[Lightstalkers] What are your ACCOUNTING methods?

What are your ACCOUNTING methods?

Wed, 23 Apr 2008 22:15:41 +0000

What do you do to keep your freelance business accounts in order? Do you pay yourself a salary? Do you keep good records? Is there a simple methodology for all this? I need to get a handle on all this. Any pointers? I'm sick of struggling day to day and having my finances in a mess. I want to grow my business and grow a little wealth for my future and my kids future and for my old age, assuming I'll be lucky enough to survive that long. I certainly intend to. That's why I'm asking. Maybe a tutorial on personal financing is in order. Depending on how this thread goes, I might prepare something. Cheers.

Re: What are your ACCOUNTING methods?

Tue, 22 Apr 2008 23:28:28 +0000

How to keep track of incomings and outgoings. That sort of thing. Any good, inexpensive software? Any good resources online that might be beneficial for me to read?

Re: What are your ACCOUNTING methods?

Tue, 22 Apr 2008 23:46:16 +0000

Type S Corp, one credit card strictly for business, request a print-out from the card company, hand it over to the trusty accountant along with a total of the gross and the rest of those vexing tax docs such as house tax payments, and done with accounting for the quarter. As for the rest, well, eat decent, establish a lifelong relationship with a holistic practitioner for times of injury, illness and four season tune-up, pay off the mortgage on the retirement pad as soon as possible, and keep growing the long web tail on the image archive. That's my stupid MO, anyway.

Re: What are your ACCOUNTING methods?

Tue, 22 Apr 2008 23:50:53 +0000

Type S corp, what's that mean? You see, I'm clueless. As soon as I touch down in London, I will register my business and take on some of the government training programs for small businesses. Perhaps that will help me. That tip about one single credit card for your business is a great idea. So simple. So is the print out. What's your methodology for doing your sums?

Re: What are your ACCOUNTING methods?

Tue, 22 Apr 2008 23:55:48 +0000

Thank you, by the way. I wish I knew who you were as I'd rather not call you Stupid.

Re: What are your ACCOUNTING methods?

Tue, 22 Apr 2008 23:56:52 +0000

Sorry, I saw you're now in NYC, S Corp is a US concept. I do my sums on a stupid old "solar calculator":http://www.educational-software.com/images/products/10007-full.jpg.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 00:40:21 +0000

Paul, Dan Heller has spelled out by chapter and verse on the Web, "here":http://www.danheller.com/photo-inc.html including S Corporation. The other day I saw "a site":http://www.help.gv.at/Content.Node/149/Seite.1490000.html#legal for not just photographers, but for starting business in Austria. There must be a similar site for the UK.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 01:09:53 +0000

Not sure about in europe, but in the states you can also form a limited liability company (LLC) or limited liability partnership (LLP). Both offer you more protection than a sole proprietorship, but not as much as a corporation (S or other). Not as hard to form and maintain an LLC or LLP as it is a corporation, but a corporation offers protection and tax advantages that the LLC/LLP don't. At least, that's my understanding of it. The single card is definitely a great idea, I like AMEX, they have a small business card that breaks your purchases out in accountant-friendly ways, and you can get one that earns points as well.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 02:25:55 +0000

Wow! Have I been learning a lot this evening. I've been studying about incorporating. All this stuff is new to me. In my efforts to develop as a visual story teller I utterly failed to take any of this important information in. It's no wonder my business is an unmitigated disaster. I am getting excited about becoming legit, however, because I'm beginning to understand that with a creative approach and good records, there is enormous potential for me to actually enjoy the process of running a company. Now I just need to learn about how to keep records. What the processes are. Looking forward to hearing more. Thank you Tomoko for Dan's link. It is indeed voluminous, succinct and enlightening.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 03:53:40 +0000

Set aside a few bucks for an accountant. One that specializes in artist/freelancer types is ideal. We recently went the LLC route. Supposedly more protection (liability wise) but costs money to set up, and yearly fees. Also seems to have had the result of taking longer to get paid from the conglomerates. It did make getting less expensive health insurance possible, and makes you more bona fide in some circles. Quickbooks is pretty handy software, but still not perfect. Has many more functions than we will ever need. If you go LLC, you will need a business bank account, which comes with it's own checks and whatnot. The dedicated business credit card is a good thing. Just pay it off every month. Get one specifically offered as a business card so you can get the yearly report. AMEX has the market on this earnings report stuff. But there is generally a yearly fee, and you either pay it off every month, or the rates aren't too competitive. Most important, get and keep a receipt for every dime you spend. Every toll, every movie, every newspaper, every insurance payment, medical bill, donation, childcare, train ticket, restaurant, car wash, etc... Even keep the stuff you know you can't right off because it's good to have a record of. Especially if you get audited. The most important thing is to find a good accountant. They are professionals. Sit down and get some advice. The same reason magazines shouldn't hire amateurs to illustrate important stories, you shouldn't trust your financial future in what you hear on the internet, or from some struggling hacks (such as myself) on LS. And pay them the 3-500 bucks to do your taxes. Organize your receipts, get the tallies, pass it over and let the pros crunch the numbers. Make sure you have a will set up, so there is no question that your youngens get any royalties your images make after your passing (which hopefully won't be for a long time, but shit does happen, so be prepared)

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 08:48:14 +0000

Get an accountant for a start. The difference between two accountants can be demonstrated by the two accounts I've used. Accountant #1 (since dumped): "You didn't fill in that 8787AJ form? Oh.... that's terrible news. You'll be in a lot of trouble. And you should have applied for an 65998JK exemption? You never heard of it? You didn't know? Well, that's not my problem. You're in big trouble." Accountant #2 (still with after several years): You came in here worried about your books not being in order? You did a great job. We've got people coming in here after 5 years in business with a fistful or receipts. Don't worry, we'll sort you out. Here, have a cup of coffee and lets have a chat." One of the important things is to get an accountant who deals with self-employed people specifically. They're much more understanding of the peaks and troughs of the freelance business.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 12:29:33 +0000

+1 to what Dave said.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 13:13:17 +0000

Pick up "Freelancing for Dummies":http://www.amazon.com/gp/reader/0764553690/ref=sib_dp_pt#reader-link at your local library. Click on the link and work your way to the Contents at a Glance page to see why.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 13:35:34 +0000

http://www.photosmudger.com/2007/11/basic-business-studies-for_4498.html

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 15:32:02 +0000

"Get an accountant" seems to be the standard response to these questions but IMO, that should only be done to the extent you are using the accountant to check your work and for advice on methods and strategies. You should still learn the laws yourself, and how to use them to your advantage. I know photographers that do nothing but throw a stack of receipts at an accountant during tax time. In the process they end up missing out on thousands in deductions and perhaps put themselves at risk. Learning the laws allows you to plan ahead on develop strategies to reduce taxes and protect yourself in case you get audited. Also, accountants are not always right. I have had accountants that have told me bad advice which I knew was not correct from my own research. The bottom line is nobody is going to be as thorough and care more about your accounting than you. I keep myself as a sole proprietorship to keep things simple and save myself from the $800/year franchise tax. The work I do doesn't put myself at a lot of risk, I wouldn't recommend it if you do weddings though. I find my spreadsheets work better and are more configurable than any software out there, but I used to breathe spreadsheets in a former life so I've gotten pretty good with them. I say do some research, then re-do last year's taxes in Turbo Tax or other software that can tutor you along the way. Take notes as you go, and research questions as they pop up. When you are done go to an accountant and have him/her check your work/understanding of the laws.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 15:46:56 +0000

Paul, you live in New York and you will be living in London. In short, you are and will be sitting on top of two of the biggest piles of business information anywhere on the planet. The New York Public Library's Science, Industry, and Business Library (SIBL) at 188 Madison Avenue offers business information as well as classes in small business management and advice from retired business executives on how to organize your business and market what you're selling. And best of all, from the point of view of the struggling freelancer, it's free. You can get to SIBL by going to www.nypl.org or by just Googling SIBL. You can also access a lot of their databases at home with your NYPL library card, so be sure you dont lose it somewhere over the Atlantic. In London, the British Library offers the same type of services at their Business & IP Information Centre. You can access the BL site at www.bl.uk, and they are at 96 Euston Road next to St. Pancras and King's Cross stations and will still be when you move the family over the pond.

Re: What are your ACCOUNTING methods?

Wed, 23 Apr 2008 22:15:41 +0000

Thank you everyone. Plans are forming in my head and knowledge is incoming at a rapid rate thanks to this post and my own searches. I registered with SmallBusiness.co.uk last evening and many of my concerns were addressed there. If I manage to get myself sorted out and get a handle on things I will try and put a workshop together. Too many photographers I know just have no clue. I'm a good photographer with lots of experience but no clue on admin and that is why I've be doing so badly. My confidence is growing again now that I'm beginning to get my head around this stuff. Thank you everyone. You've given me a kick in the arse.