Having your Small Photography Business Financially Prepared for an IRS audit is important!
Really important!! I promise!
Most of us photographers ended up in the business because we love to create beautiful photos. Our family and friends start begging for photos the latest buzz was about how amazing your photos are. At that point, we quickly try coming up with a price-list we feel comfortable with. The mistake is not realizing that once we start taking money, this isn’t just a fun hobby any longer. It’s real business. And business needs to be accounted for and properly recorded.
It does not need to be complicated. It’s not scary!
What is scary is getting audited without being able to back up your business income and expenses.
Simple excel spreadsheets should be more then ok if they are properly organized. Personally, I use Quickbooks. I found it to be pretty strait forward and can find any answers I need by “asking google”. You can easily create income and expense accounts. All my purchases get recorded, as does my income. I know many people will tell you to just get an accountant, but if you are just a bit savvy you can really do it all yourself and you’ll be fine.
So, how do I know?
I know because I was just audited by the IRS!!!
I got a letter in the mail about it and honestly, I was really stressed out! I had to pull all my records from 2012-2014. Thankfully all my efforts of keeping organized over the years paid off. I received a field audit, which means an IRS agent actually came down to my place of business, which in my case is my home. The lady was really sweet. I showed her all my accounts, saved a copy of neatly organized folders containing statements, receipts, etc. to a CD and she was happy with it!
So for my tips:
#1: Keep your business and personal finances separate!
Having a separate bank account and separate credit cards is a great way to back up your cash flow and acceptable proof of income and expenses.
#2: Use a business credit card.(or at least a separate one just for your business expenses)
Your credit card statement is a good record of any purchases you may have incurred. If you have all your personal expenses mixed in, it’s harder to prove what’s what and will be a real headache to sort through.
#3: Make a habit of downloading all bank, credit card, paypal, etc. statements!
If you close out an account, they may not be available in a few years and will cause you a big headache in case of an audit. (It happened to me! Thankfully I was able to find a receipt for almost every transaction listed in my quickbooks credit card register in my email inbox! But that took an insane amount of hours to go through and could have been easily avoided had I backed up a copy of my credit card statements)
#4: Make sure to have a clear list of your income, cost of goods sold, and expenses.
Everything listed there needs to be backed up by either one of the statements we mentioned above or, for cash purchases, keep your receipts. (You can simply scan them into a folder with receipts to avoid the paper hassle) These should also match what’s listed on your Schedule C in your tax return.
Once your business expands, I do recommend possibly getting an accountant.
However, for the small time, new, or side business photographer, the tips above are really doable and will save you should you ever have your business audited!
So, what’s an ND – Neutral Density – Filter? How will it help block ambient light?
It’s basically a dark filter you can place on your lens, kind of like sun-glasses, to block out extra light.
Many photographers will use it outdoors on a sunny day to allow for using a slow shutter speed.
In those situations, you’d choose one that blocks many stops of light.
Personally, I use it for my home studio.
I have horrid overhead lighting which I don’t always want to turn off. I don’t feel comfortable with the low light type scenario with clients.
Since the ambient light interferes with my studio light – I needed a way to cut it out & overpower it with my strobes.
The problem I ran into was that I needed to close my aperture down more than I like, resulting in too much of my images in focus.
I wanted to be able to shoot in the f/2.0 – f/4.0 range with my strobe.
The solution: A 3 stop ND filter!!
(personally, I use this one)
When buying an ND filter, make sure you purchase one that will fit on the lens you will be using it on.
How I work it:
I set everything up, with my overhead light on and my strobe powered off.
Then I take a test shot with the ND filter on my lens using the setting I would ideally like to use.
If the shot is black, then mission accomplished! That means I have successfully blocked the ambient / overhead light.
At that point, I power on my strobe & raise the power until I get a proper exposure.
One thing to look out for is that I have found at times, the color of the ambient light mixes in with my shot. I recently switched from an AB400 to the Einstein & have not found that to be as much of an issue when using the color mode.
Let me know if you have any questions!
Since I love technical, geeky, computer stuff just as much as I love photography, I decided to start sharing tutorials and tips to ease a photographer’s workflow. Since Lightroom is an essential part of my workflow as a photographer, I’ll start with a tutorial on how to sync a Lightroom Catalog across computers using Dropbox.
Many photographers work on a desktop computer, but may need to access their Lightroom Catalog and photos on the go, from a laptop, or simply to finalize work at home.
Trying to sync a Lightroom catalog across different computers proved to be a task I needed to find a work-around solution for.
In most situations where you’d like to share data, you can easily use a server – and viola! Mission accomplished. Unfortunately, the Lightroom catalog won’t run on a server or NAS drive – making it necessary to find a different way to sync a Lightroom Catalog between computers.
After spending lot’s of time researching & testing different options, the most convenient solution I found was using Dropbox!
There are a few simple steps you’ll need to follow to make it work properly:
1. Create a Dropbox Account
You can create the account for free, but be prepared to upgrade to a paid plan, since the 2 GB of space probably won’t be enough to store your Lightroom Catalog & associated photos.
2. Download & install the dropbox folder on your device. This will create a local copy on every device which will get synced as you work across all devices.
3. Within the newly created Dropbox folder, create a new folder titled “Lightroom”. Save your catalog there.
4. Open your Lightroom Catalog & go to the ‘File’ and choose ‘Preferences’. Then, under the ‘presets’ tab, check “Store presets with catalog’.
(This will ensure the presets used in your catalog are available across all devices)
5. Store all photos in your catalog in the dropbox folder too – if not, you will only be able to access low resolution previews with an icon showing the photos are missing when not using the computer the photos are stored on.
A few tips to keep in mind:
• You will need to have Lightroom physically installed on any computer you want to access the catalog from.
• It is ideal if you set the exact same user path across all devices. That means having the same user-name & storing the dropbox folder in the same spot.
• Always make sure you close / save Lightroom before opening it on the second device. This will save you lots of mess and heartache!
• Dropbox will sync your latest version of your saved files, it does not create copies. Unsaved Lightroom catalog’s will be locked and un-accesable on another computer, meaning that you won’t have access to the latest changes.
• If you have a slow internet connection & files take too long to load, this may not be your best option. Although inconvenient, you may be better off storing your catalog & associated information on an external hard drive.
Let me know in the comments if you found this helpful or if you have any questions!