10 Tips for Running a Photography Business · Tip #2

Welcome back to my mini-series on how to start a photography business! In case you missed it you can find Part 1 over here where we discussed some of the basics about registering your business in Australia.

 

Tip #2

Do you need an accountant and a bookKeeper?


DO YOU NEED AN ACCOUNTANT?

Even if you decide not to use an accountant regularly, you should absolutely consider investing in a one-off session with a book-keeper/accountant to ask questions like:

  • What’s a business expense and what’s not;

  • What can you claim as a deduction?

  • What do you need to provide to your accountant at tax time?

  • Do you need to register for GST?

     

One of the biggest problems I had when starting this business was knowing what a business expense was, and what wasn’t!

Essentially, you can claim any costs incurred in the ordinary course of business, and it mustn’t be for private use. If it’s for a mix of business and private use, only claim the portion that is related to your business.

Here’s a list of the expenses that I claim through my business:

  • stationary and printing;

  • subscriptions that I use to run my business (Xero, Adobe, Studio Ninja, etc);

  • rent and utilities (only a portion though, I used 3/8 rooms in the house for busines purposes, so I claimed 3/8 of these expenses);

  • accounting + legal fees;

  • camera gear + equipment, maintenance, com- puter equipment (pro tip - you can claim these as a depreciating expense over a few years, or all at once in one financial year - speak to your accountant about this)

  • interest and bank fees;

  • marketing and advertising expenses;

  • education;

  • insurance;

  • client meetings - but the rules are really complicated and you should seek advice about what is allowable.

What’s the difference between an accountant and a bookkeeper?

It’s pretty common for people to get these things confused, but there are a few main differences:

An accountant is someone who typically prepares tax return, financial statements, budgets and analyses business performance (from a financial perspective). Alternatively, a bookkeeper is someone who helps you manage the day to day finances, such as payroll, invoicing, receipts, recording general business transactions.

I do my own bookkeeping on a day to day basis because I like to be across my financials, butI call on my awesome bookkeeper when I’m stuck/need help or need some training on how to use Xero. The only time I see my accountant is at tax time.

BOOKKEEPING SOFTWARE

Previously I mentioned that when I first launched this business, I started with a trusty old Excel Spreadsheet to manage my invoices, and my expenses (as well as all my client info).

After about 12 months of business, I realised I had outgrown my spreadsheets and that I needed something a but more comprehensive to help me keep on top of it all.

Because I was trying to save on costs, I opted for a client relationship management (CRM) system that managed everything all in one place; and when I did it was like the heavens opened and I heard angels singing. However once I followed my own advice and finally invested in some accounting advice, I learned that this software didn’t do everything it needed to do for tax time (namely, provide reconciled bank statements). What’s a reconciled bank statement I hear you saying?

Technically, you are meant to reconcile your bank statements for your business every year against your invoices, payments and expenses, to ensure that your bank statements match your income and expenses. So every piece of money coming into your account needs to match an invoice (or be explained) and every expense needs to be categorised as a business expense or personal expense.

This was a pretty huge blow, because I’d invested almost 2 years into this software (yea….don’t wait that long to see an accountant/bookkeeper).

My bookkeeper/accountant advised me to use Xero - this is the industry preferred bookkeeping software, and it’s an absolute lifesaver. Once I got my bookkeeper to sit down with me and show me how to set it up and use it, it only took me a few days to import the previous years information, and get it reconciled for tax time (seriously, it was SO EASY once I knew what I was doing).

Xero still owns my heart, and it makes tracking and managing my income and expenses a gazillion times easier than any other program I’ve ever used, especially now that I am registered for GST and have to prepare and lodge BAS statements.

The benefit of using software like Xero is that it automatically imports my bank account transaction, and I can assign and write notes on each transaction as well as match income to client invoices, so I know at a glance who has paid and who has not. Plus my accountant loves me at tax time (err…one can hope).

Yes; it can be expensive depending on your needs.

And yes; I hate all the subscriptions we need these days to function. What a hole in my wallet! Some things are just unavoidable, and Xero has been worth every penny.

 

NEXT WEEK

I’ll be back next Thursday with tip #3 which is everyone’s favourite topic - pricing, and how to value your time.

Thanks for reading ♥

Lexi xx

 
 

FIND THE TEN TIPS HERE