Let me just preface this by saying that I know approaching your business finances can feel overwhelming. In fact, as a photographer, it's probably the lat thing you want to do. You got into the biz to create amazing photos, right? You didn't sign up to deal with taxes and finances! But the reality is, you've got a business. And to be able to be a photographer for the long-term, you've got to give your business finances some attention. I promise you, it's not as hard as you think, especially if you take it just one step at a time! So with that, let's figure out this expense thing!
What is an expense?
An expense is any amount of money you spend on your photography business. But, there are two kinds of expenses: standard business expenses and tax-deductible expenses.
What is a business expense vs. a tax deductible expense?
The difference between the two can be a bit confusing because we're often told we can "write off" all of our expenses come tax time; however, though all deductions are expenses, not all expenses are deductible.
For example, client gifts are considered tax deductible, but only up to $25. Any amount above $25 becomes a STANDARD BUSINESS EXPENSE that is NOT deductible. $25 will be subtracted from your taxable income while the rest will not.
Why knowing this is important:
It's important to know the difference and keep good records because deductions are expenses the government allows you to subtract from your taxable income which lowers the amount of taxes you have to pay!
Business expenses, though not deductible, are expenses that affect your cost of doing business (so do the deductible ones), so they need to be tracked too!
Your best resource:
The BEST suggestion I can give you is to always have a certified public accountant on your side. It costs so much less than you think to have a CPA file your yearly taxes for you and keep you up to date on the ever-changing tax laws and rules.
Did you know there was a difference between business and deductible expenses?
Are your finances a guessing game?
Are you ready to remove the guesswork, simplify the process of calculating your numbers, and confidently know you're charing what you need to keep your bank account filled every month? If yes, then click below to access my CODB calculator for photographers that will do all of the heavy math for you. All you have to do is fill in your numbers on the spreadsheet and the calculator will take it from there! You’ll have a grip on your business’ finances in a matter of minutes!