Business + Marketing

How to Manage Money for Photo Business Longevity

March 4, 2020

By Brienne Walsh

Illustration by Lisa Realmuto-Walsh

You’re already working hard at keeping your clients happy and producing quality work. There are a million things that you stress about each day, from how and where to market your offerings to updating your site and making your work resonate on social media. The last thing you want to think about is managing your money in a responsible way. You’ll think about that when you have more time, you say to yourself. 

But getting your finances in order not only gives you peace of mind, it can also ensure that your business is around for many years to come. “It’s very difficult to be a photographer nowadays,” says Robyn Cohn, a certified public accountant based in New York who works with many self-employed photographers. Staying on top of the financial aspects of your business, she says, makes it much easier to have staying power in the industry. “You know what’s happening, what’s coming, how much money you have to make, how much you need to market yourself, where you are going to get your jobs, and you’re not running around like crazy,” she says.

Bobby Mefford, a certified retirement planning counselor and the owner of Mefford Wealth Management in McKinney, Texas, says there’s no time like the present to get started with putting your finances in order. “Ignoring your finances is not the answer,” he says. “Don’t be ashamed—just get started.” 

Step 1: Get Familiar With Your Spending

“The budget is the bedrock of everything,” Mefford says. Setting one up is more complicated than you might think, especially as the owner of a small business. To get started, Mefford recommends looking at the past 36 months of your business’s finances. Doing so will let you better understand the ebbs and flows of your work. 

[Read: A Long Career in Portrait Photography Means Selling Printed Products]

“You’ll see trends within that stretch of time,” he notes, including periods where you are working nonstop and periods where you are working hardly at all. These trends, after all, are part of being a creative professional.

Mefford notes that Mint is a great starter app for gathering all of your financial history in one place. If you would like a slightly more sophisticated financial tool, he recommends QuickBooks, which offers plans starting at $8/month. The advantage with this tool is that it helps you budget and also offers tools that can prepare you for tax season, including a mileage tracker for your car.

Cohn notes that writing a business plan can uncover the many hidden costs built into a photographer’s budget. “It will help you know how much money you need not only for equipment, rentals and marketing, but also for insurance, workers compensation and legal fees,” she says.

[Read: Sage Advice from a Marketing Expert on Creating a Long-Term Work-Life Balance]

Unless you have an MBA, writing a business plan might seem ridiculously daunting—maybe even a waste of time, depending on how long you’ve been running your business. But it’s never a bad idea to define exactly what your business is, Cohn says. In fact, doing so may help you grow your business in ways you couldn’t possibly have thought of by merely winging it. 

It’s easy to find examples of small-business plans that you can imitate online; the U.S. Small Business Administration’s website is a good place to start. Writing a solid one will take you roughly an hour or two. If you haven’t done this already, it’s well worth your time.

Once you’ve defined what your business looks like, and how much money you’ll be making and spending over the coming year, it’s time to define how much money you need to keep your business alive. Cohn recommends that you have at least a year of “carrying cost” money available—half in cash, half in credit. 

If you don’t have that, don’t fret. Just start saving. “Before you buy anything else—that awesome camera, for example—you have to refill your emergency tank first,” says Mefford.

Step 2: Prep Plentifully For Your Taxes

One very clear way you can begin to save money is by getting smart with your taxes. And for a freelancer or small-business owner, getting smart with taxes means separating your business expenses from your personal expenses for future deductions.

Cohn recommends that you immediately separate your money into separate checking and savings accounts. “Don’t comingle, and don’t pay business expenses from your personal account,” she says.  

Then, apply for a business credit card and start using it. As you search for the best credit card services, Cohn says to look for hidden costs, like “if a card has a promotion that claims 0 percent interest for the first 18 months.”

Even if you’re just starting out, hire a CPA who can advise you on best business practices—and do it well before tax season. “The last week of April is no time to get your tax return done,” Cohn asserts. “You want someone to sit down with you and tell you that you could have saved money here, this expense was high, this was low. If you wait until the last minute, you may not get the attention you deserve.” 

A CPA can also help you determine what type of entity your business should be—for example, a sole proprietorship, an LLC or an S-Corp. Intelligent people, Cohn notes, can figure out the basics of setting up a legal entity themselves. But when tax season comes, they often find that they owe money they hadn’t saved for. 

Hiring a professional to set up your business entity is a much better option. Cohn cites as an example a client who had a child with over $30,000 of medical expenses every year. Cohn was able to write them off by establishing her client’s business as an S-Corp.

“Your accountants are a tremendous resource,” she says. “We’ve seen all the mistakes, and we have all of the recommendations.” 

Even if this is advice you’ve heard a million times, keep track of your expenses in preparation for tax season, whether on an app or in a physical folder. Make sure to save at least 20 percent of everything you make for income tax. “I actually prefer 30 percent,” Cohn notes.

[Read: 4 Crucial Tax Tips for Photographers Who Live and Work in Different States]

Step 3: Hire a Team to Help You

Most businesses fall into three different types of categories, Mefford says: the Volkswagen hatchback phase, the Honda Sedan phase and the Cadillac phase. When you’re a VW hatchback, you’re hustling. By the time you reach the Honda phase, Mefford notes, “You’ve built up some assets, you’re stable, you’re trying to plan for the next thing.” This is the point where you hire financial professionals to help you plan for the future.

Cohn recommends hiring a trained bookkeeper to come in every three months to look through your finances. “It will take off a tremendous burden,” she says, noting that the expense can cost as little as $150 every three months. 

Mefford notes that the sooner you start investing your money, the more it will pay off over time. “If you’re 25 years old and you start investing your money, you wind up with nearly 50 percent more money at the end of the day than someone who started investing at 35.”

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The website Betterment is a great place to start an investment strategy, he says. “They don’t gouge for fees,” he notes. Even better is working with an investment professional. Mefford recommends finding someone without any bias, like someone who works for a bank and will push that bank’s products onto your portfolio. 

Taking steps towards financial health is a bit like going to the dentist, Mefford says. You don’t want to do it, but ignoring the health of your teeth—or your business—is also not a viable option. His recommendation is simple: “Start 2020 with a plan.”