Gross income broken down for the independent photographer

If you are thinking about becoming a professional independent photographer, take a look at some of these numbers. You may want to keep your day job and do this as a hobby instead.

Numbers before lunch

One thing most self-employed people know about their business if they are successful is only a small part of what you charge a client actually is what you will take home to pay the bills.

These are my numbers and they will widely vary from business to business. Your age makes a big difference for medical for example.

According to my numbers this morning I could break down every $100 into four major categories:

1. $19 Medical Expenses 
2. $36 Business Expenses
3. $14 Federal and State Taxes [Self-Employed pays double vs staff person, and no you don't get to take home more because you don't pay more as a staff person. The company pays that other 1/2.]
4. $31 Net Income

Once you start figuring out where all your money is going you get a lot better at being sure your prices are high enough to survive. Surviving is paying all your bills and doing it on time. If I wasn't debt free then another piece of the pie would be for interest. 9% credit card interest may turn into a 3% loss of income going to pay off debt.

Numbers after lunch

So after working on those numbers I went to lunch and while eating broke my tooth. After a trip to the dentist I now changed some of the numbers by 1%. Medical went up by 1% and net income just went down by 1%.

You cannot plan for all emergencies. You cannot count on a certain income coming in either. 

What most business owners do is to run a tight ship most of the year and then in the last quarter talk to their accountants and then might do some upgrades to equipment or other purchases to help lower their taxes and also make capital improvements.

Many business owners will give more to their church the last quarter or to a charity. The reason for the delay is the importance of reserves.

If you are young and in your twenties and not married then your medical expenses could be drastically lower than mine. I am covering my family and I am in my fifties. Just being that old will give you higher rates for medical insurance.

Have your papers in order if you want to get paid

Expenses from a trip for a client

Virginia Adams, Pam Bonser and Alfreda Thompson all have been very important clients of mine through the years.  What you need to know is why they are important to me.

All three of them were the administrative assistants at places I worked or did work for that processed my invoices and expenses.

The most important thing for me at the end of the day is that I was paid for the work I did.  If I do an excellent job, make the client very happy with my work, and I do not get paid, then tomorrow I have to go and find another job, because I must pay my bills somehow.

How quickly you get paid has a lot to do with your paper work.  All of these administrative assistants were my contacts.  They interfaced with the accounts payable department and not me. 

They taught me to document all my expenses like: meals; transportation; hotels; mileage; tips for couriers; and miscellaneous items.  By having a scanned copy of each receipt attached to the invoice will insure payment in a timely matter. 

Their role is to look at the expenses and evaluate each expense.  Most companies have limits for meals for example and any unusual expense needs an explanation to forward to the next person in the process.  These notes are there for when they get audited.

Form W-9

Why is this necessary?  Well there are a few scenarios where having your papers in order will help the client in the long run.  I hate to bring this up, but there are times when your client could be in a political battle for budget planning.  Other departments can put pressure on the accounting department to audit them and see if they are being good stewards. 

If you have done a great job with providing receipts and explanations on your invoice for any abnormalities then when questions arise with the auditors they will give them a clean report.  However, if the books are sloppy this will be enough to not only affect their budget requests going forward, but may get your client fired.  When this happens you have to start all over and hope the person replacing them will use you.

If your papers are the reason the person lost their job, then the replacement will most likely not use you.

One more thing you need to do with each new client.  If you are doing freelance always give them a Form W-9.  They need it and if you do not give it to them when your invoice is due for payment they will call and request one.  So if they pay in a 30 days cycle you could be waiting another 30 days for payment past the first 30 days.

Just like in making pictures I want my standards to be higher than my client so I am giving them my best.  Do this for the paper work.  Your client my not ask for this much detail, but if you do this they will not only be pleased you will look even more professional.

The clients who hired me trusted and listened to Virginia, Pam and Alfreda.  I want to impress them with my paper work as much as I want to impress with my photography.

Scan and attach a copy of all your receipts for the client