Are you taking full advantage of every single tax break you can get in your photography business? This upcoming tax season, follow these tips to make sure you keep as much of those hard-earned dollars as you can.
Tax time. It will make the strongest, most successful business person cringe. Even when you hire a tax professional, they aren't always particularly well-versed in the nuances of taxes as they pertain specifically to photography business. The bottom line is, you need to be prepared for tax season by taking advantage of every business deduction you can.
While equipment and studio overhead expenses are more common deductions taken by photography businesses, here we will discuss some often-overlooked tax deductions that you may be able to take for your business. Keep in mind that these rules will vary depending on how your business is set up, and none of this advice should take the place of consulting with a tax professional.
Food and Drink
This one can be tricky, and although much of the entertainment tax deduction has changed in the last couple of years, you can still take advantage of tax deductions when dining with clients. Whether you hold in-person client consultations at your local coffee shop, or meet up for dinner with a potential client to pitch an idea, you need to look into deducting all or some of the cost of your food and drink. It's a good idea to familiarize yourself with IRS Publication 463 so that you can make sure you are following all the correct guidelines.
I tend to overlook this one a lot because it is so easy to throw the receipt in my handbag or the garbage can and never think about it again. I have found that keeping a separate bank account and using its debit card for these expenses gives me an electronic “ledger” to look back on when it's time to account for these. Of course, you will need complete records and receipts on hand if the IRS ever decides to audit you, so keep good notes and stay organized!
Many of us often travel on-location for photoshoots, sometimes several hundred miles away. The IRS allows you to deduct a certain amount of money for every mile you travel for business purposes.
If you find it hard to keep track of this kind of thing, take advantage of one of the many mileage tracking apps available for your smart phone. Rachel Brenke, the attorney and photographer behind the “the Lawtog” website, recommends the Everlance app.
If you aren't taking this mileage deduction for each and every mile you drive for your business, whether it be across the town for a meeting, or across the state for a wedding, you are throwing money away!
Training and Education
You know all those awesome Fstoppers tutorials you bought in 2018? Those are business expenses that you can deduct from your taxable income! In fact, any online training courses, seminars, books, or classes at your local learning establishment can be deductions.
And if you traveled across the country to get to a big seminar or conference that was intended to further your career or business, you might be able to write off your lodging, travel expenses, and some or all of the meals you purchased while you were there. Have another look at that IRS publication I mentioned earlier to find more specific information on what travel expenses are deductible before you book that next trip to a convention or seminar.
Memberships, Subscriptions, and Other Recurring Expenses
Are you paying monthly for that subscription to Photoshop or Capture One? Do you pay a yearly membership fee for being in your local Chamber of Commerce? What about that BNI you joined last year? As photographers, we subscribe and have membership in so many different things, it's easy to overlook or forget about some of them. If you subscribe to a scheduling service, album or video design services or software, magazine subscriptions, fees for professional associations such as PPA and WPPI, an invoicing service, retouching fees, or other regular services you pay for in relation to your business, these can be deducted from your business income.
Cell Phone and Landline Charges
If you have a landline dedicated to your photography business, you should definitely be deducting that expense from your income. If you have a cell phone that you use for both personal and professional use, a portion of the cost of it can be deducted. In order to keep your business and personal use clearly separated in case of an audit, it may be a good idea to have a separate phone number for your business through something like Google Voice, so that you can keep a precise call log of business-related phone use.
There are so many little promotional and marketing things that can add up over time, and often go forgotten as the year goes by. If you ordered business cards throughout the year, advertised online or in a magazine, trade paper or the local newspaper, had brochures or vouchers printed this year, or even rented space on a big billboard, these are expenses that add up to a big chunk that you can deduct from your income.
This goes without saying, but I'm going to mention it here anyway, if for nothing but a reminder to look back through your receipts and make sure you don't overlook anything. Keep those receipts! While the big stuff like cameras, lenses, and computer equipment is easy to remember when itemizing, those little things like batteries, memory cards, and lens wipes often get overlooked.
I purchase most of my equipment and supplies online, which makes it super simple to look through emailed receipts and document my purchases.
Those donations you made to silent auctions this year are likely to be deductible, given that they are made to a qualifying, non-profit organization. Be sure to get paperwork whenever you make any kind of donation, whether it be monetary or in the form of goods or services.
Again, use this advice as a guideline to gather your records and remember each deduction you may qualify for, and verify with your tax professional which ones you get to take advantage of!