I learned over time that as photographers, filmmakers and independent artists, we’re also entrepreneurs running our own small businesses. Since I’m not all that business minded I’ve had learn as much as I can while surrounding myself with smart biz-oriented people who can help. Enter stage left Mara, our on-staff accountant. Going forward, I’ve got a goal that she will be able to shed a lot of light on the $$ and business side of things that so many photogs need help with… She’ll be tag-teaming on these business posts with our Executive Producer Kate. Feel free to ask them questions and suggest new topics… In the meantime, take it away here Mara on some crucial bookkeeping tips…
By now you should have long ago finalized any financial reporting for the prior year and sent your taxes to the IRS. This time of year is usually an accounting calm, but don’t be fooled (or lazy). I‘m consistently reminded of how much easier the year-end process is when you plan ahead and keep good records. Now’s the time to… make a few plans for how much better than last year your business agenda is going to be. I know bookkeeping is a tedious aspect of your business, nobody really wants to sort receipts and pay bills, but by paying a little more attention to it you can save huge time (and money) in the end. If you’re just starting out or if your a seasoned pro, here’s some tips on getting your books in order:
1. Know which registrations and business licenses you need in order to conduct business in your state and city. Many state and city websites have a useful section of their website devoted to walking a new business through the registration process. If you have more questions, I’ve had great experience with the customer service staff at most state and city offices, so don’t be afraid to give them a call. Be sure you also research whether you need to collect sales taxes on your products and services.
2. You need to have a separate business checking account and use it for your business income and expenses as much as possible. When you eliminate sorting through your grocery and shoe purchases looking for your business expenses, recording those items is a lot easier and you’ll be less likely to miss legitimate deductions on your tax return. And if any other party (banks, accountants, auditors) ever have a need to look at your business bank statements, you can keep your personal charges to yourself.
3. Find some software to help you out. I love QuickBooks and am constantly amazed by its capabilities for its reasonable price tag. If jumping into QuickBooks seems a little scary, I suggest finding a local bookkeeper to walk you through the software and help you set it up for your business. Those will be a couple of well spent hours. Alternatives to QuickBooks include a variety of online solutions such as Kashoo, WorkingPoint, FreshBooks, and Xero. I don’t have experience with any of these online products, so if you do, please share in the comments below how they work for you.
4. Organize and save the receipts for your business income and expenses. I hope that none of you are ever audited by the IRS, but even if you avoid that letter in the mail, remember that they aren’t the only government agency to conduct audits. Over the years, I’ve worked with auditors from Washington state looking at the reporting of sales tax, excise tax, payroll taxes, and the classification of independent contractors vs employees. If your paperwork is organized, it not only speeds up the audit, but it gives a favorable impression to the auditor, which never hurts! Your receipts and other paperwork can be stored either on paper or electronically.
5. Get into a routine with your bookkeeping. If you keep up on your paperwork weekly, it becomes a small task rather than a scary project lurking on the corner of your desk. When you’re up to date on recording your income and expenses, you also have the benefit of seeing in real time how your business is performing financially.
Good luck on your financial resolutions!