← Book More Photography Clients Podcast | Photography Business, Photography Leads, Marketing
Book More Photography Clients Podcast | Photography Business, Photography Leads, Marketing
The Tax Episode Every Photographer Needs to Hear
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Welcome to the Book More Clients Photography Podcast. You can stop spending hours on Google and YouTube because you just found your number one resource for growing a profitable and sustainable photography business. Hi, I'm Brooke Jefferson. I'm a believer wife, mama to two and Oklahoma family photographer. I left the classroom in 2018 to pursue my photography career full time. Now I'm here to help you do the same. In this podcast we're covering the most asked about topics including pricing, marketing, client experience and all things systems and workflows. You won't find any fluff or BS here. Just tried and true strategy. Are you ready? Grab your kids some snacks and charge those camera batteries. It's time to jump in. Foreign. Is going to feel like a master class because I am covering all things finances, taxes, how to pay yourself. Literally anything that you need to know in that category we are going to touch on today. That way there is no more confusion or questions that you have around this topic. But before we dive in, we we are rounding out the month of April. All month long I have been taking the most popular podcast episodes and putting a new fresh spin on them because we are celebrating seven years of podcasting and we have now surpassed 400 episodes on the podcast. And because of that we have been celebrating in a bunch of different ways. But the biggest way is that I put my signature program, the Fully Booked Method, which is on sale since we celebrated 400 episodes, I put it on sale for $400. Today is the last day that you can grab that. So I just want to quickly recap what it is, who it's for and what you get. Because as of April 30, 2026, that is the last day that you can grab this for a discount. So the Fully Booked Method is basically my A to Z strategy of how to build a really profitable and sustainable photography business. It's going to help you become the go to for whatever niche you want to be known for in your area. So we cover the marketing, the ideal client, the research behind it, how to track your leads, how to increase your leads, all the things. So if you are struggling with consistent bookings and you want a shortcut instead of just trying to wing it and getting there on your own, that is the program that you want to join. You're not just going to get a course with videos, that's only part of it. You're also going to get one on one personalized coaching from me every single week. So you're going to watch the videos assigned for that week. You're going to implement the homework and then I am going to give you feedback and help coach you to get you right on track to where you need to be for your goals and your niche. So all that for $400. So you get access to me between eight to 10 weeks. Depends how fast you want to take that course. And then you are going to be doubling your bookings by the time that the course is over. So if you're interested in that, go to brooke jefferson.com fully booked. You don't need a code or anything. It will automatically take $100 off the course. There is a monthly plan option as well as a pay in full option. And to sweeten the deal, it's the last day that when you sign up you are going to get one month free of the market like a tog membership. So go check out all the details. You can look back at all of the past April episodes. I've talked about these promos on every single episode that we've had. But let's dive into taxes 101 for photographers okay, the first thing that I want to dive into is this question of should I be a sole proprietor or should I be an llc? I'm going to explain the difference, but first I just want to tell you that if you're not an llc, you haven't done anything like registering your business or changing your tax structure, nothing like that. If you are just an individual that started a photography business, you are already a sole proprietor. And so what that means is that is a fancy term basically saying that you are a single business owner who pays personal income tax on the profits that you earn from your business. So pretty much you are turning in a profit and loss statement for your business, but you are doing it. You're mixing it with your personal finances. The other side of that is an llc, you actually have to fill out some digital paperwork or in person paperwork to set this up. And all this means it doesn't make you more professional. Okay, I just want to say that I see a lot of people say I need to get the LLC so that I can actually be a professional business. And whether you're a sole proprietor or you're an llc, you can be a professional photographer without either one of those classifications. Okay, An LLC does not make you more professional. What it does is it protects you from being personally responsible. If you were to get sued or if you were to go into debt, somehow it's going to protect all of your personal assets. So basically you want to become an LLC as soon as possible, but you don't have to rush it either. So it is, it's something that I definitely highly recommend that you do as quickly as you can. If you can afford the llc. In some states, like the state of Oklahoma, it's actually really cheap. I want to say the very first time you register to become an LLC, it was like $85. And then I pay. I, I want to say it's $25 a year to maintain. That's it. However, there are some other states out there, like California, where it is ridiculously expensive. And so you need to do your own research in your own state and figure out what it's going to cost you. But there are so many benefits to being an llc. But one of those benefits is not that you're necessarily more professional, but you have more protections on the legal standpoint and then also on a tax standpoint as well. So that is the difference. The other thing that I want to highlight, and this is for every single photographer. I don't care if you're one day in or you're 21 years into your business, you need to have separate bank accounts, even if it's two separate checking accounts. And I also, I want to put out this note. I am not a cpa. I'm not a professional in any kind of way. I am not certified to give you financial advice, tax advice, nothing like that. I'm simply being big sister photographer, speaking to you and telling you all the things I wish I would have known at the beginning of my business. So I wanted to throw in that little insert. Just so you know, I'm telling you what I've learned and what I've done along the way. So make sure though, that you have separate bank accounts. Go to your bank, have a checking account for your personal stuff. So if you work a 9 to 5 job, that's where that income is going to flow through. That's what you're going to pay your bills out of. And then you're going to have another checking account that is just for photography. It's just going to be. You're going to put all the money you make in that account and then you're also going to pay your bills out of that account. Now, as you, it depends how fancy you want to get with your finances. I actually have about six different bank accounts and one is an inflow only and the rest are outflow. And we're not going to get into that today because I want to keep this super simple. But I do want you to know that there are advanced strategies and organization to your finances and your taxes. But today I'm just hitting the high points. Just make sure that you have your personal stuff in one account and all of your business transactions in another. If you can do that, that's also going to create some organization and some protection for you if something was to go awry down the legal route. So that is a difference between a sole proprietor and an llc. Now let's talk about paying taxes. Another popular question that I see is, do I pay taxes quarterly or do I pay taxes annually? And it is completely up to you on what you want to do. However, it is recommended that you make quarterly tax estimate payments. Okay, so this is you. You're estimating how much you're going to owe at the end of the year. This is something that your CPA can help you with. And it gets easier every year that you have a profit and loss statement that you're turning in. And once you do your taxes, it's easy for your CPA to go ahead and tell you in advance how much you're going to be paying. So some people might have a quarterly estimated payment of $1,000. And so you want to be setting aside money. And we're going to talk about how to do that here in a few. In a few slides. I'm literally teaching you a workshop. And so I'm using slides to keep me on track here. But paying taxes, yes. Obviously you want to run your business correctly. You want to be reporting your income and. And then you want to be turning in that profit and loss statement at the end of the year. And we'll talk about what that means here in just a minute. But I recommend that if you can start paying quarterly because it's going to decrease the amount that you owe come tax time. So if you're just waiting for every March or April when taxes are due to pay, you will always pay more than you could have if you would have been making those four quarterly payments a year. So just something to think about and you can talk to your CPA on what is right for you. Okay, so the next thing I want to talk about is tax percent. There's a tax percentage basically every month in your business. You're going to have income that comes into your business, and then you're going to have expenses, which is going to be the outcome. Right? It's going to be the outflow of what you're paying. So you're going to be making money and you're also going to be spending or investing money as well. Then whatever is left over at the end of that month. Out of that profit. That's called profit. That's what's left over after you've paid your bills and, and all the things that is called your profit based on the number that is left over. You need to be pulling a percent of that. You need to be putting that in another account. I know here we go with another bank account, but I would recommend opening a savings account that is just for taxes. So that is an account that you're going to transfer money into all year long so that when it comes time to pay your taxes, you actually have money to do that. And you're not freaking out and panicking because you didn't set anything to the side. When you run a profitable business, you will owe money. That is how it works. I know it's not fun. I know we all want to run away from everything that has to do with the irs, but it is just a part of being a profitable business owner. That's the key factor. Profitable business owner. Once upon a time, when we were on our fourth house, my husband and I, we have lived in four houses together. We're on number four, which hopefully is the last one. The, the only way I would ever move again is if we get to build a house. But I'm telling you this because two houses ago, I wanted to. I knew I was making a lot of money and I knew that I could afford the mortgage payment. However, I didn't have enough of a paper trail showing that I made that much money. And so because of that, we, like, I literally did not get my name put on the document. And so I'm telling you this because this is what's going to happen. The people when you go to buy a car or you go to buy a house, or you go to buy anything and you're getting a loan, they're going to look at the paper trail of what you make. And if they can't trace it and you can't prove it through your taxes or through however it is that they ask for it, then you don't get it. I mean, that it's. Unless you're paying full out something with cash, you're not going to get it if you're trying to apply for a loan. And so I learned the hard way that it's much better to just be prepared and show that income on paper because it really will help you in the long run. So that's just a side note and a personal story for me that I know that is, that is a personal thing. But Then once I had a paper trail, the house that we live in, I was able to get to put my name on it. And so it was amazing. And I felt really proud of myself for that. So that's why you want to make sure that you are doing everything the way that you're supposed to, because I promise you it's going to be more helpful in the long run. And if you are prepared for it, then you're not going to be shocked or panicked every time tax season rolls around. So the tax percentage. So the next question you're probably asking is like, okay, but I don't, I don't know what percent of my profit I'm supposed to be transferring to that account. And so that is where you have to go ask your cpa, whoever is doing your taxes, an actual financial advisor is who you need to speak with about this. But I've seen these range anywhere between 15% of the profit you make up to the 30 to 40% of the profit that you make. There's so many factors that go into this, and so that's why you have to go ask for your specific situation and business, what your safe percentage is going to be. Most businesses will fall between 20 and 30%, but you need to go find out what that is. So we're going to get into some number examples in a couple of slides and hopefully I'll be able to break all this down for you. If you're listening and you're literally starting to get overwhelmed and you're zoning out thinking about other things, just take a pause. Okay, pause me. Come back to me. Re. Listen to the episode. Take some notes. If you're somewhere where you can take some notes, I promise this is really good stuff that every single photographer should know. Okay, I have a little note here to answer this question. Do I have to charge sales tax? So this is different than the, than the taxes that we're setting aside. So sales tax is different and it's going to depend on what state you live in, what territory or country you live in. It just depends. And so there are different categories of taxes that we have to be aware of, but right now we're specifically talking about that sales tax. So the best way that I can tell you to go answer this question for yourself is to go to Google or even maybe try ChatGPT. I don't know how reliable it is on taxes, but you can ask this question you're going to plug in Texas sales tax law or New York sales tax law and see what comes up for you. So for example, in Oklahoma, a photographer does not have to charge sales tax unless something physical is being exchanged, such as a USB drive, prints and products that are included, something tangible that you can hold in your hands. So that's the way that right now Oklahoma sales tax law is. I don't know what the other states are. So for the way that I run my business model and what I give to my clients, I do not have to charge sales tax. So I just wanted to throw that out there and answer that question and give you some kind of a direction so you know where to look up the answer. Okay. On a month to month basis, you need to be doing this process of bookkeeping. I promise it's not hard. Okay, so there are four key terms that you need to know what they mean in your business. There's income, expenses, taxes and profit, which is also known as net income. So income, this is money that you receive for your sessions, prints and products, etc. It's also known as any form of income that is flowing into your business. So if you are making money, it is called income. Expenses is the money that's going out of your business to pay for business related expenses. Okay? This is not your groceries, this is not your hair appointment. It has to be related to your business. So examples, it could be you paying for editing software, your studio rent, your camera equipment, etc. So anything that is directly related to your business is going to go under the expenses category. There are some Amazon transactions that you are making that can absolutely be used as expenses. Anytime you buy an SD card, anytime you buy a prop for your session, anything like that that you get from Amazon gets to qualify in the expenses category. That is business related. Okay? Taxes, Obviously you know what I mean by taxes. This is simply what you're gonna owe from your profit at the end of the year or quarterly. And then that last term is profit or net income. This is the amount left over after your expenses have been subtracted from your income for the month and then your taxes have been taken out. So this is what you get to keep, okay? So you get to keep what's left over after income, expenses. And setting aside some money from taxes, how in the world are you supposed to keep track of this? The easiest way to keep track of your bookkeeping, that means every time you get an income transaction, you're going to go, you're going to go keep track of your income. Every time you have a transaction that is an expense, you're going to keep track of any time you pay yourself all the things, okay? And the easiest way to do this is to use a spreadsheet. The best part is that if you can find a profit and loss spreadsheet that automatically calculates everything for you, it makes it so much easier. So all you have to do is go plug in every session you got paid for, every print and product that was purchased, any other way that you're making income, and then you're going to go plug in in another column every time you had to spend money in your business for the month. And then the cool thing is a lot of these profit and loss spreadsheets, and especially the one that I use, it automatically calculates everything. So it's adding up all of my income for the month, all of my expenses, it's showing me what my profit or loss is, and then it is telling me based on my tax percentage, how much I need to transfer to that account for the, for the end of the month. And isn't that awesome? So it takes all this guesswork out of it. So you can find these spreadsheets on Etsy, you can Google search them. I will see if the creator of my spreadsheet is still selling these and if her link is active, I will link a couple of these in the show notes. So that way you could just click on it and you can get the one that I am using. If not, I will try to find one that I think looks like it's going to be worth the money and then you guys can have that. And the cool thing is it's a one time purchase and then you get to copy, like make a copy in your Google Drive every single year for a new one. So that's the best part is it's a one time fee. Okay. So basically I'm assuming by now you know what income categories are. These are photography sessions and you can get really specific. So if you are a family photographer, but you do family sessions, milestone sessions and maybe like maternity sessions or something, you can keep track of exactly how many times those were booked and, and what you got paid for those. So that at the end of the year when you're doing a yearly review, you can see, okay, based on my income, I made the most money from fill in the blank sessions. Right. This is also going to include your print and product sales and any affiliate revenue that you might make. And then if you are in the education side, maybe you have a course, maybe you offer mentorships, maybe you sell presets. All of this is going to go under your income categories. Then we have expense categories. So I'm going to try not to run through these super fast, but this is a great place for you to take notes. These are the types of expenses, expense categories that you might have on your spreadsheet. So every time you make a expense transaction it's going to fall in a category. So here are some of those categories. Advertising and marketing, bank service charges. Sometimes these are also called merchant fees. Business development. That's going to include things like mentorships, courses. If you, you know, ever do coaching with me or you join my membership, my marketing membership, all of that goes under business development. Car expenses. Charity and giving. Client closet. So you can have a specific category for that if you've got one. Client gifts. This can include physical gifts that you give. This could also include cards, things like that. Anything that you are spending on your clients as a gift. Contractors. So this could be, you know, if you outsource your editing, if you have a social media manager, if you hire somebody to redo your website and then you get to pick whether you want that to go under contractor or you want it to go under advertising and marketing dues and memberships. So if you're in memberships or you pay a yearly due. So this could be like if you're a chamber of commerce member, that's what that would go under. Licensing and fees. This is every time that you are paying for your LLC or you are paying your CPA for taxes, anything like that. Meals and entertainment, office supplies, photography equipment. Anytime that you are spending money on prints and products. So typically this is going to be. If you order prints and products for someone, you can have this in both the income and the expense category. Processing fees, props, professional services, shipping, freight delivery, software and subscriptions. This is honestly my biggest category is under software and subscriptions. You know, all the things like the Google, the G suite. I'm trying to think of some other ones that I have. The zoom, the loom, all the things travel and mileage, tolls and parking and utilities. And there are so many more that you can have. But these are the most common ones that you'll have on your expense categories. Okay, let's talk about something fun. How to pay yourself. This is exactly what I do on a month to month basis. So this is my process through and through. I do this about twice a month. I used to do it once a month and now I do it on the 15th and then I do it again on the last day of the month. And so the first thing I do is I track. So I sit down once or twice a month and I go over my bank statements, every single transaction and then I input them into my spreadsheet. So again, I have a column for all of the income I've made for the month and I have a column for all of the expenses that I've had for the month. And I'm categorizing those as I go. Then I review how I did for the whole month and I transfer the tax percentage amount that it's telling me based on my profit. So I'm transferring that from my checking account to that tax amount savings account. Then I'm looking at, okay, what's left over. So after that percentage of my profit is in my bank account and it's, it's in the tax account, everything that's left over is mine to do something with. And so I use a business budget. I refer to my business budget so that I know where all of my money needs to go, right. Does some of it need to go to the next month? Do I need to reinvest some of that money? Do I need to pay myself? That's going to be the biggest part that's going to get transferred and we'll talk about where these things can go. And then last but not least, you're paying yourself, right? You are going to pay yourself based on what's left over. So I'm going to give you an example. Let's say that your business budget that you've designed is on a percentage basis, meaning that 60% of your profit every single month, no matter what it is. Right? And here's why we're doing percentages and not set numbers because we run photography businesses. So I understand that our, we might have consistent bookings, but we don't always have consistent income. Like it just fluctuates. Some months you're going to get a lot of people that are booking for future months. And so it's going to increase the amount of income you made for that month. You're going to have some months where it's just not as busy or you front loaded your income. So for example, my senior team for class of 2027, they are paying all, they are paying their first half of the team payment in in May, which is just a few days away. Right. And so I'm front loading that for June. So for June I plan to cut back and not take on as many sessions because I am getting paid up front before I actually book some of those sessions in the fall. So that's just an example of how things fluctuate. And so you want to do this on a percentage basis. That way the places that you want to make sure your money goes, there's always going to be something. Even if it's $20, at least it's going to be something. And so I would recommend that you do this percentage based system. So on this fake business budget, I have 60% of whatever was left over for that month, Whatever the profit is, right. 60% is going to go to paying myself, and then I have 40% left over. So what I did was I wanted to have money to give money to save money to put back for reinvesting in my business. And 10% that's going to sit there extra to be cushioned in that account. Again, this is all a fake business budget, but so I broke it up by 10% goes to giving 10% to savings, 10% to education, and 10% of that money stays in the account for cushion. So that's an example of how you can create a percentage based business budget, maybe for you. You're going to say whatever's left over, I need 70% and then I'm going to do 15% goes to this, and then whatever's left over goes to this. Okay, so that's totally up to you on how you want to build it. But I promise you, if you will do this, it's going to be so much easier for you to track and understand where your money is going. So here is a number example. And I know that this is a podcast and you're listening to these numbers. So I'm not going to, I'm just going to tell you what's on my slide and you can take notes if you need to see these numbers. Okay, so let's say that you made $2700 for the month of April. And then let's say that your total expenses was $520. When I take 2700 minus 520, I get a, I get a profit of $2180. So out of that number right there, now we need to move a percentage over to taxes. So let's pretend that it's 20%. So 20% of 2180 is $436. So we're transferring $436 from our business account to that tax savings account. Now let's see what is actually left over that we get to pay ourselves with. So what's left over? After we take out expenses and we move the estimated taxes over, we have $1,744 left over. That's where your business budget percentage comes in. So if we go off the example that I just gave you, let's say that out of that seventeen hundred and something dollars, I get to keep 60% of it. That means that I get to keep $1046 and 40 cents. So I would transfer that amount to my personal checking because that is me giving myself a digital paycheck for the month of April. And then what's left over is basically, if I round up, I get to put $175, I get to give. Put that in my give for the month. So if I want to tithe or I want to donate to an organization or a charity, I have $175 for the month I get to do that with. I also have $175 that I can set aside for education. I also have $175 that I get to put in my savings account. And then also I'm gonna leave $175 in that account as cushion. So that's how that works. No, it was a lot of numbers. Thanks for sticking with me, but if you need to see this, I'm happy to share this slide with you, but I wanted to just kind of break all of that down. Okay. I feel like I've talked your ear off. That was a lot. But I told you it was going to be workshop style. So I just want to remind you what we talked about. So if you need to rewind or listen again, you can. So we talked about the difference between a sole proprietor and an LLC and how I want you to become an LLC as soon as you can. But just know that you're okay as long as you are keeping the profit and loss statement every month and then also submitting your taxes. You're going to be just fine. We talked about paying taxes. We talked about that estimated tax percentage that you need to ask your CPA what that is for you so that you have a. You have enough money in your tax account that when tax season comes every year, you're not panicking about how much it's going to be. We talked about sales tax. We talked about the process of bookkeeping all the different financial terms, income expenses, taxes, and profit. I told you how to track all of these from month to month. We talked about the different categories for income and expenses. And then I walked you through how to pay yourself and how to set a business budget. That was a lot. I know. But these are questions that I see you guys ask in Facebook groups. You will send me emails. I just see them all the time. And I've been asked for years, and so I thought that I would bring this taxes workshop to the podcast so that it could live here and I could constantly refer photographers to come and listen to it. So I hope this was helpful. If you found it helpful, come tell me. Come send me a DM on Instagram or shoot me an email brooke jefferson.com thank you so much for making April such an exciting month to celebrate seven years of podcasting. And now I think we're on episode 402. I could be wrong, but I'm just guessing. I think we're on 402 without looking at the podcast spreadsheet. Thank you for being a listener. Thank you for dedicating your Thursdays to tuning in to the podcast. Or maybe you're catching up on the weekend. Thank you, thank you, thank you. I couldn't do this without you. I also wouldn't do this without you listening. I always say the minute nobody tunes in is the minute I'm done podcasting. So keep pressing. Play share this podcast with another photographer friend and I will see you on the next one one.