This week, as we prep for Season Two of PhotoSpark, we decided to share another favorite episode with you guys. We know one of the biggest mistakes business owners make regarding taxes is waiting until the last minute to get everything together. At least, I know that’s MY issue! So we are hoping that releasing this Throwback Episode again NOW in the middle of summer, you’ll find inspiration to organize everything you have for 2017 so far… thus making your life easier come April of next year!
- DO #1: Have a business checking account. One of our most important tax tips for photographers is to have separate accounts for your business and personal transactions. Melissa admits that she commingled the two for awhile (I’m not going to lie; I totally did too!) and it made things a bit of a mess when she got audited. She ended up having to claim income for deposits that weren’t actually business related, which cost her money in the end, because she couldn’t prove they were personal deposits (things like gifts for birthdays, payments from friends, etc). So definitely make sure you have two accounts and keep them separate!
- DO #2: Have a reputable CPA you can trust! The guy who was doing Melissa’s taxes at the time she was audited, kind of left her high & dry when it came down to it! He also wasn’t giving her advice that was 100% accurate, which ended up meaning she owed money to the IRS that she didn’t even know she owed. It’s very important to know whoever is helping you with your taxes (and yes, you SHOULD definitely have someone helping you with your taxes, unless maybe you were an accountant in your former life) is trustworthy & knows their stuff!
- DO #3: Keep a record of EVERYTHING. This is probably the number one tip in our tax tips episode, and it means keeping receipts, keeping contracts, keeping track of people who have worked for you under a 1099 form, gas logs, mileage logs, parking fees… EVERYTHING. And keep it organized as you go. Melissa learned the hard way that her auditor didn’t really care to see a shoebox full of random receipts!
- DON’T #1: Don’t be afraid to talk to the IRS. Kate can attest to this as well as Melissa, because she had a situation a few years ago that caused her to set up an installment plan with the IRS. She was nervous to call & get scolded, but in the end, the tax guy on the other end of the line was super nice, super helpful, and set up an installment plan for her pretty easily!
- DON’T #2: Don’t wait too long to find a tax person! Melissa’s tax person is pretty famous among San Diego photographers because she’s excellent at photography-related tax issues. She books up pretty instantly each year, so make sure you don’t procrastinate when looking for a CPA… chances are the good ones in your area will book up quickly too!
- Melissa McClure
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