5 Crucial Tips To Get Your Photo Busine$$ Books in Order

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!

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Shawn Smith says:

Chase, I agree with the theme behind this post. But before I start, happy belated birthday mate (in my best Aussie accent).

I’m sure you have come across photographers (and other small business owners) who don’t really have a grip on the financial aspects of running a business. It’s a shame and terrible to hear because if this is their sole income, then at some point the house of cards will tumble over – see my last point for trying to negate this.

Separate accounts for personal and business – a must for any company owner. This will avoid all the issues, as you have mentioned, of the personal and business costs being mixed up which then leads to re-working the numbers to balance. A headache we all could do without.

One item that is close to my heart is the reporting tools – or ‘accounting’ software. Being a Mac friendly studio, many years ago there wasn’t really anything great to use. So about 2 years ago I decided that we needed to move to something more flexible and easier to use – and Xero was the answer. I won’t bore you with all the details here, but if you are interested, I have written about them extensively. I pinpointed the reasons for the change. (http://bpho.to/qrX6RL)

I’d also go one step beyond the bookkeeper and suggest get yourself the ‘best’ accountant you can afford. It will pay for itself eventually. Bookkeepers are good, however, getting yourself a good system (both technology and business processors) will usually prevent an overpaid data entry person.

David Lunt says:

Thanks Chase! Those are great points and motivation! Happy Birthday as well!

David Lunt

Bek says:

This is great. Thanks Mara.

Aaron Wulf says:

A banker gave me a good tip a few months ago:

She said to have one business checking account for your payables and one for your receivables. So when you get paid, it goes into the receivables account, and when you need to pay people, it comes out of your payables account.

This not only keeps your books extra clean, but it also prevents someone from being able to fraudulently wipe out your entire business account, which she stated was an increasing issue. And even if the bank protects you from this type of fraud, it is often days before the money gets put back into your account. That can be crippling when your business has no money to function during that time.

Aaron

fas says:

Does not this vary with the location your set in?

Dwayne says:

Thanks a lot Chase and Mara for writing this up. FreshBooks seems to be very straight forward and I plan to start using it. I was actually writing my own invoices and keeping track of them myself. It sometimes got very unorganized. I’m going to check out get harvest and freshbooks for sure.

Dwayne

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I’ve used LightBlue Software for a couple of years.

Awesome studio software that manages shoots, schedules, customer details, billing/expenses and accounting reports to pass to your accountant (and loads more features).

Really useful video ‘how-to’ tutorials too :)

I was put onto them from a photographer friend.
So in the spirit of “pass it forward”…. :)

Review below:
http://www.callumw.com/go/LBS

CW

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Brian Smith says:

There’s a few good cloud-based business management systems out there. My personal favorite is PayPanther. It handles my CRM, billing and invoicing, and project management. I think it has some more features, but those are the ones that I use the most. It’s been so helpful, saving me time and money that makes the few bucks/month completely worth it. If anyone needs a good business management software for their photography or video business, I’d recommend giving PayPanther a look.

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Great post, Mara. Thanks for sharing.

A couple of notes from my experience: FreshBooks is a great service with a lot of really useful tools. I like the ease of use and the full capability to organize estimates, invoices and budget all from one place. Worth looking into for anyone that doesn’t already have a system set up.
On biz organization: I recently closed my S-Corp status due to high overhead in tax prep and California fees. I did the math a found that a simple sole proprietorship is the way to go for me now. The S-Corp was overkill so now I use the extra money for better liability coverage on shoots.

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Accounting……. :-p yuck but it is something we all have to deal with on some level.

#3
I’m an avid user of Quickbooks. It really simplifies my accounting tasks. You can even back up your books to MobileMe in one click. Which is a good idea to keep a back up record of your financials off site…. just in case.

BTW there is an update for Quickbooks in preparation for Apple’s OS Lion.

Cheers!

For accounting software, I’d suggest Harvest (http://www.getharvest.com/) I used Quickbooks for quite a few years, and did the free trial on Freshbooks, but after using Harvest it just felt right and seemed to really have an understanding about the needs of creatives. Quickbooks is awesome, but may be overkill for most people. Harvest lacks a P.O. system, but their customer support(who are awesome btw) mentioned it’s on their list, so I’m sure it will come soon enough.

Andrew says:

So awesome Chase, thanks for being willing to share the business end of creative work. It’s such an important piece that few talk about….

Andrew

Brent Rust says:

What about when you work out of your home city and/or state? How do you account for taxes in those situations?

Will says:

I would talk with a local accountant, they’ll tell you about all the rules and regs. Keep in mind you may be able to deduct a home office, if done correctly (ie. see an accountant!).

fotomate.pl says:

Local book keeping might be the best idea

Lars says:

6) Consider outsourcing it to an accountant. Does the work faster, better and more efficiently (do you really think that you, as a photographer, know every quirk and loophole in the tax system?). And it takes accounting away from you, time which you can use doing stuff you are good in: photography. Get a quote from an accountant and consider it….

Chase says:

Yeah Lars. I should have added that. Definitely seek professional accounting help if you can remotely afford it. The money you save and the protection that advice provides is almost always worth more that the front loaded costs…

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