Deciding to take the path of professional photography is the same as embarking on the journey as a small business owner. Financial management is crucial! 💸

We all know we should be tracking our income, but we don’t always know why. At the end of this post, I’ll share with you a simple tool that can make your life easier! 😊

So here are the top reasons why you need to track your income and expenses:

TRACKING HELPS YOU DISCOVER ISSUES & OPPORTUNITIES

Tracking your finances causes you to see if there are issues in your spending that need to be looked into or stopped. It calls you to assess if they’re in line with your priorities to help you reach your goals.

Knowing your average expenses gives you the opportunity to see if your rates are covering enough, or if you need to increase them. Knowing your expenses allows you to see if your investments are justifiable to charge more.

If you don’t know how your money is being spent, you won’t know what habits you need to change. Tracking your finances serves as the foundation to have a better plan for future spending, which we call BUDGET.

BUDGET!

Tracking finances helps us make a SMART budget plan. It gives you accurate answers if you can afford the items you want based on your historical cash flow.

Tracking your past finances is essential to determine how you’ll spend in the future, and put guidelines to your daily choices. You’ll also have a way to compare your future performance and know if you’re making progress.

Budgeting is so important to achieving your goals and stay out of debt!

I’ve created a practically-informed Finance Sheet that can help you reach your financial goals.

TAXES!

One top reason to track your income and expenses is taxes! If you’re tracking your income and expenses, filing is like a walk in the park because you know your systems are in place. When it’s time to file, you save energy, time and money from bookkeeping activities.

Staying on top of your tax obligations could be daunting, but I am using a system that really works well for me - and I’m here to share it with you! Check out the bottom of this post to see it, but first, let me share with you the tax-related questions that I frequently receive:

Please remember: I am not a tax professional. Use these questions as a guide, but always consult an accountant with major finance and tax questions!

“Why do we have to pay when others get so excited about a tax return? 💸⁣” 
I got asked this question recently, and to be honest, I wondered this for years! 🤔⁣⁣It's all about perspective and knowing the facts!⁣

⁣✅ EVERYONE HAS TO PAY TAXES!⁣
✅ Most of the time, when you work for an employer, they take taxes out of your paycheck (your withholding) ⁣

So when you’re not self-employed and you work for a company, They withhold your taxes from you before you ever get your paycheck. (You also can increase or decrease your withholding, but that's another topic).

So what happens is they take taxes before you ever see it.  If it's a significant withholding, then you will get YOUR OWN MONEY back that the government took too much of! That's a tax return! (That's what you would look at as receiving. But it's not really receiving because it was always your money in the first place. They're just giving it back to you because they took too much.)

So EVERYONE is paying taxes. The difference is when you’re self-employed, you pay it quarterly or at the end of the tax year in April. Compared to a company taking it out of your paycheck every paycheck.

That's why if you’re self-employed, you should be putting a percentage aside for taxes!

I have the perfect thing to help small business owners figure out what you have to pay the IRS at the end of the year! 💕 - My Finance Sheet! Check out the details at the bottom of this post!

When will I  know when I should start paying taxes?

Great question! If you make over $600 in a year, you should absolutely be paying taxes! Anything over that amount and the government gets involved! So make sure you’re sticking to that, even if your business is a side job!

Do you file separately from your husband?

Joey and I actually file together! But again, I would recommend getting an accountant. He recommended we file together. Every couple and situation is different, so consult a professional before you make tax decisions. 

PS - Tracking your finances could be easier with the finance sheet I developed over the years!

The Finance Sheet

What's in it:

• Tips from personal experience

• Income + Expense Report

• Budget Sheet

• Income Report

• 2020 Finance sheet and Expense Breakdown

SIGN UP NOW for my email list to get more informational blog posts and buy the finance sheet!

Success in your business involves establishing a solid financial foundation. Thank you for reading my photography business tips and I wish you many years of success! 

XoXo…