Taxes. Does that word make you shudder?
For most photographers, it does. We have creative minds and numbers are often low on our list of exciting things to do for our business.
Did you know that there is more than just your annual taxes that you’re responsible for paying in a year? Did you also know that there are some taxes you can charge your clients?
If you just internally shook your head, then you’re in the right place because I’m going to walk you through which taxes you (as a small business owner) are responsible for paying, and which to collect from your clients.
And if you’re looking to keep more of your money in your pockets, you’re going to want to join me for my free class — Maximizing Your Tax Deductions as a Photographer. In this masterclass, I’ll walk you through the five most common tax deductions that photographers miss when preparing for tax season. (The ones I used to save $12,817 last year!) I’ll also give you actionable tips so you can maximize your deductions and keep more of your hard-earned money.
Common Tax Mistakes Photographers Make
When starting out, there are a few common mistakes photographers make regarding taxes. This can be things like not charging sales tax, missing estimated tax payments, or not saving enough money for all the tax-related payments throughout the year. These can all be avoided with a little preparation. Taxes are not just a once-a-year thing once you’re a small business owner.
There are several tax deadlines throughout the year. Making sure you have these marked down ahead of time will help you avoid late payments or mistakes due to rushing to get it in on time. In addition, setting money aside throughout the year takes the stress off of how you’ll pay for these different payments.
I suggest setting 30 percent aside from any income you receive for your business as soon as it hits your bank account. This takes that money out of sight, so you’re not tempted to spend it on something else. Then, just transfer that money back to your account when a payment is due and you won’t have to be stressed about where that money is going to come from.
Taxes You’re Responsible For as a Business Owner
Now, let’s break down which of these taxes you are responsible for and which you can charge your client. First, let’s go over the taxes you need to pay.
The one that everyone is aware of because you pay it if you’re self-employed or not is the annual tax return. This consists of federal, state, and local income tax.
Depending on your state, you may pay towards all three of these or just some of them. As a business owner, this annual tax return also includes your self-employment tax, which covers your Medicare and Social Security contributions each year. All of these taxes are based on a percentage of your income and thus you are required to pay them.
If you make more than a thousand dollars in a year for your business, you are then required to also pay estimated taxes. These are quarterly taxes based on the filer’s reported income for a period. Small business owners are required to pay them because their income is not subject to automatic withholding like an employee is.
These payments go towards your annual tax return, so it is covering your income taxes and self-employment tax. With estimated taxes, at the end of the year, you pay the remaining balance or you could receive a return if you overpaid. Estimated taxes are not perfectly spread out over the year, so make sure to note the deadlines in your calendar.
Better yet, make a note in your calendar for two weeks before the deadline to make sure you give yourself enough time to review everything and pay. I would also recommend doing this for your annual tax return. April 15th is a very known date, but don’t wait till the last minute to file them. Your accountant or CPA may be swamped and you don’t want there to be a chance that you don’t make the deadline.
Set your appointment with them in February or March, as soon as you receive all your tax-related papers, to make sure you have plenty of time in case something comes up.
Taxes You Should Charge Your Clients as a Photographer
Now, let’s switch over to taxes that you should charge your clients. Sales tax is a consumption tax imposed by state and local governments on the sale of tangible goods, and in some cases, certain services.
Most importantly, it’s a tax that should be collected by you and passed on to the government. If you do not collect it, that doesn’t mean you don’t have to pay it. That just means the government will still expect it from you and you will have to pay out of your profit. The big thing about this tax is that every state is different on what you can charge sales tax on.
Some states charge it on products, some on services, and others on both. Make sure to work with your accountant or CPA to nail down what your state rules are and what percentage you should charge your clients. Then, make sure to keep track of how much you have collected either with a spreadsheet, your CRM, or another program so you’re prepared when the deadline comes.
Sales tax is either paid monthly or quarterly based on your income, so make sure to check this and then add the deadlines to your calendar. Either way, it’s always due on the 20th of the month, so make sure to pay it a few days ahead of time. Depending on how early you make the payment, you could receive a discount for the early submission.
It’s always better to plan to pay early because you never know what may come up.
This week, pull out your calendar and mark these dates down so you don’t fall behind. Oh, and this video walks you through the different deadline dates you should be aware of.
Have questions about your tax responsibilities? Ask away in the comments below!
Few things make me more excited than getting the chance to help another photographer prepare for an easier tax season (and keep more of their hard-earned income! So, don’t forget to sign up for my free class — Maximizing Your Tax Deductions as a Photographer.
Give me an hour of your time, and I can show you:
➡️How to reduce your tax liability and improve your cash flow with tax deductions.
➡️The 5 key deductions every photographer needs to know about (and should probably be using).
➡️What qualifies for these deductions, and what doesn’t.
➡️How to calculate the deductions that aren’t simple and straightforward.
Last year I saved $12,817 just by utilizing the 5 key deductions I’m going to be sharing with you, so this is a class you won’t want to miss!
Let’s Prep for Tax Season – Together
Keep more of what you make inside of your business with these 5 key deductions for photographers. I’m sharing all inside of my free class — Maximizing Your Tax Deductions as a Photographer!
Make tracking your numbers easy with my Tax Prep Spreadsheet and ensure that tax season is a breeze.
Transform your passion into a thriving business and unlock success for your photography business with my free guide to setting goals for the first year of your photography business.
Mastering your business taxes starts with understanding the different tax categories. Grab my free tax category guide to take the first step towards stress-free taxes today.
Want taxes to suck less? Learn how to correctly prepare your taxes for your accountant with the Photographer Tax Course – and say hello to a confident and calm tax season!
Don’t know what you don’t know? You’re just 90 minutes from a custom tax prep system with my 1:1 Tax Prep Mentoring sessions!
XOXO ~ Heather Marie
Other Helpful Tips for Photographers:
How to Easily See Where the Money is Going in Your Business
Automate Your Bookkeeping: Spend Minutes, Not Hours Taming Your Finances
+ COMMENTS
add a comment