Molly Grunewald is a photographer and educator serving Michigan and beyond.
February 5, 2020
So you’ve started to book more clients and you realize maybe it’s time to legalize your photography business as well. Or the latter, you’ve been doing this for years and it’s dawned on you “oh shit”. Either way, now is the TIME and I am here to help you.
If you’re anything like me, you DREAD the idea of even talking about it. Taxes, spreadsheets, anything that has to do with numbers really. These are literally the reasons why I am a photographer and not an accountant. However, after years of being a business owner, I’ve learned a few things on how to stay organized and take care of the financial side of your business without having a panic attack.
First things first, we gotta make sure your business is legit. Being just facebook official isn’t exactly legal so it is super important, if you haven’t already, to register your business with the state and IRS.
This is where you’ll decided what type of business you need. Your options being: A sole proprietor or LLC, or S-Corp.
A sole proprietor is the easiest option because all of your income/taxes go directly onto you personal tax return. However, you are limited to the liability of your company which puts you at a greater risk for being sued. This includes all of your personal assets such as your car, house, etc. Yikes!
An LLC, or limited liability corporation, requires separation of business and personal finances. This protects all of your personal assets unlike a sole proprietor.
Filing your business as a S-corp is the most complicated and expensive, however sometimes can be the most profitable for your business. S-corp owners may be subject to fewer taxes than LLC owners.
(Side note: if you are anything other than an S-corp, I highly recommend paying quarterly taxes.)
This is where I am going to encourage you to do more research for yourself and your business but also to HIRE AN ACCOUNTANT. This is seriously so important. I filed my own taxes on Turbo Tax (not sponsored, lol) for years and when I switched to a CPA, it blew my mind how much better off I was. Why hadn’t I done this sooner? If you want to be taken seriously and have a successful business, you need to be legit in all aspects. Being legal is not something you should shove under the rug. Hire an accountant who will guide you in choosing which option is the best for you. Their job is literally to help save you money…it basically pays for itself.
If you chose sole proprietor, skip this step. But if you registered as an LLC, you’ll need to get yourself an EIN, or employer identification number. All you have to do is set one up on the IRS website. Another perk to having a personal accountant, they’ll probably do all of this for you. 😉
Can I just tell you all a story real quick? Getting a business bank account was my first step at getting legal. I got a check from a bride written to ‘Molly Grunewald Photography’ and it wouldn’t deposit. So I went to Chase bank to get myself set up with a business account. They told me in order to open a business account, I had to be a registered business to the state. And that’s where it all started.
Having separate financial accounts is non-negotiable for me. It is so hard to stay organized and keep your expenses separate if you don’t have separate accounts. Another super important reason to get a business account is that it allows you to track your business spending which makes record-keeping a million times easier come tax time. Every swipe is an opportunity for a write-off, or deductible.
Plus, with business cards come awesome perks! I use the Chase Sapphire Preferred and the Delta Skymiles Reserve Business cards. And it’s an awesome excuse to build credit, along with loading up on skymiles. Why not have some fun while you legalize your photography business?
Another awesome way to keep your business organized and track your business spending, is through Quickbooks and Honeybook!
I started using Quickbooks when I started filing through Turbotax. What I love about Quickbooks still, is that it links all of my transactions (income and outcome) and all I have to do is invite my accountant to join and he has all of my records right there. It is the easiest way for me to see all of my expenses laid out in front of me so I can keep track of expenses and mileage, and find more tax deductions. Click here for 50% off Quickbooks Self-Employed for your first 6 months! This will save you when it comes to next year’s taxes! (Pssst. Quickbooks (or your accountant) will also remind you when it’s time to pay quarterly taxes!)
Another amazing way to stay organized is through HoneyBook! If you’re anything like me, you used a billion different sources for client emails, invoices, contracts, calendars, workflow, and reports. Talk about unorganized, amirite?! One of my biggest regrets with my business is not jumping on Honeyboook sooner.
What is this Honeybook you speak of? Honeybook is a CRM (customer relationship management) service that has all of what I mentioned above, plus more! CRM is a tool that will help you manage and maintain your business all in one place! Talk about a game changer. Not only will Honeybook improve your relationships with your clients but it is gonig to streamline your business and bring you in more profit! Cha-ching $$! It is time to start working smarter, not harder! Here is 50% of your first year! (That’s $200 savings, y’all!!)
Yes YES YESSSSSS. All of the yes. You may be tempted to skip this part, but I advise you to not. There’s equipment insurance, liability insurance, property insurance, etc. It is so much better being SAFE than sorry. You never know when your gear might get stolen from your car, or your favorite lens gets knocked out of your hand. Plus, many wedding venues actually require proof of insurance for you to even shoot on their property!
I personally use Statefarm and I pay around $50/month for my policy. But hey, it’s just another tax write-off!
I’m gonna make this one short but sweet and promise to cover it in more details in another blog post.
It is so important to cover your ASSets as best as you can. Best way to do so is through contracts. Having contracts not only makes you look more professional, but it sets up expectations and protects both you AND your client. You don’t want to learn this the hard way like I did…
But I promise you, if you’ve made it this far, you’re on the right track! Don’t be overwhelmed..I promise none of this is as scary is it sounds! The more organized you are, the more professional your business will be. In turn, your clients and everyone else will start taking you seriously. Like the serious business boss babe you are!!!!
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Molly Grunewald is a photographer and educator serving Michigan and beyond.
This is extremely helpful and I Thank you for taking time to share these juice details with the rest of us. But I do have one question, if you’re not getting as many paying clients as you’d like and you’re in the beginning/ middle stage of your career, should you still legalize your business so soon or wait until you start getting more clients?
Does this make sense?
Depending on your filing status, income, and dependency status would determine if you legally need to file/pay taxes! I would check with an actual accountant on the laws on this. However, I definitely think registering your business is super important to do right away, rather than waiting. It only makes you more professional and reputable.
Hey Molly! This is really awesome information, I wish I had you when I was trying to figure it all out in the beginning. Now I’ve been a LLC for a year and a half, but can’t figure out the numbers. How much do I set aside for taxes when I receive a payment? What percentage do you recommend? Thanks!
I suggest finding a CPA! He calculated it all for me and gave me numbers for my quarterly taxes!
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