Financial planning for photographers and creatives
Planning and managing your finances can be challenging when you’re in a creative profession such as photography. As a creative person, you are probably more into art than into balance sheets. However, having good control over your finances will ensure you experience less stress because you know exactly where you stand financially.
Invest in quality equipment
Investing in quality equipment will be expensive but it’s worthwhile as it will pay off over the long term. Clients tend to notice the equipment you use. Using quality equipment will show them you take your work seriously.
When you use quality equipment your results will usually be better. Getting a shot right the first time will make you more productive. Quality equipment also has better features that can save you time. The BacklightBlog.com site offers some great tips that can help you to get the most out of your equipment. The authors of the blog understand what you need to do to take a great photo when using certain equipment. For example, they can show you how to capture more of a scene by using the Ultra Wide camera on an iPhone.
Set a business budget
Facing your finances head-on and understanding your cash flow is far less stressful than not having a plan at all. A budget is like a roadmap for your business. You can’t set a business budget unless you know your potential income and expenses. If your expenses outweigh your income, you need to find ways to cut your costs or increase your income.
Calculating your income will include any sources of revenue, such as money from your photo shoots, selling prints, etc. Your expenses will include all the costs of running your business such as equipment, travel expenses, etc. You need to adjust your budget frequently. Your income and expenses will change as your business grows.
Understand how your money moves
With a clear picture of how your money moves, you can make more informed decisions. You can decide whether to take on new clients and if you need to raise your prices. You can make adjustments where necessary to improve your cash flow. You can start to save if you find you are making good profits. Having savings will help in case of unexpected expenses.
Separate personal and business finances
You may think it doesn’t matter if you use one account for personal and business purposes. There are a number of reasons why this is a bad idea. Having a separate business account helps with:
- Assessing cash flow
- Making accounting more efficient
- Finding information to file taxes
- Protecting personal assets
- Establishing credibility
A separate business account facilitates accounting practices such as assessing cash flow and drawing up a business balance sheet. A balance sheet shows your business income versus your expenses. You will also find it simpler to find the information you need to file your taxes. It can keep your personal assets separate and use a business entity that protects them. A separate business account will also make you more credible to clients and suppliers.
Plan for taxes
You must understand all the different types of taxes that apply to your business and your obligations. You will also need to decide what type of business entity to set up as this will affect how you file your taxes. For example, as an independent contractor, you may be able to deduct exclusive home office expenses.
It’s important to set aside an amount for taxes on a monthly basis so you aren’t hit with a large bill you can’t pay. It will help to consult a tax practitioner for advice about what deductions you qualify for.
Track your expenses
You will need to keep a very close eye on your expenses. It is easy for them to start mounting up and this can happen quickly. You must record every expense, even if it’s a train ticket or coffee with a client.
Many useful expense trackers are available today that can make tracking them more efficient. Keep all your receipts in one place (digitally if you can) and make sure you organize them well. This will help you during tax season.
Going through your expenses on a regular basis helps you to identify areas where you may be able to cut back. You can also assess your spending habits and plan for future costs.
Balancing the books may not be as exciting as a photo shoot but it is critical if you want long-term success. When you have control over your finances, you know how much you need to bring in to cover all your costs, run your business, and make a profit. Not having to stress so much over your finances can be liberating. It can give you more time to develop and grow creatively so you can reach the top of your profession.