Finance Q+A

By popular request, last year I put together a few money-related tips I had for photographers. (You can read that post here).

The information in this post should not be considered legal or financial advice, as I am not a licensed accountant, attorney, or financial advisor. Please consult your licensed accountant, financial advisor and attorney to determine what is best for you and your unique financial situation.

Building upon that, here are a few questions I’ve been asked recently:

Q: This is the first year doing taxes for my business. What should I do?

A: First, make sure your business has an EIN number from the IRS. Open separate business bank accounts (checking, savings, and credit card) and try to keep all business and personal expenses completely separate. Next, check all state and local requirements for sales tax and apply for a license/permit if needed.

Subscribe to a bookkeeping software (I use GoDaddy but most people use QuickBooks) and connect your business accounts for an automated and seamless ability to account for every transaction.

Keep every single receipt organized in a safe place for both money coming in and money going out.

Start interviewing local CPA’s. You will want someone who is very experienced with small businesses, is easy to work with (for me… that means prompt responses to questions!), and willing to answer your questions. This CPA will be who will file your taxes for you.

Q: Is your flat travel fee included with the package they get or is it separate?

A: All travel + mileage fees are separate from the package price!

Q: What kind of insurance should an equestrian photographer have?

A: At the very minimum, your business should have general liability insurance and a policy that covers your gear (usually called business property insurance).

Q: What kind of financing software do you use? Quickbooks? Some other program?

A: I have used GoDaddy’s bookkeeping solution since 2013. I wish I used QuickBooks because they offer more integration options, but I can’t import prior history to them.

Q: How much do you keep in your bank account? Is there a minimum amount you won’t go below?

A: I keep an “emergency” balance in my bank account that can cover 6 months of my business expenses, and then working capital (cash flow to cover regular expenses) on top of that. I usually never go below $50,000 in my business checking account.

Q: How many years did it take you to get enough clients to be able to go full-time in photography?

A: I started my business at the end of 2013 and went full-time at the beginning of 2017. I have a few tips for going full-time here!

Q: What % of income do you recommend to continually put into savings?

A: At the beginning of my business I set aside an amount for business savings to use in the case of an emergency. This amount was equal to 6 months worth of business expenses. I’ve never worked off of percentages of income. Instead, I create revenue goals for the beginning of the year and then goals I want for my retirement accounts and contributions to my personal savings accounts.

Q: How do you pay yourself? A certain % of each session?

A: Because my business is an LLC filing as an S-Corp, I am required to pay myself a salary (at the rate of a “reasonable compensation” determined by my CPA). I also contribute to my retirement accounts. I don’t work off of percentages so I make owner distributions throughout the year based on my available cash levels after my salary and retirement contributions. As for retirement, I used to have a SEP IRA but switched to a Solo 401k plan for the higher contribution limits.

Q: When do you choose to make the next investment in your lens?

A: I base these investments on my needs and cash flow. If it is a dire need but I am low on available cash, I will dip into my emergency savings. However, if it is just a “want” then I will wait until I have met my goals (retirement and savings contributions) and then spend the money how I see fit!

Q: How do you ensure that your business and personal finances stay separate?

A: I keep them in separate accounts, and even at separate banks!

Q: I have never sold prints or wall art and I am wondering how you arrived at an appropriate markup.  Do you use a percentage?  

A: This depends entirely on how you have structured your business. For my all-inclusive packages, I make my minimum needed per session so any print sale is just gravy. Therefore, I mark up my products at least 6x so that I can offer discounts as an incentive to purchase and still be able to cover a re-print of the item if it is damaged or I make a mistake in the ordering process. However, if you offer your services and product a-la-carte, you may need to mark up your items significantly higher to reach your minimum needed per client.

If you need help understanding how to build your pricing structure, I have a course on how to Price your Photography Services!