Why do I need business-specific financial accounts?
There are several reasons you should keep your business finances completely separate from your personal finances.
- Easier tracking of income and expenses
- Keeps finances cleaner if audited
- Can deduct business credit card interest
- Pay business expenses with business funds
And, it’s just a good practice to keep business and personal separate from each other.
What types of accounts/cards should I have when starting my photography business?
You will use your checking account to deposit checks, deposits from credit card merchants, write checks, and transfer funds. This type of account is a must.
Opening 1 or more of these accounts is also a must. With paying sales tax and income tax on a quarterly or annual basis, you need accounts to save your money. Also, it never hurts to have a savings account to simply save up your business funds.
While having a credit card is a debatable topic with some people, if you are responsible, this is a very valuable financial tracking tool for your business expenses.
A debit card is good for withdrawing cash from your business checking and can be used for tracking business expenses.
How can having these different accounts help with gross receipt and expense tracking?
Come tax time, all you have to do is print out your checking account and credit card account statements. If you have been careful and deliberate throughout the year, all of your business transactions will be right there: your expenses on your credit card and your gross receipts in your checking. You may end up having other credit cards or deposit accounts (PayPal, etc.). You just print out the statements for those accounts, same as your checking and credit card.
Are there other options for tracking, organizing, and reporting my business finances?
Of course! The easy option is some kind of spreadsheet program, like Excel or Numbers. In fact, I have a FREE Expense Tracking spreadsheet available for you to download. It’s very basic, but all of the fields are set-up for you. The spreadsheet is fully customizable, and all you have to do is add in another sheet for the following year. Finally, an auto-filter is ready for you to use to sort, categorize, and organize all of your business receipts and expenses for the year. Did I mention that it’s free???
If you have a little more cash to spare and some time to spend on learning how to use the software, I strongly recommend Quickbooks Pro. I have only seen the tip of the iceberg with what this program can do. You can do any of the following:
- Input all gross receipts and expenses
- Print over 30-40 different reports, such as Profit & Loss, Sales by Customer Summary, and Balance Sheet.
- Pay employees
- Pay Sales Tax
- Organize vendors and payments
Now granted, I do not use all of these available features. I only use it for tracking my finances from year to year and pulling clean summary reports for when my taxes are due. This awesome software has made my life so much easier!
How to Specialize Your Photography Business