Bookkeeping??? I just want to shoot
If you don't like keeping track of your spending or budgeting and you just can never see yourself doing this, then read no further.
However, if you want to make money with your camera and do this as a profession you have no choice but to keep track of all your expenses and income or you can go to jail for tax problems. It is just that simple.
Even if you hire an accountant you must keep records to give to them.
I am writing this to help anyone who hates doing this and if you do like it maybe a simple way to do it for now on.
All you have to do for the IRS is show where all your income is coming in from and what are all your expenses. By the way you need to have documentation to back this up in the form of receipts and/or record keeping.
This is what I do for my record keeping for the IRS.
These are some tips I have to offer for photographers to help with taxes.
First a disclaimer: I am not an accountant or lawyer, so please check anything I say with a Certified Public Accountant.
I recommend using Quicken Home & Business. Here is a link. This only works on Windows, but you can run this on your Mac.
How to run on a Mac.
You need to set aside some hard drive space to run a Windows platform. I use VMware Fusion which costs $49.99.
You will still need to invest in one last software: Windows. Good news is you can still buy Windows 7 for around $79.99. Price dropped when Windows 8 came out.
Why I use Quicken Home & Business?
When I got my first computer it came with Quicken and I just started using this back in the 1980s.
I liked a few basic features, which for the most part are the same as the first version I ever used.
The template looks just like your check register. You have box for Payee, the amount and most importantly the category.
Categories
Quicken helps you setup categories based on IRS Schedule C for your business. Out of the box you can select the default and be pretty close to being done. My suggestion is to pay a CPA to consult on the categories you need to use for your business.
Now there are a few cool things that Quicken can help automate your book keeping. One of the best things is many of the credit card companies make it so Quicken can talk to them and download all your transactions. The only thing you will need to do is to be sure the right category is assigned to each transaction. But after the first time with a vendor, the next time it comes up it goes to your last category.
If you use multiple categories for a vendor it will let you choose which one from a pull down menu.
Receipts
You can attach a receipt to any transaction. This is very important for book keeping.
You may also be wondering about what the IRS thinks about digital receipts. The short answer is that digital receipts are as acceptable as a paper copy. According to Rev. Proc. 97-22, the IRS allows taxpayers to save electronic images of documents and destroy the original hard copy.
If you scan your receipts and then attach them to the transaction you are meeting the IRS requirements.
You can see here a scan of a cash receipt. I put this in my Cash Transactions.
Vehicles
Quicken even comes with a Vehicle Mileage built in.
Tips for tracking your mileage.
You will need the odometer reading for the beginning and ending of each year. So, New Years Eve or Day you need to write down the odometer reading.
Think of tracking your mileage like you would do a checkbook transaction. You need to write where you went for business. You need the starting odometer reading and the end reading. If you like you can track your tolls in the same place as well as your parking. I choose to track all my receipts for tolls and parking either my credit card account or cash account.
The IRS will want your total business miles, personal miles and over all mileage for the tax year.
Also keep track of actual vehicle expenses. You can deduct which ever you want–mileage or actual expenses.
If you have a smartphone this is really cool and easy way to track your mileage. I recommend you checking out TripLog for use with your Android Device or iPhone.
TipLog Highlights
Since I am tracking all my personal and business expenses I can easily see what my actual expenses in a given year are for a vehicle. This is where you might put in the note field which car was at the shop. So you can use actual expenses or mileage for the IRS forms. The good thing is TripLog and Quicken Home & Business helps you decide which is the best to use any given year.
Invoicing
I like the ability to use your logo and customize your invoices with Quicken.
To get paid I must invoice by clients for the work I did for them. I have setup a few categories of billables that I use for invoicing.
You can have for example unlimited number of ways to charge for your services. Once created it will automatically drop in all the explanation that you use to describe what you did for them.
If you have taxable items that you invoice for, then you can setup those categories to automatically tax at the rates for your area.
It is quite common to have some billables that are taxable and others that are not. Again, this is a reminder why you need to talk to a CPA to get you setup.
Another cool thing with the software, is you can put in the due date for invoices and Quicken will help you know what isn't paid and who is late paying. This is critical information when you are short on cash due to slow payment.
April 15th
If you have used Quicken Home & Business through the year to track all your expenses and income, then TurboTax Home & Business can import all this data and then basically you just click through questions verify that it is correct.
Filing my taxes has never been easier.
However, if you want to make money with your camera and do this as a profession you have no choice but to keep track of all your expenses and income or you can go to jail for tax problems. It is just that simple.
Even if you hire an accountant you must keep records to give to them.
I am writing this to help anyone who hates doing this and if you do like it maybe a simple way to do it for now on.
All you have to do for the IRS is show where all your income is coming in from and what are all your expenses. By the way you need to have documentation to back this up in the form of receipts and/or record keeping.
This is what I do for my record keeping for the IRS.
First a disclaimer: I am not an accountant or lawyer, so please check anything I say with a Certified Public Accountant.
I recommend using Quicken Home & Business. Here is a link. This only works on Windows, but you can run this on your Mac.
How to run on a Mac.
You need to set aside some hard drive space to run a Windows platform. I use VMware Fusion which costs $49.99.
You will still need to invest in one last software: Windows. Good news is you can still buy Windows 7 for around $79.99. Price dropped when Windows 8 came out.
Why I use Quicken Home & Business?
When I got my first computer it came with Quicken and I just started using this back in the 1980s.
I liked a few basic features, which for the most part are the same as the first version I ever used.
Categories
Now there are a few cool things that Quicken can help automate your book keeping. One of the best things is many of the credit card companies make it so Quicken can talk to them and download all your transactions. The only thing you will need to do is to be sure the right category is assigned to each transaction. But after the first time with a vendor, the next time it comes up it goes to your last category.
If you use multiple categories for a vendor it will let you choose which one from a pull down menu.
Receipts
You can attach a receipt to any transaction. This is very important for book keeping.
You may also be wondering about what the IRS thinks about digital receipts. The short answer is that digital receipts are as acceptable as a paper copy. According to Rev. Proc. 97-22, the IRS allows taxpayers to save electronic images of documents and destroy the original hard copy.
If you scan your receipts and then attach them to the transaction you are meeting the IRS requirements.
Vehicles
Quicken even comes with a Vehicle Mileage built in.
Tips for tracking your mileage.
You will need the odometer reading for the beginning and ending of each year. So, New Years Eve or Day you need to write down the odometer reading.
Think of tracking your mileage like you would do a checkbook transaction. You need to write where you went for business. You need the starting odometer reading and the end reading. If you like you can track your tolls in the same place as well as your parking. I choose to track all my receipts for tolls and parking either my credit card account or cash account.
The IRS will want your total business miles, personal miles and over all mileage for the tax year.
Also keep track of actual vehicle expenses. You can deduct which ever you want–mileage or actual expenses.
If you have a smartphone this is really cool and easy way to track your mileage. I recommend you checking out TripLog for use with your Android Device or iPhone.
TipLog Highlights
- The most popular GPS mileage tracking app with over 300,000 downloads
- The only app that AUTO STARTS when connected to power or Bluetooth devices
- The only mileage tracking app that reads a vehicle's odometer from OBD-II devices
- Sync and merge data to TripLog Web from multiple devices with Fleet Management
- The most comprehensive reports compliant to IRS TAX returns
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| Click on image to see larger |
Since I am tracking all my personal and business expenses I can easily see what my actual expenses in a given year are for a vehicle. This is where you might put in the note field which car was at the shop. So you can use actual expenses or mileage for the IRS forms. The good thing is TripLog and Quicken Home & Business helps you decide which is the best to use any given year.
Invoicing
To get paid I must invoice by clients for the work I did for them. I have setup a few categories of billables that I use for invoicing.
You can have for example unlimited number of ways to charge for your services. Once created it will automatically drop in all the explanation that you use to describe what you did for them.
If you have taxable items that you invoice for, then you can setup those categories to automatically tax at the rates for your area.
It is quite common to have some billables that are taxable and others that are not. Again, this is a reminder why you need to talk to a CPA to get you setup.
Another cool thing with the software, is you can put in the due date for invoices and Quicken will help you know what isn't paid and who is late paying. This is critical information when you are short on cash due to slow payment.
April 15th
If you have used Quicken Home & Business through the year to track all your expenses and income, then TurboTax Home & Business can import all this data and then basically you just click through questions verify that it is correct.
Filing my taxes has never been easier.
3 comments:
Great advice Stan.
I must add one thing about vehicle expenses, when you file, use actual costs vs miles. It comes out to much more.
Gas, oil, tires, repairs, additions, all add up quickly. I have a Jeep that I used for work and was able to write off my lift kit (Lived in Colorado and had off-road assignments), roof rack (used it to stand on my roof for better access), and a new engine.
Also, it's easier to keep a written record of what you drive. If you miss a day, it's easier to look at the record to figure it out.
If you notice I recommend tracking both. I have found just the opposite of Pablo, that miles came out more most every year for the past 30 except for a year.
The point is to keep good records because it can save you a lot in taxes.
Good Post Stanley! I absolutely hate this part of the business of photography. BUT, I learned very early on how important it is, mostly after being sloppy with it and getting into a wee bit of trouble with the IRS! There are many things I don't understand and one of the things I learned is that I don't really have to understand all the tax stuff. What I could do was to hire someone who did, so I chose to use a bookkeeper and accountant. It all goes back to the knowing the cost of doing business and building the fees for both into your pricing. I find he expense of these professional services well worth the peace of mind that comes with this business essential.
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