of an explanation page for a single receipt, whether an excess baggage charge, Starbucks, a hotel bill, or a taxi ride.
One thing I found when I was a staff photographer was that when I turned in my receipts, it took much less time to get paid if I attached each stack of receipts, by category, to a single 8.5 × 11 sheet of paper and stapled an adding machine tape to it. This made it so the accounting department didn't have to check my math and could put the reimbursement request through. Nowadays, adding machines are few and far between, but there is still a solution. Standard calculator software that comes with every computer's operating system includes a free calculator, and those calculators have "show tape" options. Figure 11.2 shows the one for the Mac.
When you choose Show Paper Tape, the window to the right shows up. When you are done with the calculation, you can choose to print the tape to a printer or as a PDF (see Figure 11.3).
You can then use Excel to summarize the expenses, as shown in Figure 11.4.
Figure 11.1
Explanation page for a receipt.
Figure 11.2
Show Paper Tape option on a Mac calculator.
Figure 11.3
Paper tape printout.
Figure 11.4
You can use a spreadsheet to summarize the expenses.
A Methodical Filing System
A methodical organization of your receipts related to the operation of your business is a critical cornerstone of a smooth business operation. Here, the use of account numbers to keep your accounting system organized is the solution.
Consider telephone numbers. I know, for example, that phone numbers beginning with the area code 202 are located in Washington D.C., and I know that the prefix 544 is for numbers on Capitol Hill. So too, New York numbers are 212 and 917 (among others), and those in San Francisco are 415. Further, the telephone system was built to be expandable in the U.S., so that as the population grew, the phone system could expand with it.
For your business, the organization of your account numbers is called a chart of accounts. The chart of accounts lists not just a number (and possibly a sub-number), but also the name you have given the account. No one system for any photographer will be the same.
Ultimately, you will assign each account to a tax line on your taxes, and those categories— the IRS ones—are standardized; however, organizing and establishing accounts specific to your business is up to you.
Here might be a few categories:
3000 – Draw on Business
3000-01 Personal Expenses
3000-10 Utilities (Non-business portion)
3000-20 Childcare
A note about the above categories. You should not make a habit of writing checks for non-business-related expenses on the business account. However, on occasion, it may be necessary in an emergency, and thus, being able to categorize those expenses properly as non-business in nature is important.
When your business writes a check to the electric company, that expense needs to be split properly. To split the expense, you are simply dividing up a single payment into two (or more) categories. For example, if your business occupies 25 percent of your home, then your payment on your electric bill will need to be properly divided: 25 percent to the business and 75 percent to you personally (in the form of a "draw"). Figure 11.5 shows how you might enter that into the bank account in QuickBooks.
Figure 11.5
Recording a split in QuickBooks.
Note the Splits button. Clicking that button allows you to split any one payment into more than one category. I'll go into greater depth on this when it comes to making a payment to your credit card, but for now, Figure 11.6 shows how that split would look when you click the Splits button.
Figure 11.6
Your split.
Click the Record button, and your