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Taxes can feel overwhelming for any small business owner, but for photographers, it’s especially important to get organized and plan ahead to avoid unnecessary stress and penalties. In a recent episode of the Take Your Shot podcast, I sat down with my CPA, Drake Friesen, who shared his insights on tax preparation for photographers. In this blog post, we’ll break down some of the key tips Drake shared, so you can stay organized, save money, and reduce the stress of tax season.
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Why Work with a CPA?
As business owners, we wear many hats, but when it comes to taxes, it’s often best to leave it to the professionals. A CPA (Certified Public Accountant) is more than just someone who files taxes—they are trained in accounting and tax laws and can help you avoid common pitfalls. As Drake mentioned, the real benefit of working with a CPA is peace of mind. You’ll know your books are organized, deductions are optimized, and that you’re in compliance with ever-changing tax laws. Plus, CPAs can help you save money by identifying tax-saving strategies that you might otherwise miss.
Business Structures: LLC vs. S-Corp
One of the most common questions Drake gets from photographers is how to structure their business. For most photographers, starting with an LLC (Limited Liability Company) is a great option. An LLC provides legal separation between your personal assets and your business, which protects you if any legal issues arise.
Once your business starts bringing in more income, typically around $40,000–$50,000 annually, Drake recommends considering an S-Corp. With an S-Corp, you can reduce the amount of self-employment taxes you pay, which can save you money in the long run. However, the best structure for your business depends on your unique situation, so it’s essential to work with a CPA to determine the best path forward.
Hiring Contractors vs. Employees
Many photographers work with second shooters or assistants, but how you classify them matters for tax purposes. As Drake explained, the key difference between hiring contractors versus employees is the level of control you have over their work. Most second shooters or assistants are considered independent contractors, meaning they work for you on a freelance basis and are responsible for their own taxes.
To stay compliant, Drake advises photographers to always have a contract in place with independent contractors and to ensure they fill out a W-9 form upfront. At the end of the year, you’ll need to issue them a 1099 if you’ve paid them more than $600. If you have employees working regularly for you, however, you’ll need to set up payroll and ensure you’re handling the appropriate tax withholdings.
Tracking Expenses and Staying Organized
One of the biggest challenges for photographers is keeping business expenses organized throughout the year. Drake recommends keeping your business finances completely separate from your personal accounts by opening a dedicated business bank account and credit card. This way, you can easily track income and expenses for tax purposes.
In addition, using bookkeeping software like QuickBooks can help you categorize expenses and generate reports at tax time. Even if you’re just starting out, keeping track of your spending (especially on gear, travel, and supplies) is crucial to ensure you’re claiming all possible deductions.
Don’t Forget to Track Mileage
As photographers, we’re often driving to various locations for shoots. Did you know you can deduct those miles as a business expense? Drake recommends using a mileage tracking app or a simple spreadsheet to keep a record of all business-related drives. You’ll be able to claim a mileage deduction at the end of the year, which can add up to significant savings if you travel a lot for work.
Preparing for an Audit
No one wants to think about getting audited, but it’s important to be prepared just in case. Drake explains that audits happen when the IRS wants to verify the accuracy of your tax return, and they’ll ask you to provide documentation to back up your reported income and expenses. If you’ve kept detailed records and used a bookkeeping system, the audit process will be much smoother.
By working with a CPA and staying organized throughout the year, you can reduce the likelihood of an audit and be confident that you’re reporting everything correctly.
Quarterly Tax Payments
If your photography business is growing, you might need to make quarterly estimated tax payments. Drake advises photographers to work with a CPA to calculate these payments accurately, especially if your income fluctuates from year to year. Paying quarterly taxes helps you avoid large tax bills and penalties at the end of the year.
Final Thoughts
Taxes don’t have to be stressful when you plan ahead and work with the right professionals. By structuring your business correctly, tracking expenses, and staying organized, you’ll not only reduce your tax burden but also have peace of mind knowing you’re compliant with tax laws.
If you’re feeling overwhelmed by tax preparation or unsure where to start, consider working with a CPA like Drake. And remember, by implementing these systems, you can focus more on what you love—capturing beautiful moments for your clients.
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