You’re running a photography business and you’ve worked hard to get to the point where you’re busy enough to make a good income from it. Your dedication to your craft and to growing your business should be applauded! That said, there are always growing pains and that can cause a feeling of overwhelm.
One thing that is important to get right is your finances. This includes invoicing clients, handling deposits, tracking expenses, and making sure you’re ready for tax time (you know what they say…death and taxes!). This falls into the realm known as accounting, which can seem a bit daunting if you’ve never had to deal with keeping your own books. I want to try to explain a few things that will help you run your business better, but at the end of the day, if it’s not something you want to dive into, you can always outsource your photography accounting to an expert who can come alongside you as you walk the road to higher profits.
Making a Good Photography Income
All the work you put in results in a nice income for you. This is the easy part of your financial picture – you do what you love and people are happy to pay you for it!
You likely already have streams of income you are focused on, but here is a quick rundown of some niches for photographers:
- engagements and weddings
- maternity
- newborn and baby
- family portraits
- birthday parties and events
- corporate (headshots, events)
- boudoir
- street photography and urban
- landscapes
- wildlife
- pet portraits
- lifestyle
- product
- marketing and branding
- real estate
- drone
- photo booth rentals
Product sales might also be a good source of income for you. There are endless high-quality products that photographers can sell to clients these days! These range from your standard albums of all sizes, prints, canvases, and framed art, to more outside-the-box products like magnets, cards, luggage tags, metal prints, tins, board books, and soooo many print-on-demand products. And let’s not forget stock photography that you can sell online.
Anyway, in my opinion, one of the best things about transitioning to using bookkeeping software as a photographer is that you can break out each type of revenue and see exactly what you’re making for each. This allows you to see things like, “Hey, I’m only doing two weddings a month, but these are 50% of my total revenue!” or “The framed prints of my bird photos seem like they’re doing great at art shows, but they’re really only about 5% of my income.” This also allows you to see patterns over time.
You don’t have to do it all and you can’t possibly specialize in everything, so if you’re in a position where you have chosen just one type of photography to focus on, you can break that out in your books to see which areas are making you the most. Perhaps you are renting studio space for your family portrait business, but you end up on-location 80% of the time due to client preference…so is the studio rent worth it?
Expenses for Photographers
That brings us to your expenses. The expense categories tend to overtake the income categories! It is best to give the accounts in your Chart of Accounts names that make sense to identify where your money is going and ensure that your costs of doing business are not getting out of control.
Here are some general categories of expenses for photographers you can use:
- Advertising (ads, referral fees)
- Dues and subscriptions (professional organization fees, memberships)
- Entry fees (contests, vendor markets)
- Equipment rental (extra camera body for a wedding, lenses, gear)
- Insurance
- Interest on any loans
- Legal and professional fees (lawyer to review contracts, accountant)
- Payments to contractors (MUAs, assistants, graphic designers)
- Rent (studio, photographer fees at venues)
- Software (Adobe Creative Cloud subscription, QuickBooks)
- Supplies and materials (props, studio equipment, gear)
- Training and ongoing education (online courses, in-person classes)
- Utilities for a studio
If you are a photographer who does destination weddings or if you travel for art shows, some of your travel expenses may be deductible as well. If these expenses are billable to your clients (and are thus reimbursed or invoiced to them), those are counted as income and your actual expenses paid out of pocket are still expensed. There is an easy way to set this up in the accounting software so there is no confusion on what’s what.
A cool thing about QuickBooks Online is that you can upload receipts every time you book an expense or enter a bill. This makes for an easy-to-follow digital paper trail in the event you’re asked to prove your expenses. But – having everything set up with the proper categories has to come first.
Are Cameras Assets?
Pro camera bodies – and lenses, for that matter – can be very expensive! The rule of thumb, when it comes to determining if something is an asset or expense, relates to a) useful life and b) cost. If the item will be used for two or more years, and if the dollar value exceeds $2500, you have an asset on your hands and the IRS wants you to capitalize the cost over a period of years. You expense the depreciation each year of the useful life rather than expensing it all at once when you purchase the item.
Many pro-quality cameras and accessories do fall into this category. These assets give your photography business more value than just the stream of income you’re receiving.
On the flip side of assets are liabilities. This mostly includes loans you might incur. Most photographers don’t have too many loans, but perhaps you have a business credit card or a mortgage on a studio space. These offset the assets when it comes to business valuation, as shown on your Balance Sheet.
Other liabilities that are temporary might include payroll-related ones for employees, if you have them, as well as for sales tax as you collect it on products.
Deposits and Prepaids
When a client pays you ahead of time, does that represent income yet?
Anything booked and paid ahead of time belongs in a category called “unearned income.” This is actually a liability – it’s not income yet since you have not performed the service. This is especially common for weddings, and also for commission work. It could also happen if you work with a client who gives you a retainer for ongoing work (e.g., a Realtor who uses you for all their real estate photography). You then owe these clients the service they paid for. Once you perform the service, that’s when it becomes income to you.
This is a great time to remind you that you should always have contracts in place that spell out what is being paid for and any rights to cancel, and how refunds might be handled in the case of cancellation.
Another prepaid item that might be on your books is for insurance or for an annual pass to a venue. These should be booked as “prepaid expenses,” which are assets, and moved each month to reflect the actual expense that is incurred for that period.
Outsourced Accounting for Photographers
If it’s time to make the leap and start outsourcing some of your business to-do list, the accounting is likely one of the first things to go! Being a small business owner isn’t for the faint of heart, and becoming successful as a photographer takes a lot of persistence and honing of your craft in addition to the business parts. Anything you can afford to hand off will only benefit you and your business in the long-run. It can allow you to take more jobs, or take a vacation with the fam. It’s the next best thing to cloning yourself. 😉
The first thing to do is check out my instant price quote calculator. It will give you a ballpark estimate for the cost of accounting services based on your business’ needs. Then, if you’re ready to start, schedule a quick call so you can ask any questions and we can finalize everything. I can take over for you in under a week and come alongside you as you continue to make your business a success.
