Bookkeeping ideas for freelance photographers

The lifetime of an expert photographer is outlined, partly, by the once-in-a-lifetime moments: the journeys to faraway locations, the collaborations with stylists and different artists, and the prospect to work with inspiring manufacturers. However behind each thrilling second are numerous not-so-exciting moments: the journey logistics, the gear leases, the invoices, the payments, and maybe most significantly, the bookkeeping.

Bookkeeping is important for working a sustainable freelance images enterprise, monitoring your success, figuring out your price range, and setting manageable, practical goalposts. It’s additionally comparatively manageable, whether or not you’re outsourcing to a professional or doing issues your self. All it takes is a bit of know-how and a whole lot of consistency.

Disclaimer: We’re not providing any monetary or tax recommendation! For tax or monetary recommendation, seek the advice of a CPA or monetary advisor.

What’s bookkeeping?

Bookkeeping entails the recording, organizing, and storing of all your enterprise transactions, together with however not restricted to: your payments, receipts, financial institution statements, buy orders, invoices, and taxes. Relying on your enterprise, your bookkeeping might embody funds from purchasers for photoshoots, print gross sales, bills corresponding to studio area and kit, journey prices, and extra.

Usually, you’ve two choices: single-entry (cash-based) bookkeeping, the place you enter each transaction (income or bills) as soon as, and double-entry bookkeeping, the place every transaction is recorded twice—as a credit score in a single account and as a debit in one other account.

The inspiration of double-entry bookkeeping is the accounting equation: Property = Liabilities + Fairness. In a normal ledger, used for double-entry bookkeeping, you’ll have (no less than) 5 primary accounts: property, liabilities, revenues, bills, and proprietor’s fairness. Property are what you personal, and liabilities are what you owe.

When cash comes into an asset or expense account, it’s known as “debiting”; when it goes out of an asset or expense account, that’s “crediting.” Conversely, if you debit a legal responsibility, fairness, or income account, it decreases; if you credit score a legal responsibility, fairness, or income account, it will increase.

In double-entry bookkeeping, each transaction is recorded as a credit score and a debit of equal quantities, with debits on the left and credit on the correct. When your debits and credit are equal, your books are “balanced.”

For instance, let’s say you pay $20 for a month-to-month picture enhancing software program subscription: you’d debit your expense account $20 and credit score your money (asset) account $20. Or let’s say a consumer pays you $1,500 for a photoshoot. In that case, you’d debit your money account $1,500 and credit score your income account $1,500.

Single-entry bookkeeping can work for some solopreneurs/freelancers in the event that they plan to remain small, however double-entry is extra correct and subsequently your greatest wager when you have extra complicated wants, together with a employees. If you wish to go together with the single-entry technique, an Excel spreadsheet is all you want. Use it to document each transaction involving your enterprise, after which preserve your supporting paperwork on file (extra on this later). In lots of circumstances, that will probably be sufficient come tax season.

For small companies, there are tons of software program choices obtainable to make the bookkeeping course of simpler and preserve every thing organized in a single place, corresponding to QuickBooks or Xero (for double-entry). These instruments do have a little bit of a studying curve, as it’s essential to know the fundamentals of bookkeeping. However they’ll give you a greater understanding of your enterprise’s funds and make your each day life a lot simpler. QuickBooks, for instance, presents options that help you automate invoices, ship fee reminders, and save photographs of your receipts for straightforward entry.

All of this data can later be utilized by your CPA (licensed public accountant) to interpret your funds and information you on greatest practices going ahead.

Rent a professional or do-it-yourself?

Bookkeeping is only one piece of the bigger accounting puzzle for any small enterprise. Many photographers rent an expert bookkeeper to assist alongside the best way, however some choose to do it themselves. For those who select the latter, you should have a radical understanding of tax codes (native and federal) and impeccable organizational expertise. You’ll find a plethora of on-line programs overlaying the fundamentals, so it’s value doing all of your analysis and studying the necessities.

Outsourcing this a part of your enterprise can prevent time and trouble in the long term. Instruments like Bench make it simpler than ever to seek out bookkeepers that go well with your enterprise and price range. You may as well ask colleagues and fellow photographers for suggestions. Good bookkeepers are collaborative; they’ll work with you as you develop. Plus, you may at all times seek the advice of a professional that will help you develop a method, which you then implement your self each day.

A fast notice: All accountants can do bookkeeping, however not all bookkeepers are licensed accountants. Hiring an accountant to do your bookkeeping is prone to price greater than hiring a junior bookkeeper (typically rather more). Additionally, needless to say even should you do your bookkeeping your self, you may nonetheless wish to rent a CPA to arrange for tax season and information you thru some small enterprise ideas. However the higher your bookkeeping, the better their job will probably be.

Bookkeeping ideas for freelance photographers

Tip #1: Separate your private {and professional} funds

Mixing your private funds with your enterprise funds may cause confusion and mishaps, so preserve every thing separate by sustaining totally different checking accounts and/or bank cards.

Tip #2: Hold your entire supporting paperwork

Your paperwork embrace all receipts, consumer invoices, payments, financial institution statements, loans, tax returns, and extra. For photographers, receipts can embrace every thing out of your picture enhancing software program subscription to digital advertising and marketing instruments. At all times preserve these paperwork, whether or not you retailer them bodily or digitally utilizing a instrument like Evernote.

Organizing paperwork chronologically by date will make issues easier and enable you to keep away from errors. As a normal rule, you’ll wish to preserve them for eight years. You’ll want them should you’re ever audited.

Tip #3: Keep present

Keep away from the temptation to get every thing so as on the final minute earlier than tax season; correct bookkeeping year-round will cut back stress and guarantee accuracy. DIYing may cost a little you much less cash, nevertheless it’ll price you numerous when it comes to time. Take into account setting apart at some point per week for bookkeeping duties. If you end up unable to carve out that point frequently, it may be time to rent a professional.

Tip #4: Use your monetary data to your benefit

Lastly, make time to take a seat down no less than as soon as a month to go over all of your bills and earnings. That data will show important when planning for the longer term, whether or not you’re deciding if you’ll have the funds to put money into new gear or making modifications to issues that aren’t working (like an expense that isn’t value it).

Bookkeeping isn’t only for tax season, though it definitely helps when the time comes for that. For photographers, common, constant bookkeeping is the important thing to understanding your enterprise from the within out. For that purpose, it’s one thing it is best to at all times be concerned in, no less than in some capability, whether or not you’re tackling it by yourself or working intently with an expert who can educate you on greatest practices, share entrepreneur ideas, and steer you in the correct route.

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