Identify common mistakes and learn to master your money in this article on bookkeeping for photographers. You’ll be profitable in no time! (Featuring TANYA HIRSCHY with TIDY BOOKS | Photos by CASSIDY ALANE)
The best part of owning your own business is, of course, owning your own business. But the worst part of owning your own business is running your own business. All the records and receipts, the tax filings and account numbers, the scheduling and the contracts – oh! and the revisions to those contracts every time something goes awry and you think, “A-ha! That should be a clause in my contract!” (Cue call to attorney.)
With all the administrative work you do to keep your photography business running, it’s easy to understand how bookkeeping can fall by the wayside. “I’ll get to it later,” you say, until you’ve accumulated 12 months of “laters” and tax time has arrived with its greedy little paw outstretched for a chunk of your hard-earned income.
Bookkeeping for Photographers
That’s why, in 2016, former photographer Tanya Hirschy launched Tidy Books, a virtual bookkeeping service designed solely for photographers. “A lot of photographers do NOT enjoy the numbers side of things,” Tanya states, “or they simply don’t have the time to keep up with their books.” That’s where Tanya comes in. Tidy Books offers monthly bookkeeping services to established photographers, and provides organizational assistance to photographers whose businesses are still in their infancy.
We reached out to Tanya and Tidy Books to find out where most photographers go wrong, and how YOU can set yourself up for long-term financial success.
Top 3 Money Mistakes Photographers Make
In her cloud-based bookkeeping business, Tanya has seen her fair share of major money mistakes. The most common challenges her clients face include:
Mistake #1: No Cash Flow
Tanya regularly meets with photographers who simply feel broke. They are rolling in dough during the busy months, but counting their pennies the rest of the year. “The income in this industry is most often not predictable,” explains Tanya, “and it’s hard to get a handle on the money coming in and out of the business. It’s a challenge to manage fluctuating revenue and prepare for the low income months.”
Mistake #2: “Bookkeeping? What bookkeeping?”
Over and over, photographers approach Tanya with little to no structure in place for maintaining their books. “Either the numbers are overwhelming and therefore the books are messy, or bookkeeping is simply taking too much valuable time that could be better spent focused on growing the business.”
Mistake #3: Mixing Business and Personal Funds
“This is a big one,” sighs Tanya. “Lots of photographers come to us with the bad habit of mixing personal and business funds. Knowing how to keep things separate and how to correctly pay yourself as a photographer is a common challenge.”
Real Solutions to Real Problems
Money mistakes should never be ignored, but if you have slipped up, there’s still hope! Mistakes like the ones mentioned above play out in the following true stories from real-life Tidy Books clients – all of whom found ways to get back on track:
True Story: “My spending is out of control!”
“The biggest mistake I’ve seen is a common one,” Tanya shares. “My client came to me saying that her spending was out of control. She felt like she never had money in her business, and her account was overdrawn almost monthly. She:
- couldn’t get a handle on the money coming in and out of her business.
- was defeated and discouraged by working so hard and having nothing to show for it.
- had no idea how much money she was actually making and if it was worth all of her hard work.”
The Solution to Overspending
“We started by completely separating her business and personal expenses,” says Tanya. “No more using her business card for personal purchases. From there, we were able to get a clear picture of her business profit. We laid out a big picture of the money coming in and out for the year. Then we analyzed all of her expenses and cut areas that were sucking profit.
“Now: she’s making a good salary and gives herself a consistent paycheck each month. She also knows exactly how much profit her business made this year, and she can strategize about growing her business. Not to mention the relief she feels now that she’s in control of her money instead of the other way around!”
True Story: “My bookkeeping is hurting my business!”
“One client came to us and said, ‘If I could just get my money management together, then I could really scale.’ And that’s exactly what happened. We got her organized and confident in her finances, and she went on to make her highest revenue yet that year!”
The Solution: It’s all in Your Head
“Getting your books in order starts with your mindset,” explains Tanya. “It takes getting over mental hurdles like shame, procrastination, and fear. It’s not an option to ignore your books! As a business owner you have to know what’s happening with your money. You have to be consistent, and you have to be professional about it. To avoid the common pitfalls, educating yourself about business finances and how to manage your books will go a long way.
“The next step is to get yourself some accountability from someone who will help get you on the right track and be an advocate for your business. This could be your spouse or another photographer or your bookkeeper. Find someone who will ask you:
- are you paying yourself too much or too little?
- have you curbed your spending?
- are you keeping your records up to date?”
Top 3 Tips for Making Your Money Work for You
Now that you can identify your money mistakes, it’s time to get organized and reestablish your business as a financially-lucrative, well-managed money-making machine. This is what Tanya suggests to get you (re)started on the right foot:
Tip #1: Create a Process
“Once things get busy, managing your books will take a back seat,” acknowledges Tanya. “You need a simple, sustainable system in place; then it will be much less overwhelming for you.”
Tanya recommends QuickBooks for photographers who want a tried-and-true software to lean on, but any bookkeeping solution can work if you maintain it. Even a simple spreadsheet can solve your bookkeeping blues! Just be sure you’re regularly updating your number and reconciling your accounts.
Tip #2: Educate Yourself
You can’t know what you don’t know. So get familiar with terms like revenue, gross profit, and net profit. “Make sure you understand sales tax,” Tanya advises. “Know how often you need to file taxes and what is deductible.” In the United States, photographers can get most of these questions answered through their state’s Department of Revenue website.
Tip #3: Stay Consistent
“Schedule a time to update your books once a month – or even once a quarter – and stick to it!” Tanya says.
Maintain your books the way you maintain your photography equipment, with regular review and thoughtful attention to detail. You wouldn’t wait until you’ve arrived at a shoot to charge your batteries, after all. So don’t wait until it’s tax time to catch up on the previous year’s bookkeeping!
Get Your Money Management Back on Track
When your money management is streamlined, you get to spend more time creating and less time calculating. If you’re ready to boost your financial wellness, begin with your bookkeeping. If you have extra time on your hands, you should be able to maintain your books yourself. But if you want some outside accountability, look for a bookkeeper.
“A bookkeeper is focused on the day-to-day vitals of your business. They see the money coming in and out, and they organize it for you,” explains Tanya. “Your bookkeeper can also answer straightforward ‘is this deductible?’ questions and give you insight into the financial state of your business. They help you get everything ready to see the accountant at tax time.”
At tax time, you’ll want to hire an accountant. “An accountant’s main focus is taxes – keeping you in line with IRS regulations and planning ahead for tax-time.”
Tanya advises that, eventually, if you’re hoping to scale your business, you’ll likely need both a bookkeeper and an accountant working alongside you. “It’s one of the best investments you can make in your business!”
Bookkeeping for Photographers, by Photographers
Though Tanya doesn’t photograph professionally any longer, her years as a working photographer prepared her to serve this creative industry and its unique needs.
“I’ve gotten to meet so many creative people who are fantastic at their craft and have built really smart businesses,” expresses Tanya. “Finances are such a personal, often emotional topic, and the fact that photographers trust me with their books and finances is a great privilege.”
How do you manage your bookkeeping?
Share your tips and advice in the comments below!
Join us on Wednesday, January 15, 2020, at 1:00 PM (EST)
You’ll Also Like…
The post Make Money, Not Mistakes: Bookkeeping for Photographers appeared first on ShootProof Blog.