Better Photos
From beginners to pros, I'm taking you from photography basics to creative challenges to find your unique passion for photography.
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11 From Hobby to Business: Navigating Taxes, Expenses, and Income as a Photographer
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The fundamentals of photography finance are essential knowledge for anyone turning their creative passion into a sustainable business. We explore the journey from hobby photographer to legitimate business owner with practical advice on setting up your business structure.
• Setting up your business legally through services like LegalZoom
• Creating a dedicated business bank account to separate personal and business finances
• Tracking income, expenses and mileage using accounting software like Wave Accounting
• Understanding real costs to set sustainable pricing
• Planning for seasonal income fluctuations with buffer funds
• Diversifying income through mini sessions, digital products, and stock photography
• Managing quarterly tax payments with a recommended 25-30% set aside from each payment
• Obtaining business insurance for liability protection
• Analyzing expenses to find cost-cutting opportunities
Join us next time as we continue exploring ways to build your photography business and make better photos.
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Hey, mama, whether or not you're trying out your camera for the very first time, or you've been doing this a while and just looking for some creative inspiration, I've got all that and more. I'm here to help you see your world differently, challenge you creatively and find your passion for photography. Welcome back to the Better Photos podcast. I'm so excited that you decided to join me today, because we are going to be talking about finance for photographers and, if you are creative, this subject may not come natural to you. I have taken a lot of classes and I definitely encourage you to do the same. There are experts out there that know a lot more than I do, but I'm going to give the basics, so stay tuned, all right. So this week I did my session over at the horse farm and it was so beautiful and it was so beautiful. I ended up using my Pocket Dispo lens for like three-fourths of it, and I'm kind of regretting using that for that long, just because it does provide that grainy, blurry type effect. And basically, what they've done is they've taken this digital camera. I mean, uh, instant camera, is it an instant camera? It is something. Yeah and um, put the, the lens of that onto this little like thing that fits onto your camera, so it gives that like nostalgic feel, um, which is great, but probably not for like detail shots, um, and like close-up stuff. So, um, and maybe when it was like the sun was setting and it was a little too dark, because then it just gets like even more um, that feel. So, just a side note vary my lens next time, which I ended up switching once we like kind of went to a different spot and I love them. I just don't know if it's going to be like too much of that style, but anyways, so we're always learning, always growing, always reevaluating what goes well and what doesn't.
Speaker 1:I also drove like an almost two hours away because I was doing some location scouting and also like client searching and I ended up finding this farm photographer that, um, I loved like that. That is, her whole like niche, um, niche, whatever, um, and she was offering like cowgirl mini sessions and so I asked her if I could just bring my camera and get some like photos with my camera for like branding, and she said sure, and so I drove up there. She had like this big client closet and I brought like one outfit from my client closet and then borrowed one of hers and she had like the ranch hats, like all the things, so it was basically like studio setup and I got a good amount of photos for, um, like promoting my podcast or just putting on social media. Like you don't realize, like people need to see your face and so it's important to have photos of yourself and ones that you actually take time out to get ready for. And yeah, because I always like I'm like, oh, like, even now, like I should be recording this podcast and putting it on YouTube, but I'm literally in my bathrobe, my glasses are still on, no makeup and, like my house is a mess, so which I mean probably that would get like a lot more views, I don't know, just the natural of like what it is. So, anyways, what else was I gonna say?
Speaker 1:Um, yeah, so this week is starting my super busy month or two. I have a newborn on Friday, two sessions on Saturday, plus my son does flag football. Last weekend we celebrated, or yesterday was his birthday, so this whole past weekend we've been kind of celebrating him turning nine, and then Sunday I have a session, and actually I think I have two in home this week, so that'll be exciting. I love in home, because it's like where you live, like where the memories are created, like the things that you're going to want to remember, like if you've ever moved. You're like really sad to like leave behind memories and just having great photos taken at a place that is so special to you and where you've brought babies home, where you've, um, you know, played with your kids, where you've decorated, where you've learned and, um, you know all the things. So I'm excited to do that, um things. So I'm excited to do that.
Speaker 1:My garden's going well, the things are growing and I have some seedlings inside that I will hopefully be transplanting. I don't know those, these, you know, it's kind of like a trial. I'm like, okay, if the ones outside fail, I've got the ones inside, and if the ones inside fail, I've got the ones outside. So I'm just trying to be like extra cautious in case I fail. It's all a ones outside, so I'm just trying to be like extra cautious in case I fail. It's all a test, experimental, I don't know. Okay, so today we are going to be talking about finance, and so when you are doing photography, this is going to be something that you are going to have to think about. So, if you haven't already, grab your coffee, get your pen and notepad and sit down and let's chat.
Speaker 1:Okay, so when you first start getting paid for your photography, you may not have set yourself up as a business and you will not be paying taxes. So therefore, you will not be feeling the financial pressures of making certain amount of money and yes, I did that at the beginning like just taking money and like you'll soon start feeling very guilty, especially around other photographers that want to like complain about how there's some people that you know are legit and pay their taxes and there's like a million other things than just taxes. You have to pay like an annual report. You have to pay like legal fees, you have to pay the Secretary of State something like every quarter. There's just like so much stuff and like all of your money could be just like going to that and it doesn't seem like a lot, but like when it's percentages, it doesn't matter how much you make you still. You still feel it so, um, so you may go a little while without you know paying taxes, but honestly, what happened to me is I was like reading my Bible and it stuck out so clear to me that one of the verses was like talking about like give God what is God's and give Caesar what is Caesar's.
Speaker 1:Like talking about taxes, and I felt so convicted about not paying taxes that I was like I'm like literally going against Jesus right now if I'm not giving the government what they've asked for when I start up a business. So that was my whole conviction process of why I felt it really important to set my business up as something legitimate. So what I did was I went through the process of legal zoom and they basically do everything for you. You pay them a flat fee and they register your name. They do, they set you up.
Speaker 1:I did an LLC and you can also do, I think, like a sole proprietorship, and you may want to do some research on which one is beneficial for you. For me, I know, and I don't know, like, the difference between all of them, but I know that an LLC can protect you against, like, your personal assets, and so if in the case you were to get sued, they could only take my business stuff and not my personal stuff. So that's why I thought it was really important to distinguish my business from my personal, just for worst case scenario of my life. So you'll just have to do some research on which one and I'm pretty sure they ask you like questions and you can also, like you know, google it or ask, chat, gpt, like which one is probably right for you. So, going through LegalZoom, they basically came back and gave me a business identification number, an IEN, and that is what you plug into pretty much everything.
Speaker 1:So once you start that process, we also have a tax consultant, whatever that just files our taxes basically, and so we file jointly and he does the stuff with my business. So I don't really know a lot about, like, all the tax stuff, so we pretty much just file our tax. I have to present stuff for my business. Okay, so what I had to present for my business to the tax guy and this is where you would hire an accountant to do this for your business as like a somebody that you either have virtually contracted or maybe somebody that you know is a tax consultant or assistant or CPA, or you can do this yourself so what I have to present to him, to my tax guy, is and this is funny because my husband's like we need these by tomorrow, and where he gives me a date and I obviously wait till the very last day, like I will wait till tonight and do it like under pressure because that's how I like to work. Okay, so I have to give him my expenses, my income and my income like where things have been allocated, so for write offs and just for seeing where you're spending and where you're getting money from. So it is very hard to track your income if you don't have some sort of software. If people pay cash, that is a whole nother system that you're going to have to keep track of so that, therefore, you can count it as your income and pay taxes on it. So that's when acuity scheduling comes into play, where people can pay online.
Speaker 1:I set up a business account through Fifth Third Banking and you can. I don't know why I specifically went there, but you could figure out like which one has the best like benefits, and it's just a straight debit card. I learned to not do anything on a credit card. That was one thing that my husband, um, really helped me with was um making sure that if I didn't have the money to pay for something, I'm not putting it on credit. So I have a business debit card and an account that goes with it and I deposit. Everything goes into that account. Venmo is connected to that, so I always transfer my Venmo account to that business bank account. When people pay online for things, it goes to that business bank account and so everything is easily tracked with income. Then when I'm spending, I have a business debit card to that account and I use that card for everything. What happens and becomes tricky and so annoying and things that I wish I didn't do was sometimes I use that business card for other personal things because it's also like my fun money or my like spending money aside from my family stuff, and so then it becomes very muddy. So then I have to figure out which expenses were for my business and which ones were for fun.
Speaker 1:So this is where you will want accounting software.
Speaker 1:A lot of people use QuickBooks. I did not want to use QuickBooks. I don't know, it just sounds too foreign to me, too mathematical, I don't know, it just sounded like too too much, and so I researched a freeway called Wave Accounting and so I basically you hook up your bank account and it imports all of your income and all of your expenses linked to that card and that bank account that I set up, and it will categorize all of the income to where it came from and like whether it was cash or card or Venmo, and it will put or maybe even like a refund or whatever, and then it will take all the expenses and you can set up certain categories based on whether it's like you're paying for, like client gifts, or you're paying for subscriptions, or you're paying for like camera gear, or you're paying for insurance, or like. It has like all these categories and I can put the categories that I use like in the show notes, and so it categorizes everything. So then I go in and tally all the things.
Speaker 1:Actually, I think you can print a, I think I print the profit and loss statements and it prints off like what I've spent in each category and what income has come in, and then like basically you can see what you made for a time period, so you can do it by quarter and that's how I know how much to pay for my quarterly taxes, and then I do a year-long one so I can give that to our tax guy. The other thing I give him is my mileage as like a separate document, because you can get I think it's like 20 cents a mile I don't remember how much it is. But you also want to be tracking, like your odometer on your car If you forget. I kind of just like count the mileage of like each session and put it on there, but you would preferably keep like a little tracker either on your phone or in the side of your car, if you're like pen and paper person, so that you could have that better. And every year I say I'm going to get better at like actually the number tracking, but I literally forget until I've gotten to a session and then, like I forgot after that too. So I make things like way more hard on myself and I think that's where, like you could delegate this task to somebody else, like a virtual assistant or virtual CPA or whatever that can help you do all of that.
Speaker 1:If this sounds so overwhelming, because it is. But then again I'm like a penny pincher, so I'm like I'm gonna figure this out, I am gonna do this, um, there's nothing I can't do, um, until there is just too many things that I'm trying and I'm spread thin and stressed and have no time. So all right, so you do LegalZoom, register your business, become legit, come up with a tax program, whether you're doing QuickBooks or a tracking service. Quickbooks Wave Accounting is not free anymore. I think I pay like 16 bucks a month or something. Again, this is where I would love to introduce HoneyBook and I think I am going to do like the free trial and then, um, maybe sign up for that because I think it it incorporates your tax stuff to it and so that I could get rid of that payment and just roll it into the HoneyBook payment per month.
Speaker 1:But again, it's kind of fun in a way, like when you're tracking things, because what is fun as a business owner is to see how can you make more that you can keep Okay. So in your first few years of starting a business you may be spending more than you're earning and that's okay, that's a normal business. But if every year you're spending more than you're getting, then your business is failing. So you want to have some years that you are winning and spending less. Plus that's more profit for you to like pocket if you spend less.
Speaker 1:So say that I tally all, all the amount that I spend on my client boxes or the USBs or the packaging material, like all of that stuff, and it amounts like I make a spreadsheet of like what everything costs and say I want to get the cost down of the client boxes because if I send them, you know, so often it's costing me this. Well, maybe I found boxes that I can buy in bulk and the cost comes down per box. Or maybe I buy something else in bulk and then it comes down. Or maybe there's like lighter material that I could put in the box instead of something heavy that is making it heavier to ship and costing me more money. So that's kind of fun in the business aspect is like where can I tweak what I'm spending like? For a while I was spending a lot on like prop stuff which benefits, because it's also things that I like and could put in my house, you know. So it's like a win there.
Speaker 1:But at the same time I don't I don't need another blanket, I have plenty. So I need to maybe cut costs on like how many blankets I'm buying for a session, and maybe I need one and maybe I don't, or maybe I'm like getting these things and like really like they don't add that much, you know, to my session, and so if I can cut things, sometimes I will cut things and just make it more simple. Okay, so you can do this on a spreadsheet. I basically take my stuff and tracking, like what I spend on my business and sometimes I'm really good good at this and sometimes I'm okay, like, let me just be honest, most of the time I'm not good at this, but I would like to be better and putting all my expenses in that spreadsheet so that you can calculate what exactly you are spending per session.
Speaker 1:How much does it cost you per month to do Lightroom? How much does it cost you per month for Photoshop? How much does it cost you per month for Canva? How much does it cost you per month for, like, printer supplies if you're printing labels and any product material? How much does it cost you for shipping? How much does it cost you for USBs? How much does it cost you for any like prints or things that you that you give? How much does it cost you for literally anything in your business, your gear, your computer, your anything that you are using for marketing, maybe as your client closet, maybe it is stuff for your newborn sessions, like swaddles and headbands and heaters and whatever. So all of those things can go on a spreadsheet and you can see how much is it costing you to do the shoot, okay, and then you're like, how much time is it costing me to shoot it and edit it and how much do I want to get paid per hour?
Speaker 1:And you're starting to come up with these numbers and you're realizing that your $50 session is not going to cut it when you are a legitimate business. So what I wish people knew is that when you are hiring that really cheap photographer, is that they're probably not legitimate and they're probably not that experienced and they probably don't have the the like higher level products, like editing stuff and things, to give you a reliable outcome. They may, you know, maybe the lighting aligns perfectly and maybe they had a great day of shooting, but ultimately, if you're charging $50, even $100, like something is lacking and it could be taxes, it could be the client experience and it could just be that they are not like they're not making anything, they're not profiting, and you know, as you're starting up, then maybe that's okay, like with you, because you're spending money on gear, but at some point you need to raise your prices to cover the things that you'll be spending on your business that you actually need like insurance. I use simply business insurance and basically it's like and basically it's like liability, like coverage, like so that if anything were to happen, that I'm covered up to a certain amount, and so that is like $200 like a year or something. But I find that really important, you know, because I want to show up to clients and in clients' homes and with newborns you're working with like little babies and like anything you know could happen, and just to be safe, it's like I want to have myself covered if you're shooting on other people's property or um, you know, I just want to like be safe. Um, so that is another thing that you can look up to help your business. I think that okay.
Speaker 1:So for taxes, you a general rule is to set aside 25 to 30% of every payment for your taxes. Do I do this? No, I keep. This is my husband's suggestion that was like so good for me is that I keep $1,000 as my zero in my account. So if I get down to $1,000 with spending, then in my mind I'm at zero and I don't like that. So I just try to keep the income coming and not spending when I, until I see like a good amount in there and then I'm like, okay, like I, no matter what, I will always have money for those things that sneak up on me like, oh my gosh, I forgot to pay this quarter's taxes. Well, I've got enough in there. If my minimum is a thousand, then I've got. Sometimes it will be like my quarterly taxes are like $700 and I go down to 300, but I have 300 and I'm not negative $600 or $700 because I had to pay that tax. So financially it's great to give yourself a buffer or hide some cash, you know, like in an emergency or something, but you can also just keep a record of your that 30% from every income. So tracking definitely takes time and you can do it. Quarterly is like what I have to do because I have to pay the quarterly taxes to the state, but you can do it more often and then you definitely have to do it, like that year for your end of year taxes.
Speaker 1:The unpredictability of photography is really hard if you know. You know, like if you have a really busy season and you're getting all this money in fall and then all of a sudden January hits, maybe February, and there's like no money coming in, that can be a scary spot. So you want to make sure that you are kind of building this nest egg for the slower time so that you can still cover your costs. Because every month I know things are being withdrawn out of my account and like it's things that I need and so if I can like if it's a yearly thing, then sometimes I just go ahead and pay for the year so that I don't have that monthly payment coming out, so I don't have to be like like really going in debt with the subscription services that are coming out and some you know I can cancel and like be okay for a month or if I'm not that busy. So you just kind of have to be aware of like the unexpected expenses that may be hitting your account and to prepare for them in the busy season so that you'll be okay in the slower season and that you've planned ahead.
Speaker 1:Other things that you can do for like the slow months, for like passive income, is the like mini sessions. Maybe you're offering like some sort of summer one, or maybe you're offering like a spring, like early spring one or like Valentine's Day, whatever. Sometimes that can offset some of your slower season with mini sessions. I it's like hard like when it's like a busy season and you're offering like mini sessions and you just have like so much on your plate. So it's good to, if you're not a mini session person, to maybe offer something like that in your slower season to get some other income coming in.
Speaker 1:Other things that you can do is you can end up selling like presets. You can have print sales, you can sell like digital products. You can promote something for later and have people put a deposit down. Um that is always good is like in July I promote my um like Christmas or like fall sessions, and so then I have money coming in for people that are pre-booking fall um. So just be aware of like that photography is the ebbs and flows of income and so you can't predict that you're going to have this amount every month. And so just to plan ahead of time and have that emergency fund available in case your computer dies or in case something comes up that you forgot, that you paid last year and now all of a sudden there's $300 coming out, like next week. So there's always like unexpected costs that come up. As a business owner, that is the not so fun part of being one All right.
Speaker 1:So the thing that I'm kind of in now when it comes to like finance stuff is really just diversifying my income and like that is partly with affiliate marketing, like if I'm doing my Amazon storefront stuff like that also, stock images can be a great thing to try. I keep thinking I'm going to be slow and I'm going to dive into stock photography, but I've been pretty busy and I started like 10 things you know. So it's like, oh, I could do stock, or I could work in my garden or my Etsy shop or a digital download or record a podcast or actually like edit my photos. That is like my main thing you know to do, um or promote my business or whatever. Um, so you could offer um like prints and albums. But again, sometimes this is just taking more time. I'm trying to think of things that like are like passive income. So, uh, creating like digital guides and, um, maybe even at some point like mini courses. That's what I am going to offer after this podcast.
Speaker 1:Um, and looking into like other collaborations that can help bring in more money. Um, really, there's just like there's things that you can do like um, not even just stock photography, but okay. So, like with my etsy store, people buy a lot of like mock-ups, so like plain shirts, like, if you know photography and you like studio style, um, it doesn't even have to be studio style, but you're trying to like get these blank pictures so that people can put their product on it, so that could be a really good thing to market or to sell. Then, obviously, like upselling packages, just be creative, like there's so many things. We'll have another episode that's totally like all about like passive income and what you can do as a photographer to go down different avenues. So if you're interested in that, just let me know. Okay, so I think you have a good gist of photography finance basics.
Speaker 1:So again, just to recap, if you haven already um defined your business as legit, go on to legal zoom or um another platform, or I know you can do it just by going to like your state government sites. I believe I don't know. Um legal zoom, okayzoom. Sign up for creating your business. Get your business identification number, set up a bank account that is specifically under that identification number and that everything can be tracked in that bank account. Get a software program that can help you track your income and expenses to make it easier for tax time and then making sure that you are making enough to cover slow seasons and unexpected business cost and hopefully you will be on track to building your business and making better photos. Join me next time. I'll see you guys later, bye.