Here are some handy tips to be sure you maximize your business expenses:
- Keep all receipts: Be sure to keep track of all your business receipts. My business partner and I keep all of our receipts and jot down what was in each purchase that applied to our business. All paper copies of our receipts are kept in a file marked by YEAR. For any online purchases that have electronic receipts we keep those in a mailbox folder marked "Expenses" so we don't forget them come April 15.
- Mileage: In my car I keep a clip board with a pen. I keep it right next to my seat and console so I never forget to jot down work related miles. I note the date, the miles to and from my home office, and all of those mileage expenses are deductible. For 2010 the mileage deduction is 50-cents a mile. In 2011 it is 51-cents. I was astounded to see that half of my mileage last year was work related.
- Marketing: To be in business and stay in business you have to do some form of marketing. If you made flyers or postcards, put an ad in a newspaper or Facebook (the kind that cost money), or attended a trade show, all of those expenses are deductible.
- Professional Fees: If you belong to a professional photographer's association, attended a photography conference, subscribe to a magazine for your work, all of those expenses should be itemized.
- Portfolio Building Costs: If you are building your photography portfolio all of the costs involved to build it are deductible. That includes the website fees, software you use such as Adobe Photoshop, and travel. Of course with travel expenses you have to be honest. If you are just starting out it will be unrealistic to say your vacation to Australia was for work, unless of course you actually got paid for a photoshoot while you were there. Remember, you want to think about the possibility if you are audited and whether your claim for that trip to Australia was truly business related.
- Business Licenses: We maintain all sorts of business licenses for our company. We have a city license, a state resale license, and a General Partnership license. All of these have fees associated with them. All of those fees are deductible.
IRS Small Business Expenses
Tax Tips for Part Time Photographers
How to obtain your FEIN (Federal Employer Identification Number)
LLC vs. General Partnership vs. Sole Proprietorship
Next week we'll talk about other ways you can parlay your photography skills to other business ideas.