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PPA Today: Helpful Hints: November 2015 Archives

Helpful Hints: November 2015 Archives

By Guest Blogger Rachel Brenke

Taxes can be extremely overwhelming, exhausting and downright annoying. In fact, figuring out how to do taxes can feel like one big ball of these emotions with no real path to navigate. Unfortunately, we have no choice but to make it happen. The downfall for many photographers is that they don't take the time to pick apart the needed tax information and strategies that are available out there, including keeping up with remitting the proper tax, identifying your deduction strategy and keeping up with reporting.

Remit the proper taxes 

Paying the proper amount of taxes is scary. You want to do it right, but may not be sure if you are. There are three major tax categories to keep in mind: federal income, state income, and state sales. 

Income taxes at both the federal and state level are taxes on the money that is determined to be your income. As you'll see at the end of this blog, you can identify certain expenses as deductions to help reduce your personal income tax liability. On a state sales tax level, figuring out what rate to take and what products/services are taxed can seem tedious. You are a middleman between client and state, but you need to fulfill the duty of ensuring that the sales tax is collected properly. Other information for sales tax includes whether the state is a destination based, origin based, or hybrid state, as well as whether use or franchise taxes are needed for your business. It is highly recommended you engage in a yearly review of this information to ensure you're walking the tax lane on the straight-and-narrow. Whether you feel comfortable and competent enough to handle it yourself or hire a trusted accountant, it will avoid you getting penalized for failure to fulfill the required duty of remitting accurate taxes and while this seems taunting, it truly is needed as it protects your photography business and ends up saving a lot of time, money and energy in the long run.

Keep up with reporting

Keeping a handle on reporting your income and expenses can help you be more efficient at tax reporting time, as well as identifying appropriate pricing and paralleling to evaluate marketing strategies for effectiveness. The baseline information to get your head around is the monies coming in the bank account, as well as the monies going out. These outgoing amounts include overhead expenses such as the cost of goods, insurance, legal fees, hosting, marketing materials, subscriptions, etc. Without getting your arms around these numbers, you'll end up shooting in the red. But not only that, you're unable to accurately and easily deduct (see tax tip #3 shortly) these expenses, resulting in paying taxes on money you didn't really "pocket".

About this Archive

This page is a archive of entries in the Helpful Hints category from November 2015.

Helpful Hints: June 2015 is the previous archive.

Helpful Hints: December 2015 is the next archive.

Find recent content on the main index or look in the archives to find all content.

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