This week we welcome guest blogger Andrea Spencer from The Easy Accounting Solution for the Photographer.

Many photographers start their own photography business because they have such a passion for being creative, and taking pictures in their personal lives.  They have the creative abilities needed to succeed as a professional photographer.  What they often do not have, or necessarily enjoy, are the “business tools,” especially when it comes to accounting.  Photography is fun, paying bills, and tracking money, not so much (at least to a photographer, as an accountant I have that strange enjoyment for numbers).  It is just as important for a business owner to take care of the “business side” as it is to perform the photography functions (sometimes even more important to a business).

Keeping track of the accounting is not just keeping track of how much money clients pay (income).  It is very important to keep track of expenses as well since those offset money received by clients to calculate the actual business earnings.  Also, in order to maximize your business’ profit, it is important to track expenses because some are tax deductible.  You don’t want to give Uncle Sam any more of your hard-earned money than you really have to.  Examples of expenses to track include household utilities, if the business is in a home; mileage and car maintenance, if there is a vehicle for the business; advertising expenses; equipment costs; etc.

If you keep current with the tracking of the accounting it is not as daunting or overwhelming.  When you wait until it is tax time to get all of your figures together it is one huge, overwhelming project, and much more work than keeping track of everything as it comes along, and is fresh in your mind!

The use of an accounting tool, such as The Easy Accounting Solution for the Photographer spreadsheet, will help a photographer with little or no accounting knowledge maintain the records needed to make tax-time a breeze, be able to look at the financial condition of the company at any time, as well as track jobs, clients, and other business vital items.  The best thing a photographer can do it start out maintaining good records, and building that part of the business into the normal routine just as you would editing photos; make it part of your normal business, find a great accounting tool to help take a lot of the technical accounting out of the process, and come year-end you will receive a huge payout for your efforts, hopefully in the form of a headache-free experience filing your taxes.

ACCOUNTING TIP: Decide how you want to “file” your paperwork, and create labels for all the folders.  If you do this at the beginning of each year, you can be ready when each month comes along vs. having to create new folders each month.  This way you don’t have to “record” each receipt/bill when you get it, but know what folders to pull to make it easy when you get a few minutes to catch up.  Some prefer to file by category (a folder for just phone bills, or even all utilities, for the entire year in one folder, all vehicle receipts in another folder for the whole year, etc).  Some prefer to keep files per month (this is especially helpful if you only plan to record things once a month vs. as the expenses occur.  Then you just pull the folder for which month you’re working on at the end of the month and input all the receipts).  If you plan to create just one folder for the whole month, you will probably find it helpful to clip receipts together by category (all utilities together, all vehicle expenses together, etc) in case you need to go back and supply “proof” of expenses for taxes, or verify your numbers at tax time.  Likewise, if you create “category” folders, clip all the items together each month, that way if you end up going back needing to review May utility bills to see what you paid last year vs. this, it’s easy to find them instead of leafing through an entire year worth of papers.