Best Business Practices for Photographers [93]
Here are examples of a few other categories and subcategories that I use:
350 – Contractors
350-10 Photographers
350-20 Assistants
500 – Dues and Subscriptions
700 – Photo Equipment Expense
700-01 Materials and Supplies
700-02 Repairs
700-03 Equipment Purchases
700-04 Rental/Lease of Equipment
800 – Insurance
1000 – Office Expense
1000-10 Office Equipment
1000-20 Office Supplies
1000-30 Software
1100 – Postage and Delivery
1100-01 – Couriers
1100-02 – Overnight
1100-03 – Other
4300 – Photo Supplies
Please don't lock yourself into these categories or think they are the only way to do it. The thing to do is to sit down and look at the expenses you have that are specific to your business and use them in a manner that makes the most sense to you. Simply looking at your expenses for a previous year and trying to think about how they would best be organized by category will be your best bet.
As you can see, I have left gaps between the numbers for future expansion of my accounting system as my needs evolve.
Let's take a look at how you would set up one expense category in QuickBooks. I'll use one common to all photography businesses—equipment purchases. In Figure 11.7, you will see the fields associated with the sub-account 700 – Photo Equipment: 700-03 – Equipment Purchases.
Once you have set that up in QuickBooks, when you are assigning this category to a check you have written (or a line item within the splits section when it was a portion of a credit card charge—more on that later), you need only type in 700-03, and the category will be chosen and filled out by QuickBooks.
Figure 11.7
An expense category in QuickBooks.
When you are organizing your receipts, you need only write on a corner of the receipt the category number (700-03) and file it away. But, how do you file it?
Originally, I filed all my receipts by category alone, but when I went searching for a receipt for any reason, I had to shuffle through so many receipts that it took forever. I learned over time that I have a finite number of businesses I make purchases from, and I learned that the best way was to organize them by vendor, within each category.
So, consider for a moment that we made a purchase from Adorama Camera. We would note on the corner of the receipt 700-03 because in this case it was an equipment purchase, and the receipt would go into the folder pertaining to that expense category.
Note that on the file folder label I've included the parent category and child category in small type, so that when I remove the folder from my filing cabinet and it is returned, it goes into the correct location. This is important because I also have an Adorama folder for category 4300 – Photo Supplies, and since I also have purchased software and office equipment (computers) from them, I also have Adorama folders in the 1000-30 and 1000-10 categories.
The way the receipts are organized in the filing cabinet is that there is a section for the parent category Photo Equipment (700), and then within that section, there is a hanging file folder with a child category on it, like you see in Figure 11.8.
Figure 11.8
A hanging file folder with a child category on it.
Within that hanging file folder is every vendor folder, alphabetically. Figure 11.9 shows how that looks.
Figure 11.9
Vendor folders listed alphabetically.
Thus, when a vendor's file folder gets removed, it is extremely easy to locate where it should go back to when you're finished with it. However, where do you file the receipt when there are both, say, equipment purchases and photo supplies on it? You may choose to just file the receipt in the folder that has the larger expense. Or, a best practice would be to make a photocopy of the receipt and place a copy of the receipt in each of the proper folders, circling the line item that is relevant for that file folder.